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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As filed with the Securities and
Exchange Commission on April 23, 2004 &#151; Registration No. 333-<U></U> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECURITIES AND
EXCHANGE COMMISSION <BR>Washington, D.C. 20549 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM S-8 </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REGISTRATION STATEMENT<BR>UNDER<BR>THE SECURITIES ACT OF
1933 </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>APPLIED FILMS
CORPORATION </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Exact name of
registrant as specified in its charter) </FONT></P>

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     <TD WIDTH=43% ALIgn=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Colorado</B></FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=51% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>84-1311581</B></FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(State or other jurisdiction of</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(I.R.S. Employer Identification No.)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>incorporation or organization)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" size=2><B>9586 I-25 Frontage Road, Suite 200, Longmont, Colorado 80504</B><BR>

(Address of Principal Executive Offices) (Zip Code) <BR><BR>

<B>Applied Films Corporation Long-Term Incentive Plan </B><BR>

and the<BR>

<B>Applied Films Corporation Non-Employee, Non-Director Officer &amp; Consultant<BR>
Non-Qualified Stock Option Plan
</B><BR>(Full Title of the Plan)<BR><BR>




<B>Lawrence D. Firestone, 9586 I-25 Frontage Road, Suite 200, Longmont, Colorado 80504, (303) 774-3246</B><BR>
(Name, address, and telephone number of agent for service) <BR><BR>


<B>Copies of Communications to: </B><BR>

Harvey Koning<BR>

Varnum, Riddering, Schmidt &amp; Howlett LLP <BR>
333 Bridge Street, N.W.,
P.O. Box 352 <BR>
Grand Rapids, Michigan
49501-0352 <BR>
(616) 336-6000 </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CALCULATION OF
REGISTRATION FEE </FONT></H1>


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     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title of Securities<BR> Being Registered</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount Being <BR>Registered</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Proposed <BR>Maximum <BR>Offering Price<BR> Per Share(2)</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Proposed <BR>Maximum <BR>Aggregate <BR>Offering Price(2)</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount of <BR>Registration<BR> Fee</FONT></TH></TR>
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     <TD COLSPAN=20><HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE></TD></TR>
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     <TD WIDTH=19% ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Common Stock</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=27% ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,224,000 shares(1)</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=7% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 27.52</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=14% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 33,684,480</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 4,267.82</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD COLSPAN=20><HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE></TD></TR>
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          <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
          <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
          Represents 1,200,000 shares of Common Stock authorized for issuance under the
          Applied Films Corporation Long-Term Incentive Plan and 24,000 shares of Common
          Stock authorized for issuance under the Applied Films Corporation Non-Employee,
          Non-Director Officer &amp; Consultant Non-Qualified Stock Option Plan dated
          October 24, 2000, as incorporated by reference to Exhibit 10.3 of
          Registrant&#146;s Quarterly Report on Form 10-Q for the fiscal quarter ended
          December 29, 2001. This Registration Statement also covers such indeterminable
          additional number of shares as may be issuable under the Applied Films Long-Term
          Incentive Plan and the Applied Films Corporation Non-Employee, Non-Director
          Officer &amp; Consultant Non-Qualified Stock Option Plan by reason of
          adjustments to the number of shares covered thereby as described in their
          respective Prospectuses. </FONT></P></TD>
          </TR>
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          <BR>
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          <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
          <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
          For the purpose of computing the registration fee only, the price shown is based
          upon the price of $27.52 per share, the average of the high and low sales prices
          for the Common Stock of Applied Films Corporation in the NASDAQ National Market
          System on April 22, 2004, in accordance with Rule 457(h). </FONT></P></TD>
          </TR>
          </TABLE>
          <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to Rule 416(a) of the
General Rules and Regulations under the Securities Act of 1933, this Registration
Statement shall cover such additional securities as may be offered or issued to prevent
dilution resulting from stock splits, stock dividends or similar transactions. </FONT></P>


<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  2</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INFORMATION REQUIRED
IN THE SECTION 10(a) PROSPECTUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Information required by Part I to be
contained in the Section 10(a) Prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933 and the Note to Part I of Form
S-8. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INFORMATION REQUIRED
IN THE REGISTRATION STATEMENT </FONT></H1>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 3. Incorporation of Documents
by Reference </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation hereby incorporates
by reference in this Registration Statement the following documents filed by the
Corporation with the Securities and Exchange Commission: </FONT></P>

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          <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
          <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
          The Corporation&#146;s latest Annual Report on Form 10-K filed pursuant to
          Section 13(a) of the Securities Exchange Act of 1934; </FONT></P></TD>
          </TR>
          </TABLE>
          <BR>

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          <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
          <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
          All other reports or documents filed by the Corporation pursuant to Section
          13(a) or 15(d) of the Securities Exchange Act of 1934, since the end of the
          fiscal year covered by the Annual Report on Form 10-K referenced to in (a)
          above; and </FONT></P></TD>
          </TR>
          </TABLE>
          <BR>

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          <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
          <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
          The description of the Corporation&#146;s Common Stock is contained in the
          Corporation&#146;s Registration Statement filed pursuant to Section 12 of the
          Exchange Act and is incorporated in this Registration Statement by reference,
          including any subsequent amendments or reports filed for the purpose of updating
          such description. </FONT></P></TD>
          </TR>
          </TABLE>
          <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All other documents subsequently
filed by the Corporation pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be part of
this Registration Statement from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference in this
Registration Statement shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained in this Registration
Statement or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference in this Registration Statement modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as
modified or superseded, to constitute a part of this Registration Statement. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 4. Description of
Securities </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The class of securities to be offered
is registered under Section 12 of the Exchange Act. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 5. Interests of
Named Experts and Counsel </FONT></H1>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Not applicable. </FONT></P>

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<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3</FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 6. Indemnification
of Directors and Officers </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sections&nbsp;7-109-102 through
7-109-110 of the Colorado Business Corporation Act (the &#147;Act&#148;) grant the
Corporation broad powers to indemnify any person in connection with legal proceedings
brought against him by reason of his present or past status as an officer or director of
the Corporation, provided with respect to conduct in an official capacity with the
Corporation, the person acted in good faith and in a manner he reasonably believed to be
in the best interests of the Corporation, with respect to all other conduct, the person
believed the conduct to be at least not opposed to the best interests of the Corporation,
and with respect to any criminal action or proceeding, the person had no reasonable cause
to believe his conduct was unlawful. Indemnification is limited to reasonable expenses
incurred in connection with the proceeding. No indemnification may be made (i)&nbsp;in
connection with a proceeding by or in the right of the Corporation in which the person was
adjudged liable to the Corporation; or (ii)&nbsp;in connection with any other proceedings
charging that the person derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the person was judged liable on the
basis that he derived an improper personal benefit, unless and only to the extent the
court in which such action was brought or another court of competent jurisdiction
determines upon application that, despite such adjudication, but in view of all relevant
circumstances, the person is fairly and reasonably entitled to indemnity for reasonable
expenses as the court deems proper. In addition, to the extent that any such person is
successful in the defense of any such legal proceeding, the Corporation is required by the
Act to indemnify him against reasonable expenses. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation&#146;s Amended and
Restated Articles of Incorporation contain provisions that permit the Corporation to
indemnify its officers and directors to the fullest extent permitted by the Colorado
Business Corporation Act. The Corporation has indemnification agreements with each of its
directors and certain of its officers providing for similar indemnification. In addition
to the available indemnification, the Corporation&#146;s Amended and Restated Articles of
Incorporation limits the personal liability of the members of its Board of Directors,
subject to certain exceptions, for monetary damages with respect to claims by the
Corporation or its stockholders. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation&#146;s Amended and
Restated Bylaws provide that the Corporation may purchase and maintain insurance on behalf
of its directors, officers, employees, fiduciaries and agents against liability asserted
against or incurred by such persons in any such capacity. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 7. Exemption from
Registration Claimed </FONT></H1>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Not applicable. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 8. Exhibits </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reference is made to the Exhibit
Index which appears on Page 7. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 9. Undertakings </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;
          The undersigned registrant hereby undertakes: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To file, during any period in which offers or sales are being made, a
          post-effective amendment to this Registration Statement: </FONT></P>

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               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               To include any prospectus required by Section 10(a)(3) of the Securities Act of
               1933; </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               To reflect in the prospectus any facts or events arising after the effective
               date of the Registration Statement (or the most recent post-effective amendment
               thereof) which, individually or in the aggregate, represents a fundamental
               change in the information set forth in the Registration Statement; and </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               To include any material information with respect to the plan of distribution not
               previously disclosed in the Registration Statement or any material change to
               such information in the Registration Statement; </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  4</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>provided, however</I>, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if information required to be included in
a post-effective amendment by those paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          That, for the purpose of determining any liability under the Securities Act of
          1933, each such post-effective amendment shall be deemed to be a new
          registration statement relating to the securities offered therein, and the
          offering of such securities at that time shall be deemed to be the initial
          <I>bona fide</I> offering thereof. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To remove from registration by means of a post-effective amendment any of the
          securities being registered which remain unsold at the termination of the
          offering. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;
          The undersigned registrant hereby undertakes that, for purposes of determining
          any liability under the Securities Act of 1933, each filing of the
          registrant&#146;s annual report pursuant to Section 13(a) or Section 15(d) of
          the Securities Exchange Act of 1934 (and, where applicable, each filing of an
          employee benefit plan&#146;s annual report pursuant to Section 15(d) of the
          Securities Exchange Act of 1934) that is incorporated by reference in the
          Registration Statement shall be deemed to be a new registration statement
          relating to the securities offered therein, and the offering of such securities
          at that time shall be deemed to be the initial <I>bona fide</I> offering
          thereof. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;
          Insofar as indemnification for liabilities arising under the Securities Act of
          1933 may be permitted to directors, officers, and controlling persons of the
          registrant pursuant to the foregoing provisions, or otherwise, the registrant
          has been advised that in the opinion of the Securities and Exchange Commission
          such indemnification is against public policy as expressed in the Act and is,
          therefore, unenforceable. In the event that a claim for indemnification against
          such liabilities (other than the payment by the registrant of expenses incurred
          or paid by a director, officer or controlling person of the registrant in the
          successful defense of any action, suit or proceeding) is asserted by such
          director, officer or controlling person in connection with the securities being
          registered, the registrant will, unless in the opinion of its counsel the matter
          has been settled by controlling precedent, submit to a court of appropriate
          jurisdiction the question whether such indemnification by it is against public
          policy as expressed in the Act and will be governed by the final adjudication of
          such issue. </FONT></P>


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<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  5</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing on Form S-8
and has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Longmont, State of Colorado, on the
23rd day of April, 2004. </FONT></P>


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<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>APPLIED FILMS CORPORATION</B><BR>
(Registrant)<BR><BR>
<BR>By: /s/ Thomas T. Edman<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thomas T. Edman, President and Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>POWER OF ATTORNEY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>KNOW
ALL MEN BY THESE PRESENTS,</B> that each person whose signature appears below constitutes
and appoints Thomas T. Edman and Lawrence D. Firestone, and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement and to
file the same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing required and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been
signed below on April 23, 2004, by the following persons in the capacities indicated. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Signatures</U></B></FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=55% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Title</U></B></FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Thomas T. Edman<BR>Thomas T. Edman</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director, President, and Chief Executive Officer (principal executive officer)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Lawrence D. Firestone<BR>Lawrence D. Firestone</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD  ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Financial Officer, Treasurer, Senior Vice President and Secretary (principal fianancial and accounting officer)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Richard P. Beck<BR>Richard P. Beck</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD  ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director, Chairman of the Board of Directors</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Allen Alley<BR>Allen Alley</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ John S. Chapin<BR>John S. Chapin</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Vincent Sollitto<BR>Vincent Sollitto</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>

<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  6</FONT></P>

<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>





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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT INDEX </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following exhibits are filed as a part of the Registration Statement: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Exhibit Number</U></B> </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD ALIGN=CENTER WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B><U>                                        Description of Document</U></B> </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1 </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Amended and Restated Articles of Incorporation of Applied Films Corporation, as amended,
and incorporated by reference to Exhibit 3.1 of Registrant&#146;s Current Report on Form
8-K dated January 16, 2001 </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2 </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Amended and Restated Bylaws of Applied Films Corporation, and incorporated by reference to
Exhibit 3.2 of Registrant&#146;s Registration Statement on Form S-1, as amended (Reg. No.
333-35331) </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Applied
Films Corporation Long-Term Incentive Plan dated October 22, 2003 </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.4  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Applied
Films Corporation Non-Employee, Non-Director Officer &amp; Consultant Non-Qualified Stock
Option Plan </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.1  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Opinion
 of  Varnum,  Riddering,  Schmidt &amp;  Howlett  LLP with  respect  to the  legality  of
the          securities being registered </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.1  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Ernst &amp; Young LLP  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.2  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of PricewaterhouseCoopers Zhong Tian Certified Public Accounts Co., Ltd. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.3  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Varnum, Riddering, Schmidt &amp; Howlett LLP (included in opinion filed as Exhibit 5.1) </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.1  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Power
of Attorney - included on page 6 hereof </FONT></TD>
</TR>
</TABLE>
<BR>



<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  7</FONT></P>







<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 4.3 </FONT></H1>



<P align="center"><FONT size="2"><B>APPLIED FILMS CORPORATION</B>
</FONT>

<P align="center"><FONT size="2"><B>LONG-TERM INCENTIVE PLAN</B>
</FONT>
<BR><BR><BR><BR><BR>

<P align="center"><FONT size="2"></FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="center"><FONT size="2"><B>TABLE OF CONTENTS</B>
</FONT>

<DIV align="left">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ESTABLISHMENT AND PURPOSE OF THE PLAN</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Establishment of the Plan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purpose of the Plan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Term of Plan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DEFINITIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ADMINISTRATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">3</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">3.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">The Committee</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">3</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">3.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Committee Authority</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">3</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">3.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">No Authority to Reprice</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">4</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 4</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">COMMON STOCK SUBJECT TO THE PLAN</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">4</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 5</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ELIGIBILITY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">5</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 6</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">STOCK OPTIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">5</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">6.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">5</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">6.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Grants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">5</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">6.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Incentive Stock Options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">5</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">6.4</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Terms of Options</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">5</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 7</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">STOCK APPRECIATION RIGHTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Grant of SARs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payment of SAR Amount</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nontransferability</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 8</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RESTRICTED STOCK</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">8.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Awards of Restricted Stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">7</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">8.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Awards and Certificates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">8</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">8.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Restrictions and Conditions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">8</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 9</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PERFORMANCE SHARES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Award of Performance Shares</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Terms and Conditions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 10</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">OTHER STOCK-BASED AWARDS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">10.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other Awards</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">10.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Terms and Conditions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">10</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 11</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">TERMINATION OR AMENDMENT OF THE PLAN</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">10</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 12</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">UNFUNDED PLAN</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">10</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 13</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ADJUSTMENT PROVISIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">13.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Antidilution</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">13.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Change in Control</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">13.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjustments by Administrator</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARTICLE 14</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">GENERAL PROVISIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Legend</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">No Right to Employment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Withholding of Taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">11</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.4</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">No Assignment of Benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">12</FONT></DIV></TD>
</TR>
</TABLE>
</DIV>

<P align="center"><FONT size="2">i</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.5</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Governing Law</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">12</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.6</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Application of Funds</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">12</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.7</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Rights as a Shareholder</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">12</FONT></DIV></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">14.8</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Non-U.S. Awards</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">12</FONT></DIV></TD>
</TR>
</TABLE>
</DIV>


<P align="center"><FONT size="2">ii</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="center"><FONT size="2"><B>APPLIED FILMS CORPORATION<BR>
LONG-TERM INCENTIVE PLAN</B>
</FONT>

<P align="center"><FONT size="2"><B>ARTICLE 1<BR>
ESTABLISHMENT AND PURPOSE OF THE PLAN</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Establishment of the Plan. Applied Films Corporation, a Colorado
corporation (the &#147;Company&#148;), hereby establishes an incentive compensation plan
to be known as the &#147;Applied Films Corporation Long-Term Incentive Plan&#148; (the
&#147;Plan&#148;), as set forth in this document. The Plan permits the granting of stock
options, stock appreciation rights, restricted stock, performance shares, and
other stock-based awards to key employees of the Company and its Subsidiaries,
as well as Directors, Nonemployee Officers and Consultants. Upon approval by
the Board of Directors of the Company, subject to ratification by the
affirmative vote of holders of a majority of shares of the Company&#146;s Common
Stock present and entitled to vote at the 2003 Annual Meeting of Shareholders,
the Plan shall be effective as of October&nbsp;22, 2003 (the &#147;Effective Date&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company&#146;s shareholders,
through stock-based compensation, by aligning the personal interests of Plan
Participants with those of its shareholders. The Plan is designed to allow
Plan Participants to participate in the Company&#146;s future, as well as to enable
the Company to attract, retain and award such individuals.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date (&#147;Termination Date&#148;),
provided that Awards granted prior to the Termination Date may extend beyond
that date.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 2<BR>
DEFINITIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this Plan, the following terms shall have the meanings set
forth below:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 &#147;Administrator&#148; shall mean the Board or any of the Committees
designated to administer the Plan in accordance with Section&nbsp;3.1 of the Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 &#147;Award&#148; shall mean any award under this Plan of any Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or Other Stock-Based
Award.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 &#147;Award Agreement&#148; shall mean an agreement evidencing the grant of an
Award under this Plan. Awards under the Plan shall be evidenced by Award
Agreements that set forth the details, conditions and limitations for each
Award, as established by the Administrator and shall be subject to the terms
and conditions of the Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 &#147;Award Date&#148; shall mean the date that an Award is made, as specified in an Award Agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 &#147;Board&#148; shall mean the Board of Directors of the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 &#147;Code&#148; shall mean the Internal Revenue Code of 1986, as amended.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 &#147;Committee&#148; shall mean one of the Committees, as specified in Article
3, appointed by the Board to administer the Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 &#147;Common Stock&#148; shall mean the Common Stock, no par value per share, of
the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 &#147;Consultant&#148; shall mean any person or entity engaged by the Company or
a Subsidiary to render services to the Company or that Subsidiary.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 &#147;Director&#148; shall mean a member of the Board or a member of the Board
of Directors of a Subsidiary.
</FONT>

<P align="center"><FONT size="2">1
</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 &#147;Disability&#148; shall mean permanent and total disability as determined
under the rules and guidelines established by the Administrator for purposes of
the Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 &#147;Employee&#148; shall mean any person employed by the Company or a
Subsidiary. Neither service as a Director nor the payment of a Director&#146;s fee
by the Company shall be sufficient to constitute employment by the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 &#147;Exchange Act&#148; shall mean the Securities Exchange Act of 1934.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14 &#147;Fair Market Value&#148; shall be the closing sale price of the Company&#146;s
Common Stock for such date on the NASDAQ. If no sale of shares of Common Stock
is reflected on NASDAQ on a date, &#147;Fair Market Value&#148; shall be determined
according to the closing sale price on the next preceding day on which there
was a sale of shares of Common Stock reflected on NASDAQ.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15 &#147;Immediate Family Member&#148; shall mean the spouse, and/or any child or
grandchild of a Participant.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16 &#147;Incentive Stock Option&#148; or &#147;ISO&#148; shall mean an option to purchase
shares of Common Stock granted under Article&nbsp;6, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section&nbsp;422
of the Code.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17 &#147;Insider&#148; shall mean an employee who is an officer (as defined in
Rule&nbsp;16a-1(f) of the Exchange Act) or Director, or holder of more than 10% of
its outstanding shares of the Company&#146;s Common Stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18 &#147;NASDAQ&#148; shall mean the National Association of Security Dealers
Automated Quotation System or any successor then in use.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19 &#147;Nonemployee Director&#148; shall mean a person who satisfies (1)&nbsp;the
definition of &#147;Nonemployee Director&#148; within the meaning set forth in Rule
16b-3(b)(3), as promulgated by the SEC under the Exchange Act, or any successor
definition adopted by the SEC, or (2)&nbsp;the definition of &#147;outside director&#148;
within the meaning of Section 162(m) of the Code.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.20 &#147;Nonemployee Officer&#148; shall mean a person who is not an employee, but
who has been elected as an officer of the Company or of the Board.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.21 &#147;Nonqualified Stock Option&#148; or &#147;NQSO&#148; shall mean an option to
purchase shares of Common Stock, granted under Article&nbsp;6, which is not an
Incentive Stock Option.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.22 &#147;Option&#148; means an Incentive Stock Option or a Nonqualified Stock
Option.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.23 &#147;Option Price&#148; shall mean the price at which a share of Common Stock
may be purchased by a Participant pursuant to an Option, as determined by the
Administrator.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.24 &#147;Other Stock-Based Award&#148; shall mean an Award under Article&nbsp;10 of
this Plan that is valued in whole or in part by reference to, or is payable in
or otherwise based on, Common Stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.25 &#147;Participant&#148; shall mean an Employee, a Director, a Consultant, or a
Nonemployee Officer who holds an outstanding Award granted under the Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.26 &#147;Performance Shares&#148; shall mean an Award granted under Article&nbsp;9 of
this Plan evidencing the right to receive Common Stock or cash of an equivalent
value at the end of a specified performance period.
</FONT>

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</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.27 &#147;Permitted Transferee&#148; means (i)&nbsp;an Immediate Family Member, (ii)&nbsp;a
trust or trusts for the exclusive benefit of the Participant and/or one or more
Immediate Family Members, or (iii)&nbsp;a partnership or limited liability company
whose only partners or members are the Participant and/or one or more Immediate
Family Members.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28 &#147;Plan Shares&#148; shall mean the shares of Common Stock which may be
issued under this Plan, which may be either unauthorized and unissued Common
Stock or issued Common Stock reacquired by the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.29 &#147;Restricted Stock&#148; shall mean an Award granted to a Participant under
Article&nbsp;8 of this Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.30 &#147;Retirement&#148; shall mean the termination of a Participant&#146;s employment
with the Company or a Subsidiary after the Participant attains the age of 60.
With respect to a Director, Retirement shall mean the termination of a
Director&#146;s service as a Director of the Company or a Subsidiary after serving
as a Director of the Company and/or any Subsidiary for a period of at least
five (5)&nbsp;consecutive years prior to the date of termination of such service.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.31 &#147;SEC&#148; shall mean the Securities and Exchange Commission of the United
States of America.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.32 &#147;Stock Appreciation Right&#148; or &#147;SAR&#148; shall mean an Award granted to a
Participant under Article&nbsp;7 of this Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.33 &#147;Subsidiary&#148; shall mean any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least 50% of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company owns
at least 50% of the combined equity thereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.34 &#147;Termination of Service&#148; shall mean the termination of an Employee&#146;s
employment with the Company or a Subsidiary. An Employee employed by a
Subsidiary shall also be deemed to incur a Termination of Service if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become an employee of the Company or another Subsidiary. With
respect to a Participant that is not an Employee, Termination of Service shall
mean the termination of the person&#146;s service as a Director, as a Consultant, or
as a Nonemployee Officer.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 3<BR>
ADMINISTRATION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 The Administrator. The Plan may be administered by different
Committees with respect to different groups of Plan Participants. To the
extent that the Administrator determines it to be desirable to qualify Awards
granted hereunder as &#147;performance-based compensation&#148; within the meaning of
Section 162(m) of the Code, the Plan shall be administered by a Committee of
two or more Non-Employee Directors. To the extent desirable to qualify
transactions hereunder as exempt under Rule&nbsp;16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule&nbsp;16b-3. Other than as provided above, the Plan shall be
administered by (a)&nbsp;the Board, or (b)&nbsp;a Committee, which Committee shall be
constituted to satisfy the foregoing conditions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 Administrator Authority. Subject to the Company&#146;s Articles of
Incorporation, Bylaws and the provisions of this Plan, the Administrator shall
have full authority to grant Awards to key Employees, as well as Directors,
Consultants and Nonemployee Officers. Awards may be granted singly, in
combination, or in tandem. The authority of the Administrator shall include the
following:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(a) To select the key Employees, Directors, Nonemployee Officers or
Consultants to whom Awards may be granted under the Plan;
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(b) To determine whether and to what extent Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Other
Stock-Based Awards, or any combination thereof are to be granted under
the Plan;
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(c) To determine the number of shares of Common Stock to be covered
by each Award;
</FONT>
<P align="center"><FONT size="2">3
</FONT>
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<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction
or limitation, any vesting schedule or acceleration thereof, or any
forfeiture restrictions or waiver thereof, regarding any Award and
the shares of Common Stock relating thereto, based on such factors as the
Administrator shall determine in its sole discretion;
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(e) To determine whether, to what extent and under what
circumstances grants of Awards are to operate on a tandem basis and/or in
conjunction with or apart from other cash compensation arrangement made
by the Company and/or a subsidiary other than under the terms of this
Plan;
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(g) To determine to what extent and under what circumstances shares
of Common Stock and other amounts payable with respect to an Award shall
be deferred.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Administrator shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. A majority of any
Committee or the Board shall constitute a quorum, and the acts of a majority of
a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of any Committee or the Board, shall be the valid acts
of any Committee or the Board. The interpretation and construction by any
Committee or the Board of any provisions of the Plan or any Award granted under
the Plan shall be final and binding upon the Company, the Board and
Participants, including their respective heirs, executors and assigns. No
member of the Board or any Committee shall be liable for any action or
determination made in good faith with respect to the Plan or an Award granted
hereunder.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 No Authority to Reprice. Notwithstanding the authority described in
Section&nbsp;3.2, without the prior approval of the Company&#146;s shareholders, neither
the Committee nor the Board shall have the authority to lower the option
exercise price of previously granted Awards, whether by means of the amendment
of previously granted Awards or the replacement or regrant, through
cancellation, of previously granted Awards.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 4<BR>
COMMON STOCK SUBJECT TO THE PLAN</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to adjustment as provided in Section&nbsp;13.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan, which may
be either unauthorized and unissued Common Stock or issued Common Stock
reacquired by the Company shall be 1,200,000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Determinations as to the number of Plan Shares that remain available for
issuance under the Plan shall be made in accordance with such rules and
procedures as the Administrator shall determine from time to time. If an Award
expires unexercised or is forfeited, cancelled, terminated or settled in cash
in lieu of Common Stock, the shares of Common Stock that were theretofore
subject (or potentially subject) to such Award may again be made subject to an
Award Agreement. In addition, shares from the following sources shall be added
to the number of Plan Shares available for issuance under the Plan:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(1) Any shares of the Company&#146;s Common Stock surrendered in payment
of the exercise price of Options or to pay the tax withholding
obligations incurred upon the exercise of Options;
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(2) Options withheld to pay the exercise price or tax withholding
obligations incurred upon the exercise of Options; and
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(3) The number of shares repurchased by the Company in the open
market or otherwise having an aggregate purchase price no greater than
the cash proceeds received by the Company from the sale of shares of the
Company&#146;s stock under the Plan.
</FONT>
<P align="center"><FONT size="2">4
</FONT>
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<P align="center"><FONT size="2"><B>ARTICLE 5<BR>
ELIGIBILITY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The persons who shall be eligible to receive Awards under the Plan shall
be selected by the Administrator from time to time. In making such selections,
the Administrator shall consider the nature of the services rendered by such
persons, their present and potential contribution to the Company&#146;s success and
the success of the particular Subsidiary of the Company by which they are
employed or to whom they provide services, and such other factors as the
Administrator in its discretion shall deem relevant. Participants may hold
more than one Award, but only on the terms and subject to the restrictions set
forth in the Plan and their respective Award Agreements. No Participant may
receive Awards under the Plan covering more than 25% of Plan Shares.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 6<BR>
STOCK OPTIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 Options. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either
an Incentive Stock Option (ISO)&nbsp;or a Nonqualified Stock Option (NQSO).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 Grants. The Administrator shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does
not qualify shall constitute a separate Nonqualified Stock Option.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section&nbsp;422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section&nbsp;422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company. The aggregate Fair Market Value, determined
on the Award Date of the shares of Common Stock with respect to which one or
more Incentive Stock Options (or other incentive stock options within the
meaning of Section&nbsp;422 of the Code, under all other option plans of the
Company) granted on or after January&nbsp;1, 1987, that are exercisable for the
first time by a Participant during any calendar year shall not exceed the
$100,000 limitation imposed by Section 422(d) of the Code.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 Terms of Options. Options granted under the Plan shall be evidenced
by Award Agreements in such form as the Administrator shall, from time to time
approve, which Agreement shall comply with and be subject to the following
terms and conditions:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(a) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Administrator at
the time of grant but shall be not less than 100% of the Fair Market
Value of the Common Stock at the Award Date. Once granted, the Option
Price may not be modified to provide the Participant with a more
favorable price per share unless such modification is approved by the
shareholders of the Company.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(b) Option Term. The term of each Option shall be fixed by the
Administrator, provided that no Option shall be exercisable more than ten
(10)&nbsp;years after the date the Option is granted.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(c) Exercisability. Except as provided in Section&nbsp;13.2, no Option
shall be exercisable either in whole or in part prior to the first
anniversary of the Award Date. Thereafter, an Option shall be exercisable
at such time or times and subject to such terms and conditions as shall
be determined by the Administrator and set forth in the Award Agreement.
If the Administrator provides that any Option is exercisable only in
installments, the Administrator may at any time waive such installment
exercise provisions, in whole or in part, based on such factors as the
Administrator may determine.</FONT>

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<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(d) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c)&nbsp;above, Options
may be exercised in whole or in part at any time during the term of the
Option, by giving written notice of exercise to the Company specifying
the number of shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in such form as the
Administrator may accept, provided that no officer or director of the
Company shall be permitted to make payment by promissory note or other
obligation payable in the future. Notwithstanding the foregoing, an
Option shall not be exercisable with respect to less than 100 shares of
Common Stock unless the remaining shares covered by an Option are fewer
than 100 shares. If and to the extent determined by the Administrator in
its sole discretion at or after grant, payment in full or in part may
also be made in the form of Common Stock owned by the Participant (and
for which the Participant has good title free and clear of any liens and
encumbrances and with respect to any shares of Common Stock acquired upon
the exercise of an Option, has been held by the Optionee for a period of
at least six (6)&nbsp;consecutive months), or by reduction in the number of
shares issuable upon such exercise based, in each case, on the Fair
Market Value of the Common Stock on the last trading date preceding
payment as determined by the Administrator. No shares of stock shall be
issued until payment has been made. A Participant shall generally have
the rights to dividends or other rights of a shareholder with respect to
shares subject to the Option when the person exercising such option has
given written notice of exercise, has paid for such shares as provided
herein, and, if requested, has given the representation described in
Section&nbsp;13.1 of the Plan.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(e) Transferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than
through an agent as approved by the Administrator or by will or by the
laws of descent and distribution, provided, however, the Administrator
may, in its discretion, authorize all or a portion of a Nonqualified
Stock Option to be granted to an optionee to be on terms which permit
transfer by such optionee to a Permitted Transferee, provided that (i)
there may be no consideration for any such transfer (other than the
receipt of or interest in a family partnership or limited liability
company), (ii)&nbsp;the Award Agreement pursuant to which such Options are
granted must be approved by the Administrator, and must expressly provide
for transferability in a manner consistent with this Section&nbsp;6.4(e), and
(iii)&nbsp;subsequent transfers of transferred Options shall be prohibited
except those in accordance with Section&nbsp;6.4(h). Following transfer, any
such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer. The events
of termination of service of Sections&nbsp;6.4(f), (g)&nbsp;and (h)&nbsp;hereof, and the
tax withholding obligations of Section&nbsp;14.3 shall continue to be applied
with respect to the original optionee, following which the Options shall
be exercisable by the Permitted Transferee only to the extent, and for
the periods specified in Sections&nbsp;6(f), (g), and (h). The Company shall
not be obligated to notify Permitted Transferee(s) of the expiration or
termination of any Option. Further, all Options shall be exercisable
during the Participant&#146;s lifetime only by such Participant and, in the
case of a Nonqualified Stock Option, by a Permitted Transferee. The
designation of a person entitled to exercise an Option after a person&#146;s
death will not be deemed a transfer.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(f) Termination of Service for Reasons other than Retirement,
Disability, or Death. Upon Termination of Service for any reason other
than Retirement or on account of Disability or death, each Option held by
the Participant shall, to the extent rights to purchase shares under such
Option have accrued at the date of such Termination of Service and shall
not have been fully exercised, be exercisable, in whole or in part, at
any time for a period of no more than three (3)&nbsp;months following
Termination of Service in the case of ISOs or no more than six (6)&nbsp;months
following Termination of Service in the case of NQSOs, subject, however,
to prior expiration of the term of such Options and any other limitations
on the exercise of such Options in effect at the date of exercise.
Whether an authorized leave of absence or absence because of military or
governmental service shall constitute Termination of Service for such
purposes shall be determined by the Administrator, which determination
shall be final and conclusive.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(g) Termination of Service for Retirement or Disability. Upon
Termination of Service by reason of Retirement or Disability, each Option
held by such Participant shall, to the extent rights to purchase shares
under the Option have accrued at the date of such Retirement or
Disability and shall not have been fully exercised, remain exercisable in
whole or in part, at any time during the twelve (12)&nbsp;month period
following
</FONT>
<P align="center"><FONT size="2">6
</FONT>
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<P align="left"><FONT size="2">Termination of Service, subject, however, in any case, to the
prior expiration of the term of the Option and any other limitation on
the exercise of such Option in effect at the date of exercise.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(h) Termination of Service for Death. Upon Termination of Service
due to death, each Option held by such Participant or Permitted
Transferee shall, to the extent rights to purchase shares under the
Options have accrued at the date of death and shall not have been fully
exercised, be exercisable, in whole or in part, by the personal
representative of the estate of the Participant or Permitted Transferee
or by any person or persons who shall have acquired the Option directly
from the Participant or Permitted Transferee by bequest or inheritance at
any time during the twelve (12)&nbsp;month period following death, subject,
however, in any case, to the prior expiration of the term of the Option
and any other limitation on the exercise of such Option in effect at the
date of exercise.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(i) Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Sections&nbsp;6.4(f), (g)&nbsp;or
(h)&nbsp;is applicable shall terminate upon expiration of such exercise
period.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(j) Purchase and Settlement Provisions. The Administrator may at
any time offer to purchase an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate
to the Participant at the time that such offer is made. In addition, if
an Award Agreement so provides at the Award Date or is thereafter amended
to so provide, the Administrator may require that all or part of the
shares of Common Stock to be issued with respect to the exercise of an
Option, in an amount not greater than the Fair Market Value of the shares
that is in excess of the aggregate Option Price, take the form of
Performance Shares, which shall be valued on the date of exercise on the
basis of the Fair Market Value of such Performance Shares determined
without regard to the deferral limitations and/or forfeiture restrictions
involved.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 7<BR>
STOCK APPRECIATION RIGHTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 Grant of SARs. The Administrator may approve the grant of Stock
Appreciation Rights (SARs) that are related to Options only. A SAR may be
granted only at the time of grant of the related Option. A SAR will entitle
the holder of the related Option, upon exercise of the SAR, to surrender such
Option, or any portion thereof to the extent unexercised, with respect to the
number of shares as to which such SAR is exercised, and to receive payment of
an amount computed pursuant to Section&nbsp;7.2. Such Option will, to the extent
surrendered, then cease to be exercisable. Subject to Section&nbsp;6.4, a SAR
granted hereunder will be exercisable at such time or times, and only to the
extent that a related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 Payment of SAR Amount. Upon the exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined
by multiplying (i)&nbsp;the difference between the Fair Market Value of a share of
Common Stock on the date of exercise over the Option Price, by (ii)&nbsp;the number
of shares of Common Stock with respect to which the SAR is exercised. At the
discretion of the Administrator, the payment upon SAR exercise may be in cash,
in shares of Common Stock of equivalent value, or in some combination thereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 Nontransferability. Except as provided in Section&nbsp;7.1 above, no SAR
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, and also except as provided for in Section&nbsp;7.1 above, all SARs shall
be exercisable, during the Participant&#146;s lifetime, only by such Participant.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 8<BR>
RESTRICTED STOCK</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Administrator shall determine the eligible persons to whom, and the time or
times at which, grants of Restricted Stock will be made, the number of shares to be awarded, the price (if any) to be paid</FONT>

<P align="center"><FONT size="2">7</FONT>
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<P align="left"><FONT size="2">by the
Participant, the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. The Administrator may condition the
grant of Restricted Stock upon the achievement of specific business objectives,
measurements of individual, business unit, Company or Subsidiary performances,
or such other factors as the Administrator may determine. The provisions of
Restricted Stock awards need not be the same with respect to each Participant,
and such Awards to individual Participants need not be the same in subsequent
years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Awards and Certificates. A Participant selected to receive a
Restricted Stock Award shall not have any rights with respect to such Award,
unless and until such Participant has executed an Award Agreement evidencing
the Award and has delivered a fully executed copy thereof to the Company, and
has otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(a) Acceptance. Awards of Restricted Stock must be accepted within
a period of thirty (30)&nbsp;days (or such shorter period as the Administrator
may specify at grant) after the Award Date, by executing an Award
Agreement and by paying whatever price (if any) the Administrator has
designated for such shares of Restricted Stock.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(b) Legend. Each Participant receiving a Restricted Stock Award
shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
</FONT>
<P align="left"><FONT size="2">&#147;The transferability of this certificate and the
shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the
Applied Films Corporation Long-Term Incentive Plan and
related Award Agreement entered into between the
registered owner and the Company, dated
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Copies of such Plan and Agreement are on file in
the offices of the Company, 9586 I-25 Frontage Road,
Suite&nbsp;200, Longmont, Colorado 80504.&#148;
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(c) Custody. The Administrator may require that the stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have
delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(a) Restriction Period. Subject to the provisions of this Plan and
the Award Agreement, during a period set by the Administrator commencing
with the Award Date (the &#147;Restriction Period&#148;), the Participant shall not
be permitted to sell, transfer, pledge, or assign shares of Restricted
Stock awarded under this Plan. Subject to these limits, the
Administrator, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or
such other factors or criteria as the Administrator may determine.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(b) Rights as Shareholder. Except as provided in this subsection
(b)&nbsp;and subsection (a)&nbsp;above, the Participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a holder of shares
of Common Stock of the Company including the right to vote and to receive
any dividends. The Administrator, in its sole discretion, as determined
at the time of Award, may permit or require the payment of dividends to
be deferred. If any dividends or other distributions are paid in shares
of Common Stock, such shares shall be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Stock with
respect to which they were paid.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(c) Termination of Service. Subject to the applicable provisions of
the Award Agreement and this Article&nbsp;8, upon Termination of Service for
any reason during the Restriction Period, all Restricted Stock</FONT>

<P align="center"><FONT size="2">8</FONT>
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<P align="left" ><FONT size="2">still subject to restriction will vest or be forfeited in accordance
with the terms and conditions established by the Administrator as
specified in the Award Agreement.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(d) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock, the
certificates for such shares shall be delivered to the Participant.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(e) Waiver of Limitation. In the event of the Participant&#146;s
Retirement, Disability or death, or in cases of special circumstances,
the Administrator may, in its sole discretion, waive in whole or in part
any or all of the limitations imposed hereunder (if any) with respect to
any or all of an Award under this Article&nbsp;8.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 9<BR>
PERFORMANCE SHARES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 Award of Performance Shares. Performance Shares may be awarded either
alone or in addition to other Awards granted under this Plan. The
Administrator shall determine the eligible persons to whom and the time or
times at which Performance Shares shall be awarded, the number of Performance
Shares to be awarded to any person, the duration of the period (the
&#147;Performance Period&#148;) during which, and the conditions under which, receipt of
the Performance Shares will be deferred, and the other terms and conditions of
the Award in addition to those set forth in Section&nbsp;9.2, as specified in the
Award Agreement. The Administrator may condition the grant of Performance
Shares upon the achievement of specific business objectives, measurements of
individual, business unit, Company or Subsidiary performance, or such other
factors or criteria as the Administrator shall determine. The provisions of
the award of Performance Shares need not be the same with respect to each
Participant, and such Awards to individual Participants need not be the same in
subsequent years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 Terms and Conditions. Performance Shares awarded pursuant to this
Article&nbsp;9 shall be subject to the following terms and conditions:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(a) Nontransferability. Subject to the provisions of this Plan and
the related Award Agreement, Performance Shares may not be sold,
assigned, transferred, pledged or otherwise encumbered during the
Performance Period. At the expiration of the Performance Period, share
certificates or cash of an equivalent value (as the Administrator may
determine in its sole discretion) shall be delivered to the Participant,
or his legal representative, in a number equal to the shares covered by
the Award Agreement.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(b) Dividends. Unless otherwise determined by the Administrator at
the time of Award, amounts equal to any cash dividends declared during
the Performance Period with respect to the number of shares of Common
Stock covered by a Performance Share Award will not be paid to the
Participant.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(c) Termination of Employment. Subject to the provisions of the
Award Agreement and this Article&nbsp;9, upon Termination of Service for any
reason during the Performance Period for a given Award, the Performance
Shares in question will vest or be forfeited in accordance with the terms
and conditions established by the Administrator at or after grant.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(d) Accelerated Vesting. Based on service, performance and/or such
other factors or criteria as the Administrator may determine and set
forth in the Award Agreement, the Administrator may, at or after grant,
accelerate the vesting of all or any part of any award of Performance
Shares and/or waive the deferral limitations for all or any part of such
Award.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 10<BR>
OTHER STOCK-BASED AWARDS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 Other Awards. Other Awards of Common Stock and other Awards that are
valued in whole or in part by reference to, or are payable in or otherwise
based on, Common Stock (&#147;Other Stock-Based Awards&#148;), may be granted either
alone or in addition to or in tandem with other Awards under the Plan. Subject
to the provisions of this Plan, the Administrator shall have authority to
determine the persons to whom and the time or times at which such Awards shall be
</FONT>
<P align="center"><FONT size="2">9
</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">made, the number of shares of Common
Stock to be awarded pursuant to such awards, and all other conditions of the
Awards. The Administrator may also provide for the grant of Common Stock under
such Awards upon the completion of a specified performance period. The
provisions of Other Stock-Based Awards need not be the same with respect to
each Participant and such Awards to individual Participants need not be the
same in subsequent years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article&nbsp;10 shall be set forth in an Award Agreement and shall be subject to the
following terms and conditions:
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(a) Nontransferability. Subject to the provisions of this Plan and
the Award Agreement, shares of Common Stock subject to Awards made under
this Article&nbsp;10 may not be sold, assigned, transferred, pledged, or
otherwise encumbered prior to the date on which the shares are issued,
or, if later, the date on which any applicable restriction, performance
or deferral period lapses.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(b) Dividends. Unless otherwise determined by the Administrator at
the time of Award, subject to the provisions of this Plan and the Award
Agreement, the recipient of an Award under this Article&nbsp;10 shall be
entitled to receive, currently or on a deferred stock basis, dividends or
other distributions with respect to the number of shares of Common Stock
covered by the Award.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(c) Vesting. Any Award under this Article&nbsp;10 and any Common Stock
covered by any such Award shall vest or be forfeited to the extent so
provided in the Award Agreement, as determined by the Administrator, in
its sole discretion.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(d) Waiver of Limitation. In the event of the Participant&#146;s
Retirement, Disability or death, or in cases of special circumstances,
the Administrator may, in its sole discretion, waive in whole or in part
any or all of the limitations imposed hereunder (if any) with respect to
any or all of an Award under this Article&nbsp;10.
</FONT>
<P align="left" ><FONT size="2">&nbsp;&nbsp;&nbsp;(e) Price. Common Stock issued or sold under this Article&nbsp;10 may be
issued or sold for no cash consideration or such consideration as the
Administrator shall determine and specify in the Award Agreement.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 11<BR>
TERMINATION OR AMENDMENT OF THE PLAN</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company&#146;s shareholders, no
amendment may be made which would (i)&nbsp;increase the aggregate number of shares
of Common Stock that may be issued under this Plan (except by operation of
Article&nbsp;4 or of Section&nbsp;13.1 of the Plan); (ii)&nbsp;decrease the option price of
any Option to less than 100% of the Fair Market Value on the date of grant for
an Option; or (iii)&nbsp;extend the maximum option period under Section&nbsp;6.4(b) of
the Plan. The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section&nbsp;13.2 of the
Plan, no such amendment or other action by the Administrator shall impair the
rights of any Participant without the Participant&#146;s consent. Awards may not be
granted under the Plan after the Termination Date, but Awards granted prior to
such date shall remain in effect or become exercisable pursuant to their
respective terms and the terms of this Plan.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 12<BR>
UNFUNDED PLAN</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Plan is intended to constitute an &#147;unfunded&#148; plan for incentive and
deferred compensation. With respect to any payment not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
</FONT>
<P align="center"><FONT size="2">10
</FONT>
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<P align="center"><FONT size="2"><B>ARTICLE 13<BR>
ADJUSTMENT PROVISIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 Antidilution. Subject to the provisions of this Article&nbsp;13, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalizations, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or
other securities, an appropriate and proportionate adjustment may be made in
(i)&nbsp;the maximum number and kind of shares provided in Article&nbsp;4 of the Plan,
(ii)&nbsp;the number and kind of shares or other securities subject to the then
outstanding Awards, and (iii)&nbsp;the price for each share or other unit of any
other securities subject to the then outstanding Awards.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 Change in Control. In the event of a merger or consolidation of the
Company with or into another corporation or any other entity or the exchange of
substantially all of the outstanding stock of the Company for shares of another
entity in which, after either transaction, the prior shareholders of the
Company own less than 50% of the voting shares of the continuing or surviving
entity, or in the event of the sale of all or substantially all of the assets
of the Company, (either event, a &#147;Change of Control&#148;), then each outstanding
Award shall be assumed or an equivalent option or award substituted by the
successor corporation or a parent or subsidiary of the successor corporation,
with appropriate adjustments as to the number and kind of shares and prices. In
the event that the Administrator determines that the successor corporation or a
parent or a subsidiary of the successor corporation has refused to assume or
substitute an equivalent option or award for each outstanding Award, then all
Awards then outstanding under the Plan will be fully vested and exercisable and
all restrictions will immediately cease. If an Award becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Change of
Control, the Administrator shall notify all Participants that all outstanding
Options shall be fully exercisable for a period of fifteen (15)&nbsp;days from the
date of such notice and that any Options that are not exercised within such
period shall terminate upon the expiration of such period.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.3 Adjustments by Administrator. Any adjustments pursuant to this
Article&nbsp;13 will be made by the Administrator, whose determination as to what
adjustments will be made and the extent thereof will be final, binding, and
conclusive. No fractional interest will be issued under the Plan on account of
any such adjustments. Only cash payments will be made in lieu of fractional
shares.
</FONT>
<P align="center"><FONT size="2"><B>ARTICLE 14<BR>
GENERAL PROVISIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1 Legend. The Administrator may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations and other
requirements of the SEC, any stock exchange upon which the Common Stock is then
listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Administrator may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.2 No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other employee, director or consultant
any right with respect to continuance of employment, or any arrangement for
services with the Company or any Subsidiary, nor shall there be a limitation in
any way on the right of the Company or any Subsidiary by which an employee is
employed to terminate his or her employment or for any director or consultant to terminate his or
her relationship with the Company or its subsidiary at any time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.3 Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be
</FONT>
<P align="center"><FONT size="2">11
</FONT>
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<P align="left"><FONT size="2">withheld. Unless otherwise prohibited by the
Administrator, each Participant may satisfy any such withholding tax obligation
by any of the following means or by a combination of such means: (a)&nbsp;tendering
a cash payment; (b)&nbsp;authorizing the Company to withhold from the shares
otherwise issuable to the Participant a number of shares having a Fair Market
Value as of the &#147;Tax Date,&#148; less than or equal to the amount of the withholding
tax obligation; or (c)&nbsp;delivering to the Company unencumbered shares owned by
the Participant having a Fair Market Value, as of the Tax Date, less than or
equal to the amount of the withholding tax obligation. The &#147;Tax Date&#148; shall be
the date that the amount of tax to be withheld is determined.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.4 No Assignment of Benefits. No Award or other benefit payable under
this Plan shall, except as otherwise specifically provided by law, be subject
in any manner to anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge. Any attempt to anticipate,
alienate, attach, sell, transfer, assign, pledge, encumber or charge, any such
benefits shall be void, and any such benefit shall not in any manner be subject
to the debts, contracts, liabilities, engagements or torts of any person who
shall be entitled to such benefit, nor shall such benefit be subject to
attachment or legal process for or against such person.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed, construed and enforced in accordance with the laws and in
the courts of the state of Colorado.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.6 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.8 Non-U.S. Awards. The Administrator may grant Awards to Participants
who are subject to the laws of nations other than the United States, which
Awards may have terms and conditions that differ from the terms provided
elsewhere in this plan for the purpose of complying with the laws or practices
of nations other than the United States.
</FONT>
<P align="center"><FONT size="2">12
</FONT>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 4.4 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>APPLIED FILMS
CORPORATION <BR>NON-EMPLOYEE, NON-DIRECTOR
OFFICER &amp; CONSULTANT  <BR>NON-QUALIFIED STOCK
OPTION PLAN</U> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Name and Purpose</U>. This plan shall be called the Applied Films Corporation
          Non-employee, Non-director Officer &amp; Consultant Stock Option Plan (the
          &#147;Plan&#148;). The Plan is intended to encourage stock ownership by
          non-employee, non-director officers and consultants (&#147;Consultants&#148;) of
          Applied Films Corporation (the &#147;Company&#148;), to provide such Consultants
          with an additional incentive to better service the Company effectively, to
          contribute to its success, and to provide a form of compensation which shall
          attract and retain highly qualified individuals as Consultants to the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Effective Date and Term of the Plan</U>. The Plan shall become effective upon
          its approval by the Board of Directors of the Company (the &#147;Effective
          Date&#148;). Options may not be granted under the Plan after the tenth (10th)
          anniversary of the Effective Date (the &#147;Term&#148;); provided, however,
          that all options outstanding as of that date shall remain or become exercisable
          pursuant to their terms and the terms of the Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Administration</U>. The Plan shall be administered by the Compensation
          Committee of the Company&#146;s Board of Directors (the &#147;Committee&#148;)
          consisting of not less than three (3) directors who shall be appointed from time
          to time by the Board. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee may, from time to time, establish such regulations, provisions and procedures,
within the terms of the Plan, as in the opinion of its members may be advisable in the
administration of the Plan. The Committee shall keep minutes of its meetings. A majority
of the Committee shall constitute a quorum, and the acts of a majority of a quorum at any
meeting, or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
interpretation and construction by the Committee of any provisions of the Plan or of any
option granted pursuant to the Plan shall be final and binding upon the Company, the Board
of Directors of the Company and any optionee. No member of the Board of Directors of the
Company or the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted pursuant thereto. </FONT></P>

<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>  1</FONT></P>

<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Participation</U>. Subject to the limitations contained in this Section 4,
          those Consultants to the Company, who are neither contractual nor common law
          employees or directors of the Company or any of its subsidiaries, whom the
          Committee shall select from time to time, shall be granted options to purchase
          shares of the Company&#146;s common stock in accordance with the provisions of
          Section 6 of the Plan and consistent with the terms and conditions of the Plan.
          In making such selections, the Committee shall consider the nature of the
          services rendered by the respective Consultant, the Consultant&#146;s present
          and prospective potential contributions for the Company&#146;s success and such
          other factors as the Committee, in its discretion, shall deem relevant. An
          optionee may hold more than one option, but only on the terms and subject to the
          restrictions hereafter set forth. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Stock Available for Options</U>. Subject to the adjustments as provided in
          Subsection&nbsp;6(h), the aggregate number of shares reserved for purposes of
          the Plan shall be twenty-four thousand (24,000) authorized and unissued shares
          or issued shares reacquired by the Company (the &#147;Shares&#148;).
          Determinations as to the number of Shares that remain available for issuance
          under the Plan shall be made in accordance with such rules and procedures as the
          Committee shall determine from time to time. If any outstanding option under the
          Plan expires or is terminated for any reason before the end of the Term of the
          Plan, the shares allocable to the unexercised portion of such option shall
          become available for the grant of other options under the Plan. No shares
          delivered to the Company in full or partial payment upon exercise of an option
          pursuant to Subsection 6(d) or in full or partial payment of any withholding tax
          liability permitted under Section 9 shall become available for the grant of
          other options under the Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Terms and Conditions of Option Agreement</U>. Options granted under this Plan
          shall be evidenced by agreements in such form as the Committee shall from time
          to time approve, which agreements shall comply with and be subject to the
          following conditions: </FONT></P>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Optionee&#146;s Agreement</U>. Each optionee shall agree to continue to serve
               as a Consultant to the Company for at least twelve (12) months from the date of
               the grant of the option. Such agreement shall not impose upon the Company, its
               Board of Directors, or its shareholders any obligation to retain the optionee as
               a Consultant for any period. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Number of Shares and Term of Options</U>. Each option shall state the number
               of shares of the Common Stock of the Company to which it pertains. The term of
               each option shall be for a period of not greater than ten (10) years from the
               date of grant of the option. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> 2 </FONT></P>
<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Option Price</U>. The exercise price of each option shall be equal to one
               hundred percent (100%) of the Fair Market Value of the shares of Common Stock on
               the date of the grant of the option. If the shares are traded in the
               over-the-counter market, the Fair Market Value per share shall be the closing
               price on the national market list as quoted in the National Association of
               Securities Dealers Automated Quotation System (&#147;NASDAQ&#148;) on the day
               the option is granted or if no sale of shares is reflected in NASDAQ on that
               day, on the next preceding day on which there was a sale of shares reflected in
               NASDAQ. If the shares are not traded in the over-the-counter market but are
               listed upon an established stock exchange or exchanges, such Fair Market Value
               shall be deemed to be the closing price of the shares on such stock exchange or
               exchanges on the day the option is granted or if no sale of the shares shall
               have been made on any stock exchange on that day, on the next preceding day on
               which there was a sale of the shares. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Medium of Payment</U>. The option price shall be payable to the Company
               either (i) in United States dollars in cash or by check, bank draft, or money
               order payable to the order of the Company, (ii) through the delivery of shares
               of the Company&#146;s Common Stock with a Fair Market Value on the date of the
               exercise equal to the option price, provided such shares are utilized as payment
               to acquire at least one hundred (100) shares of Common Stock, or (iii) by a
               combination of (i) and (ii) above. Fair Market Value shall be determined in the
               manner specified in Subsection 6(c) except as to the date of determination. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Exercise of Options</U>. Except as provided in Subsection 6(h) no option
               shall be exercisable, either in whole or in part, prior to the first
               (1<SUP>st</SUP>) anniversary of the date of grant of the option. Subject to the
               foregoing, the Committee shall have the authority to determine, at the time of
               the grant of each Option, the times at which an Option may be exercised and any
               conditions precedent to the exercise of an Option. An option shall be
               exercisable upon written notice to the Chief Financial Officer of the Company,
               as to any or all shares covered by the option, until its termination or
               expiration in accordance with its terms or the provisions of the Plan.
               Notwithstanding the foregoing, an option shall not at any time be exercisable
               with respect to less than one hundred (100) shares unless the remaining shares
               covered by an option are less than one hundred (100) shares. The purchase price
               of the shares purchased pursuant to an option shall be paid in full upon
               delivery to the optionee of certificates for such shares. Exercise by an
               optionee&#146;s heir or personal representative shall be accompanied by evidence
               of his or her authority to act, in a form reasonably satisfactory to the
               Company. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>
<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> 3 </FONT></P>
<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>
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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Options not Transferable</U>. Options may not be sold, pledged, assigned, or
               transferred in any manner otherwise than by will or the laws of descent or
               distribution to the extent provided in Subsection 6(g). During the lifetime of
               an optionee, the options shall be exercisable only by the optionee. Following
               the death of an optionee, the options shall be exercisable only to the extent
               provided in Subsection 6(g). </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Termination of Service as Consultant</U>. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Level 2" FSL="Default" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=6%></TD>
               <TD WIDTH=94%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Termination of Service for any Reason Other than Death</U>. In the event an
               optionee shall cease to serve the Company as a Consultant for any reason other
               than such optionee&#146;s death, each option held by such optionee shall remain
               exercisable, subject to prior expiration according to its terms and other
               limitations imposed by the Plan, for a period of one (1) year following the
               optionee&#146;s cessation of service as a Consultant of the Company. If the
               optionee dies after such cessation of service, the optionee&#146;s options shall
               be exercisable in accordance with Subsection&nbsp;6(g)(ii) hereof. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=6%></TD>
               <TD WIDTH=94%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Termination of Service for Death</U>. If an optionee ceases to be a
               Consultant by reason of death, each option held by such optionee shall, to the
               extent rights to purchase shares under the option have been accrued at the time
               of death and shall not have been fully exercised, be exercisable, in whole or in
               part, by the personal representative of the optionee&#146;s estate or by any
               person or persons who have acquired the option directly from the optionee by
               bequest or inheritance during the shorter of the following periods: (i) the term
               of the option, or (ii) a period of one (1) year from the death of such optionee.
               If an optionee dies during the extended exercise period following cessation of
               service specified in Subsection 6(g)(i) above, such option may be exercised any
               time within the longer of such extended period or one (1) year after death,
               subject to the prior expiration of the term of the option. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Adjustment in Shares Covered by Option</U>. The number of shares covered by
               each outstanding option, and the purchase price per share thereof, shall be
               proportionately adjusted for any increase or decrease in the number of issued
               and outstanding shares resulting from a split in or combination of shares or the
               payment of a stock dividend on the shares or any other increase or decrease in
               the number of such shares effected without receipt of consideration by the
               Company. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>
<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> 4 </FONT></P>

<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company shall be the surviving corporation in any merger or consolidation or if the
Company is merged into a wholly owned subsidiary solely for purposes of changing the
Company&#146;s state of incorporation, each outstanding option shall pertain to and apply
to the securities to which a holder of the number of shares subject to the option would
have been entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, except as above
provided, shall cause each outstanding option to terminate, provided, that each optionee
shall, in that event, have the right immediately prior to such dissolution or liquidation,
or merger or consolidation in which the Company is not the surviving corporation, to
exercise his or her option in whole or in part. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of a change in the shares as presently constituted, which is limited to a change
of all of its authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any such change shall
be deemed to be the shares within the meaning of the Plan. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the extent that the foregoing adjustments relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose determination in that respect shall
be final, binding and conclusive. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an option. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as hereinbefore expressly provided in this Subsection 6(h), the optionee shall have no
rights by reason of any split or combination of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, merger, or consolidation
or spinoff of assets or stock of another corporation, and any issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of stock subject to the option. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
grant of an option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure, or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets. </FONT>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> 5 </FONT></P>
<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>
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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Rights of a Shareholder</U>. An optionee shall have no rights as a
               shareholder with respect to any shares covered by his or her option until the
               date on which the optionee becomes the holder of record of such shares. No
               adjustment shall be made for dividends, distributions, or other rights for which
               the record date is prior to the date on which he or she shall have become the
               holder of record thereof, except as provided in Subsection 6(h). </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Postponement of Delivery of Shares and Representations</U>. The Company, in
               its discretion, may postpone the issuance and/or delivery of shares upon any
               exercise of an option until completion of the registration or other
               qualification of such shares under any state and/or federal law, rule or
               regulation as the Company may consider appropriate, and may require any person
               exercising an option to make such representations, including a representation
               that it is the optionee&#146;s intention to acquire shares for investment and
               not with a view to distribution thereof, and furnish such information as it may
               consider appropriate in connection with the issuance or delivery of the shares
               in compliance with applicable laws, rules, and regulations. In such event no
               shares shall be issued to such holder unless and until the Company is satisfied
               with the accuracy of any such representations. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               <U>Other Provisions</U>. The option agreements authorized under the Plan shall
               contain such other provisions, including, without limitation, restrictions upon
               the exercise of the option, as the Committee shall deem advisable. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Adjustments in Shares Available for Options</U>. The adjustments in number
          and kind of shares and the substitution of shares, affecting outstanding options
          in accordance with Subsection&nbsp;6(h) hereof, shall also apply to the number
          and kind of shares reserved for issuance pursuant to the Plan, but not yet
          covered by options. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Amendment of the Plan</U>. The Committee, insofar as permitted by law, shall
          have the right from time to time, with respect to any shares at the time not
          subject to options, to suspend or discontinue the Plan or revise or amend it in
          any respect whatsoever, and except that, without approval of the Board of
          Directors of the Company, no such revision or amendment shall: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          increase the maximum number of shares which may be subject to the Plan; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          materially increase the benefits accruing to option holders under the Plan; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          decrease the exercise price of options granted under the Plan; </FONT></P>

<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>  6</FONT></P>
<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          remove the administration of the Plan from the Committee; or </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          permit the granting of options under the Plan after the Term of the Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Withholding of Taxes</U>. The Company shall have the right to deduct from any
          payment to be made pursuant to this Plan, or to otherwise require, prior to the
          issuance or delivery of any shares of Common Stock, payment by the optionee of
          any federal, state, or local taxes required by law to be withheld, if any.
          Unless otherwise prohibited by the Committee, an optionee may satisfy any such
          withholding tax obligation by any of the following means or by a combination of
          such means: </FONT></P>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               tendering a cash payment; </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               authorizing the Company to withhold from the shares otherwise issuable to the
               optionee a number of shares having a Fair Market Value as of the &#147;Tax
               Date,&#148; less than or equal to the amount of withholding tax obligation; or </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
               <TR VALIGN=TOP>
               <TD ALIGN=RIGHT WIDTH=3%></TD>
               <TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
               delivering to the Company unencumbered shares owned by the optionee having a
               Fair Market Value, as of the Tax Date, less than or equal to the amount of the
               withholding tax obligation. </FONT></P></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The &#147;Tax Date&#148; shall be the
date that the amount of tax to be withheld is determined. Fair Market Value shall be
determined in the manner specified in Subsection 6(c), except as to the date of
determination. An optionee&#146;s election to pay the withholding tax obligation by either
of (b) or (c) above shall be irrevocable, may be disapproved by the Committee, and must be
made either six months prior to the Tax Date or during the period beginning on the third
business day following the date of release of the Company&#146;s quarterly or annual
summary statement of sales and earnings and ending on the twelfth business day following
such date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Right of Board of Directors to Terminate Consultant&#146;s Service</U>.
          Nothing in this Plan or in the grant of any option hereunder shall in any way
          limit or effect the right of the Board of Directors of the Company to terminate
          a Consultant&#146;s service as a Consultant, pursuant to law, the Articles of
          Incorporation, or Bylaws of the Company. </FONT></P>
<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> 7 </FONT></P>
<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Application of Funds</U>. The proceeds received by the Company from the sale
          of stock pursuant to options shall be used for general corporate purposes. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>No Obligation to Exercise Option</U>. The granting of an option shall impose
          no obligation upon the optionee to exercise such option. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent"  -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Construction</U>. This Plan shall be construed under the laws of the State of
          Colorado, United States of America. </FONT></P>



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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>APPROVED:<BR>
<BR><BR>
<BR>/s/ Thomas T. Edman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Thomas T. Edman, President and Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Head Center Underline" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>CERTIFICATION</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Plan was duly adopted by the Board of Directors of the Company the 24th day of October,
2001. </FONT></P>





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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>
<BR>/s/ Lawrence D. Firestone<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Lawrence D. Firestone, Secretary and Chief Financial Officer</FONT></TD>
</TR>
</TABLE>
<BR><BR>
<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 5.1 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>April 23, 2004 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Applied Films Corporation<BR>9586
 I-25 Frontage Road, Suite 200<BR>Longmont, Colorado 80504 </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Re:</B>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Registration
Statement on Form S-8 Relating to the Applied Films CorporationLong-Term Incentive Plan
and the Applied Films Corporation Non-Employee,Non-Director Officer &amp;Consultant
Non-Qualified Stock Option Plan (the &#147;Plans&#148;)</B> </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gentlemen: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
respect to the Registration Statement on Form S-8 (the &#147;Registration Statement&#148;)
filed by Applied Films Corporation, a Colorado corporation (the &#147;Company&#148;) with
the Securities and Exchange Commission, for the purpose of registering under the
Securities Act of 1933, as amended, 1,224,000 shares of the Company&#146;s common stock,
no par value, for issuance pursuant to the Plans, we have examined such documents and
questions of law we consider necessary or appropriate for the purpose of giving this
opinion. On the basis of such evaluation, we advise you that in our opinion the 1,224,000
shares covered by the Registration Statement, including shares issued upon the exercise of
options, at the prices described in the Registration Statement, and upon delivery of such
shares and payment therefor in accordance with the terms stated in the Plans and the
Registration Statement, will be duly and legally authorized, issued and outstanding, and
will be fully paid and nonassessable. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as amended, or
under the rules and regulations of the Securities and Exchange Commission relating
thereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sincerely, </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VARNUM, RIDDERING,
SCHMIDT &amp; HOWLETT LLP </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ VARNUM, RIDDERING,
SCHMIDT &amp; HOWLETT LLP </FONT></P>


<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  </FONT></P>

<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 23.1 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF INDEPENDENT
AUDITORS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush"  -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the incorporation by
reference in the Registration Statement (Form S-8) pertaining to the Applied Films
Corporation Long-Term Incentive Plan and the Applied Films Corporation Non-Employee,
Non-Director Officer &amp; Consultant Non-Qualified Stock Option Plan, of our report dated
July 24, 2003, with respect to the consolidated financial statements and schedule of
Applied Films Corporation and subsidiaries included in its Annual Report (Form 10-K) for
the year ended June 28, 2003, filed with the Securities and Exchange Commission. </FONT></P>

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<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=45% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=45% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Ernst &amp; Young LLP</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>




<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Denver, Colorado<BR>April 22,
2004 </FONT></P>


<BR>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  </FONT></P>

<BR>
<HR SIZE=2 NOSHADE>
<p Style='page-break-before:always'>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 23.2 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF INDEPENDENT
AUDITORS </FONT></H1>

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<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD VALIGN=TOP WIDTH=46% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PRICEWATERHOUSECOOPERS</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=46% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PricewaterhouseCoopers<BR>
Zhong Tian CPA Co., Ltd.<BR>
12th Floor, Shui On Plaza <BR>333 Huai Hai Zhong Lu<BR> Shanghai 200021 <BR>People&#146;s Republic of China<BR>
Telephone +86 (21) 6386-3388<BR> Facsimile +86 (21) 6386-3300
</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>





<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23 April 2004 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF INDEPENDENT
ACCOUNTANTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To: Applied Films
Corporation </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of Applied Films
Corporation of our report dated 21 February 2003 relating to the financial statements of
Suzhou NSG AFC Thin Films Electronics Co., Ltd. as of 31 December 2002 and 2001 and for
the three years ended 31 December 2002, which appears in the Annual Report on Form 10-K/A
filed 30 June 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ PricewaterhouseCoopers Zhong Tian
CPAs Co., Ltd. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PricewaterhouseCoopers
Zhong Tian CPA Co., Ltd. </FONT></P>
</BODY>
</HTML>
[{"type": "S-8", "sequence": "1", "filename": "applieds8_042304.htm", "secsgml_size_bytes": 166998}]
{"company-data": {"conformed-name": "APPLIED FILMS CORP", "cik": "0001040660", "assigned-sic": "3674", "irs-number": "841311581", "state-of-incorporation": "CO", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-114809", "film-number": "04752025"}, "business-address": {"street1": "9586 I-25 FRONTAGE ROAD", "city": "LONGMONT", "state": "CO", "zip": "80504", "phone": "303-774-3200"}, "mail-address": {"street1": "9586 I-25 FRONTAGE ROAD", "city": "LONGMONT", "state": "CO", "zip": "80504"}}
As filed with the Securities and
Exchange Commission on April 23, 2004 — Registration No. 333-
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF
1933
APPLIED FILMS
CORPORATION
(Exact name of
registrant as specified in its charter)
Colorado
84-1311581
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
9586 I-25 Frontage Road, Suite 200, Longmont, Colorado 80504
(Address of Principal Executive Offices) (Zip Code)
Applied Films Corporation Long-Term Incentive Plan
and the
Applied Films Corporation Non-Employee, Non-Director Officer & Consultant
Non-Qualified Stock Option Plan
(Full Title of the Plan)
Lawrence D. Firestone, 9586 I-25 Frontage Road, Suite 200, Longmont, Colorado 80504, (303) 774-3246
(Name, address, and telephone number of agent for service)
Copies of Communications to:
Harvey Koning
Varnum, Riddering, Schmidt & Howlett LLP
333 Bridge Street, N.W.,
P.O. Box 352
Grand Rapids, Michigan
49501-0352
(616) 336-6000
CALCULATION OF
REGISTRATION FEE
Title of Securities
Being Registered
Amount Being
Registered
Proposed
Maximum
Offering Price
Per Share(2)
Proposed
Maximum
Aggregate
Offering Price(2)
Amount of
Registration
Fee
Common Stock
1,224,000 shares(1)
$
27.52
$
33,684,480
$
4,267.82
(1)
Represents 1,200,000 shares of Common Stock authorized for issuance under the
          Applied Films Corporation Long-Term Incentive Plan and 24,000 shares of Common
          Stock authorized for issuance under the Applied Films Corporation Non-Employee,
          Non-Director Officer & Consultant Non-Qualified Stock Option Plan dated
          October 24, 2000, as incorporated by reference to Exhibit 10.3 of
          Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
          December 29, 2001. This Registration Statement also covers such indeterminable
          additional number of shares as may be issuable under the Applied Films Long-Term
          Incentive Plan and the Applied Films Corporation Non-Employee, Non-Director
          Officer & Consultant Non-Qualified Stock Option Plan by reason of
          adjustments to the number of shares covered thereby as described in their
          respective Prospectuses.
(2)
For the purpose of computing the registration fee only, the price shown is based
          upon the price of $27.52 per share, the average of the high and low sales prices
          for the Common Stock of Applied Films Corporation in the NASDAQ National Market
          System on April 22, 2004, in accordance with Rule 457(h).
Pursuant to Rule 416(a) of the
General Rules and Regulations under the Securities Act of 1933, this Registration
Statement shall cover such additional securities as may be offered or issued to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
2
PART I
INFORMATION REQUIRED
IN THE SECTION 10(a) PROSPECTUS
Information required by Part I to be
contained in the Section 10(a) Prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933 and the Note to Part I of Form
S-8.
PART II
INFORMATION REQUIRED
IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents
by Reference
The Corporation hereby incorporates
by reference in this Registration Statement the following documents filed by the
Corporation with the Securities and Exchange Commission:
(a)
The Corporation's latest Annual Report on Form 10-K filed pursuant to
          Section 13(a) of the Securities Exchange Act of 1934;
(b)
All other reports or documents filed by the Corporation pursuant to Section
          13(a) or 15(d) of the Securities Exchange Act of 1934, since the end of the
          fiscal year covered by the Annual Report on Form 10-K referenced to in (a)
          above; and
(c)
The description of the Corporation's Common Stock is contained in the
          Corporation's Registration Statement filed pursuant to Section 12 of the
          Exchange Act and is incorporated in this Registration Statement by reference,
          including any subsequent amendments or reports filed for the purpose of updating
          such description.
All other documents subsequently
filed by the Corporation pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be part of
this Registration Statement from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference in this
Registration Statement shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained in this Registration
Statement or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference in this Registration Statement modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as
modified or superseded, to constitute a part of this Registration Statement.
Item 4. Description of
Securities
The class of securities to be offered
is registered under Section 12 of the Exchange Act.
Item 5. Interests of
Named Experts and Counsel
Not applicable.
3
Item 6. Indemnification
of Directors and Officers
Sections 7-109-102 through
7-109-110 of the Colorado Business Corporation Act (the "Act") grant the
Corporation broad powers to indemnify any person in connection with legal proceedings
brought against him by reason of his present or past status as an officer or director of
the Corporation, provided with respect to conduct in an official capacity with the
Corporation, the person acted in good faith and in a manner he reasonably believed to be
in the best interests of the Corporation, with respect to all other conduct, the person
believed the conduct to be at least not opposed to the best interests of the Corporation,
and with respect to any criminal action or proceeding, the person had no reasonable cause
to believe his conduct was unlawful. Indemnification is limited to reasonable expenses
incurred in connection with the proceeding. No indemnification may be made (i) in
connection with a proceeding by or in the right of the Corporation in which the person was
adjudged liable to the Corporation; or (ii) in connection with any other proceedings
charging that the person derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the person was judged liable on the
basis that he derived an improper personal benefit, unless and only to the extent the
court in which such action was brought or another court of competent jurisdiction
determines upon application that, despite such adjudication, but in view of all relevant
circumstances, the person is fairly and reasonably entitled to indemnity for reasonable
expenses as the court deems proper. In addition, to the extent that any such person is
successful in the defense of any such legal proceeding, the Corporation is required by the
Act to indemnify him against reasonable expenses.
The Corporation's Amended and
Restated Articles of Incorporation contain provisions that permit the Corporation to
indemnify its officers and directors to the fullest extent permitted by the Colorado
Business Corporation Act. The Corporation has indemnification agreements with each of its
directors and certain of its officers providing for similar indemnification. In addition
to the available indemnification, the Corporation's Amended and Restated Articles of
Incorporation limits the personal liability of the members of its Board of Directors,
subject to certain exceptions, for monetary damages with respect to claims by the
Corporation or its stockholders.
The Corporation's Amended and
Restated Bylaws provide that the Corporation may purchase and maintain insurance on behalf
of its directors, officers, employees, fiduciaries and agents against liability asserted
against or incurred by such persons in any such capacity.
Item 7. Exemption from
Registration Claimed
Not applicable.
Item 8. Exhibits
Reference is made to the Exhibit
Index which appears on Page 7.
Item 9. Undertakings
(a)    
          The undersigned registrant hereby undertakes:
(1)       
          To file, during any period in which offers or sales are being made, a
          post-effective amendment to this Registration Statement:
(i)       
               To include any prospectus required by Section 10(a)(3) of the Securities Act of
               1933;
(ii)       
               To reflect in the prospectus any facts or events arising after the effective
               date of the Registration Statement (or the most recent post-effective amendment
               thereof) which, individually or in the aggregate, represents a fundamental
               change in the information set forth in the Registration Statement; and
(iii)       
               To include any material information with respect to the plan of distribution not
               previously disclosed in the Registration Statement or any material change to
               such information in the Registration Statement;
4
provided, however
, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if information required to be included in
a post-effective amendment by those paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2)       
          That, for the purpose of determining any liability under the Securities Act of
          1933, each such post-effective amendment shall be deemed to be a new
          registration statement relating to the securities offered therein, and the
          offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
(3)       
          To remove from registration by means of a post-effective amendment any of the
          securities being registered which remain unsold at the termination of the
          offering.
(b)    
          The undersigned registrant hereby undertakes that, for purposes of determining
          any liability under the Securities Act of 1933, each filing of the
          registrant's annual report pursuant to Section 13(a) or Section 15(d) of
          the Securities Exchange Act of 1934 (and, where applicable, each filing of an
          employee benefit plan's annual report pursuant to Section 15(d) of the
          Securities Exchange Act of 1934) that is incorporated by reference in the
          Registration Statement shall be deemed to be a new registration statement
          relating to the securities offered therein, and the offering of such securities
          at that time shall be deemed to be the initial
bona fide
offering
          thereof.
(c)    
          Insofar as indemnification for liabilities arising under the Securities Act of
          1933 may be permitted to directors, officers, and controlling persons of the
          registrant pursuant to the foregoing provisions, or otherwise, the registrant
          has been advised that in the opinion of the Securities and Exchange Commission
          such indemnification is against public policy as expressed in the Act and is,
          therefore, unenforceable. In the event that a claim for indemnification against
          such liabilities (other than the payment by the registrant of expenses incurred
          or paid by a director, officer or controlling person of the registrant in the
          successful defense of any action, suit or proceeding) is asserted by such
          director, officer or controlling person in connection with the securities being
          registered, the registrant will, unless in the opinion of its counsel the matter
          has been settled by controlling precedent, submit to a court of appropriate
          jurisdiction the question whether such indemnification by it is against public
          policy as expressed in the Act and will be governed by the final adjudication of
          such issue.
5
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing on Form S-8
and has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Longmont, State of Colorado, on the
23rd day of April, 2004.
APPLIED FILMS CORPORATION
(Registrant)
By: /s/ Thomas T. Edman
——————————————
Thomas T. Edman, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS,
that each person whose signature appears below constitutes
and appoints Thomas T. Edman and Lawrence D. Firestone, and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement and to
file the same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing required and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been
signed below on April 23, 2004, by the following persons in the capacities indicated.
Signatures
Title
/s/ Thomas T. Edman
Thomas T. Edman
Director, President, and Chief Executive Officer (principal executive officer)
/s/ Lawrence D. Firestone
Lawrence D. Firestone
Chief Financial Officer, Treasurer, Senior Vice President and Secretary (principal fianancial and accounting officer)
/s/ Richard P. Beck
Richard P. Beck
Director, Chairman of the Board of Directors
/s/ Allen Alley
Allen Alley
Director
/s/ John S. Chapin
John S. Chapin
Director
/s/ Vincent Sollitto
Vincent Sollitto
Director
6
EXHIBIT INDEX
The
following exhibits are filed as a part of the Registration Statement:
Exhibit Number
Description of Document
4.1
Amended and Restated Articles of Incorporation of Applied Films Corporation, as amended,
and incorporated by reference to Exhibit 3.1 of Registrant's Current Report on Form
8-K dated January 16, 2001
4.2
Amended and Restated Bylaws of Applied Films Corporation, and incorporated by reference to
Exhibit 3.2 of Registrant's Registration Statement on Form S-1, as amended (Reg. No.
333-35331)
4.3
Applied
Films Corporation Long-Term Incentive Plan dated October 22, 2003
4.4
Applied
Films Corporation Non-Employee, Non-Director Officer & Consultant Non-Qualified Stock
Option Plan
5.1
Opinion
 of  Varnum,  Riddering,  Schmidt &  Howlett  LLP with  respect  to the  legality  of
the          securities being registered
23.1
Consent
of Ernst & Young LLP
23.2
Consent
of PricewaterhouseCoopers Zhong Tian Certified Public Accounts Co., Ltd.
23.3
Consent
of Varnum, Riddering, Schmidt & Howlett LLP (included in opinion filed as Exhibit 5.1)
24.1
Power
of Attorney - included on page 6 hereof
7
EXHIBIT 4.3
APPLIED FILMS CORPORATION
LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1
1.1
Establishment of the Plan
1
1.2
Purpose of the Plan
1
1.3
Term of Plan
1
ARTICLE 2
DEFINITIONS
1
ARTICLE 3
ADMINISTRATION
3
3.1
The Committee
3
3.2
Committee Authority
3
3.3
No Authority to Reprice
4
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
4
ARTICLE 5
ELIGIBILITY
5
ARTICLE 6
STOCK OPTIONS
5
6.1
Options
5
6.2
Grants
5
6.3
Incentive Stock Options
5
6.4
Terms of Options
5
ARTICLE 7
STOCK APPRECIATION RIGHTS
7
7.1
Grant of SARs
7
7.2
Payment of SAR Amount
7
7.3
Nontransferability
7
ARTICLE 8
RESTRICTED STOCK
7
8.1
Awards of Restricted Stock
7
8.2
Awards and Certificates
8
8.3
Restrictions and Conditions
8
ARTICLE 9
PERFORMANCE SHARES
9
9.1
Award of Performance Shares
9
9.2
Terms and Conditions
9
ARTICLE 10
OTHER STOCK-BASED AWARDS
9
10.1
Other Awards
9
10.2
Terms and Conditions
10
ARTICLE 11
TERMINATION OR AMENDMENT OF THE PLAN
10
ARTICLE 12
UNFUNDED PLAN
10
ARTICLE 13
ADJUSTMENT PROVISIONS
11
13.1
Antidilution
11
13.2
Change in Control
11
13.3
Adjustments by Administrator
11
ARTICLE 14
GENERAL PROVISIONS
11
14.1
Legend
11
14.2
No Right to Employment
11
14.3
Withholding of Taxes
11
14.4
No Assignment of Benefits
12
i
14.5
Governing Law
12
14.6
Application of Funds
12
14.7
Rights as a Shareholder
12
14.8
Non-U.S. Awards
12
ii
APPLIED FILMS CORPORATION
LONG-TERM INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 Establishment of the Plan. Applied Films Corporation, a Colorado
corporation (the "Company"), hereby establishes an incentive compensation plan
to be known as the "Applied Films Corporation Long-Term Incentive Plan" (the
"Plan"), as set forth in this document. The Plan permits the granting of stock
options, stock appreciation rights, restricted stock, performance shares, and
other stock-based awards to key employees of the Company and its Subsidiaries,
as well as Directors, Nonemployee Officers and Consultants. Upon approval by
the Board of Directors of the Company, subject to ratification by the
affirmative vote of holders of a majority of shares of the Company's Common
Stock present and entitled to vote at the 2003 Annual Meeting of Shareholders,
the Plan shall be effective as of October 22, 2003 (the "Effective Date").
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's shareholders,
through stock-based compensation, by aligning the personal interests of Plan
Participants with those of its shareholders. The Plan is designed to allow
Plan Participants to participate in the Company's future, as well as to enable
the Company to attract, retain and award such individuals.
1.3 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"),
provided that Awards granted prior to the Termination Date may extend beyond
that date.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth below:
2.1 "Administrator" shall mean the Board or any of the Committees
designated to administer the Plan in accordance with Section 3.1 of the Plan.
2.2 "Award" shall mean any award under this Plan of any Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or Other Stock-Based
Award.
2.3 "Award Agreement" shall mean an agreement evidencing the grant of an
Award under this Plan. Awards under the Plan shall be evidenced by Award
Agreements that set forth the details, conditions and limitations for each
Award, as established by the Administrator and shall be subject to the terms
and conditions of the Plan.
2.4 "Award Date" shall mean the date that an Award is made, as specified in an Award Agreement.
2.5 "Board" shall mean the Board of Directors of the Company.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.7 "Committee" shall mean one of the Committees, as specified in Article
3, appointed by the Board to administer the Plan.
2.8 "Common Stock" shall mean the Common Stock, no par value per share, of
the Company.
2.9 "Consultant" shall mean any person or entity engaged by the Company or
a Subsidiary to render services to the Company or that Subsidiary.
2.10 "Director" shall mean a member of the Board or a member of the Board
of Directors of a Subsidiary.
1
2.11 "Disability" shall mean permanent and total disability as determined
under the rules and guidelines established by the Administrator for purposes of
the Plan.
2.12 "Employee" shall mean any person employed by the Company or a
Subsidiary. Neither service as a Director nor the payment of a Director's fee
by the Company shall be sufficient to constitute employment by the Company.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934.
2.14 "Fair Market Value" shall be the closing sale price of the Company's
Common Stock for such date on the NASDAQ. If no sale of shares of Common Stock
is reflected on NASDAQ on a date, "Fair Market Value" shall be determined
according to the closing sale price on the next preceding day on which there
was a sale of shares of Common Stock reflected on NASDAQ.
2.15 "Immediate Family Member" shall mean the spouse, and/or any child or
grandchild of a Participant.
2.16 "Incentive Stock Option" or "ISO" shall mean an option to purchase
shares of Common Stock granted under Article 6, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.
2.17 "Insider" shall mean an employee who is an officer (as defined in
Rule 16a-1(f) of the Exchange Act) or Director, or holder of more than 10% of
its outstanding shares of the Company's Common Stock.
2.18 "NASDAQ" shall mean the National Association of Security Dealers
Automated Quotation System or any successor then in use.
2.19 "Nonemployee Director" shall mean a person who satisfies (1) the
definition of "Nonemployee Director" within the meaning set forth in Rule
16b-3(b)(3), as promulgated by the SEC under the Exchange Act, or any successor
definition adopted by the SEC, or (2) the definition of "outside director"
within the meaning of Section 162(m) of the Code.
2.20 "Nonemployee Officer" shall mean a person who is not an employee, but
who has been elected as an officer of the Company or of the Board.
2.21 "Nonqualified Stock Option" or "NQSO" shall mean an option to
purchase shares of Common Stock, granted under Article 6, which is not an
Incentive Stock Option.
2.22 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.23 "Option Price" shall mean the price at which a share of Common Stock
may be purchased by a Participant pursuant to an Option, as determined by the
Administrator.
2.24 "Other Stock-Based Award" shall mean an Award under Article 10 of
this Plan that is valued in whole or in part by reference to, or is payable in
or otherwise based on, Common Stock.
2.25 "Participant" shall mean an Employee, a Director, a Consultant, or a
Nonemployee Officer who holds an outstanding Award granted under the Plan.
2.26 "Performance Shares" shall mean an Award granted under Article 9 of
this Plan evidencing the right to receive Common Stock or cash of an equivalent
value at the end of a specified performance period.
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2.27 "Permitted Transferee" means (i) an Immediate Family Member, (ii) a
trust or trusts for the exclusive benefit of the Participant and/or one or more
Immediate Family Members, or (iii) a partnership or limited liability company
whose only partners or members are the Participant and/or one or more Immediate
Family Members.
2.28 "Plan Shares" shall mean the shares of Common Stock which may be
issued under this Plan, which may be either unauthorized and unissued Common
Stock or issued Common Stock reacquired by the Company.
2.29 "Restricted Stock" shall mean an Award granted to a Participant under
Article 8 of this Plan.
2.30 "Retirement" shall mean the termination of a Participant's employment
with the Company or a Subsidiary after the Participant attains the age of 60.
With respect to a Director, Retirement shall mean the termination of a
Director's service as a Director of the Company or a Subsidiary after serving
as a Director of the Company and/or any Subsidiary for a period of at least
five (5) consecutive years prior to the date of termination of such service.
2.31 "SEC" shall mean the Securities and Exchange Commission of the United
States of America.
2.32 "Stock Appreciation Right" or "SAR" shall mean an Award granted to a
Participant under Article 7 of this Plan.
2.33 "Subsidiary" shall mean any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least 50% of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company owns
at least 50% of the combined equity thereof.
2.34 "Termination of Service" shall mean the termination of an Employee's
employment with the Company or a Subsidiary. An Employee employed by a
Subsidiary shall also be deemed to incur a Termination of Service if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become an employee of the Company or another Subsidiary. With
respect to a Participant that is not an Employee, Termination of Service shall
mean the termination of the person's service as a Director, as a Consultant, or
as a Nonemployee Officer.
ARTICLE 3
ADMINISTRATION
3.1 The Administrator. The Plan may be administered by different
Committees with respect to different groups of Plan Participants. To the
extent that the Administrator determines it to be desirable to qualify Awards
granted hereunder as "performance-based compensation" within the meaning of
Section 162(m) of the Code, the Plan shall be administered by a Committee of
two or more Non-Employee Directors. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3. Other than as provided above, the Plan shall be
administered by (a) the Board, or (b) a Committee, which Committee shall be
constituted to satisfy the foregoing conditions.
3.2 Administrator Authority. Subject to the Company's Articles of
Incorporation, Bylaws and the provisions of this Plan, the Administrator shall
have full authority to grant Awards to key Employees, as well as Directors,
Consultants and Nonemployee Officers. Awards may be granted singly, in
combination, or in tandem. The authority of the Administrator shall include the
following:
(a) To select the key Employees, Directors, Nonemployee Officers or
Consultants to whom Awards may be granted under the Plan;
(b) To determine whether and to what extent Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Other
Stock-Based Awards, or any combination thereof are to be granted under
the Plan;
(c) To determine the number of shares of Common Stock to be covered
by each Award;
3
(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction
or limitation, any vesting schedule or acceleration thereof, or any
forfeiture restrictions or waiver thereof, regarding any Award and
the shares of Common Stock relating thereto, based on such factors as the
Administrator shall determine in its sole discretion;
(e) To determine whether, to what extent and under what
circumstances grants of Awards are to operate on a tandem basis and/or in
conjunction with or apart from other cash compensation arrangement made
by the Company and/or a subsidiary other than under the terms of this
Plan;
(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and
(g) To determine to what extent and under what circumstances shares
of Common Stock and other amounts payable with respect to an Award shall
be deferred.
The Administrator shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. A majority of any
Committee or the Board shall constitute a quorum, and the acts of a majority of
a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of any Committee or the Board, shall be the valid acts
of any Committee or the Board. The interpretation and construction by any
Committee or the Board of any provisions of the Plan or any Award granted under
the Plan shall be final and binding upon the Company, the Board and
Participants, including their respective heirs, executors and assigns. No
member of the Board or any Committee shall be liable for any action or
determination made in good faith with respect to the Plan or an Award granted
hereunder.
3.3 No Authority to Reprice. Notwithstanding the authority described in
Section 3.2, without the prior approval of the Company's shareholders, neither
the Committee nor the Board shall have the authority to lower the option
exercise price of previously granted Awards, whether by means of the amendment
of previously granted Awards or the replacement or regrant, through
cancellation, of previously granted Awards.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 13.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan, which may
be either unauthorized and unissued Common Stock or issued Common Stock
reacquired by the Company shall be 1,200,000.
Determinations as to the number of Plan Shares that remain available for
issuance under the Plan shall be made in accordance with such rules and
procedures as the Administrator shall determine from time to time. If an Award
expires unexercised or is forfeited, cancelled, terminated or settled in cash
in lieu of Common Stock, the shares of Common Stock that were theretofore
subject (or potentially subject) to such Award may again be made subject to an
Award Agreement. In addition, shares from the following sources shall be added
to the number of Plan Shares available for issuance under the Plan:
(1) Any shares of the Company's Common Stock surrendered in payment
of the exercise price of Options or to pay the tax withholding
obligations incurred upon the exercise of Options;
(2) Options withheld to pay the exercise price or tax withholding
obligations incurred upon the exercise of Options; and
(3) The number of shares repurchased by the Company in the open
market or otherwise having an aggregate purchase price no greater than
the cash proceeds received by the Company from the sale of shares of the
Company's stock under the Plan.
4
ARTICLE 5
ELIGIBILITY
The persons who shall be eligible to receive Awards under the Plan shall
be selected by the Administrator from time to time. In making such selections,
the Administrator shall consider the nature of the services rendered by such
persons, their present and potential contribution to the Company's success and
the success of the particular Subsidiary of the Company by which they are
employed or to whom they provide services, and such other factors as the
Administrator in its discretion shall deem relevant. Participants may hold
more than one Award, but only on the terms and subject to the restrictions set
forth in the Plan and their respective Award Agreements. No Participant may
receive Awards under the Plan covering more than 25% of Plan Shares.
ARTICLE 6
STOCK OPTIONS
6.1 Options. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either
an Incentive Stock Option (ISO) or a Nonqualified Stock Option (NQSO).
6.2 Grants. The Administrator shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does
not qualify shall constitute a separate Nonqualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company. The aggregate Fair Market Value, determined
on the Award Date of the shares of Common Stock with respect to which one or
more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the
Company) granted on or after January 1, 1987, that are exercisable for the
first time by a Participant during any calendar year shall not exceed the
$100,000 limitation imposed by Section 422(d) of the Code.
6.4 Terms of Options. Options granted under the Plan shall be evidenced
by Award Agreements in such form as the Administrator shall, from time to time
approve, which Agreement shall comply with and be subject to the following
terms and conditions:
(a) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Administrator at
the time of grant but shall be not less than 100% of the Fair Market
Value of the Common Stock at the Award Date. Once granted, the Option
Price may not be modified to provide the Participant with a more
favorable price per share unless such modification is approved by the
shareholders of the Company.
(b) Option Term. The term of each Option shall be fixed by the
Administrator, provided that no Option shall be exercisable more than ten
(10) years after the date the Option is granted.
(c) Exercisability. Except as provided in Section 13.2, no Option
shall be exercisable either in whole or in part prior to the first
anniversary of the Award Date. Thereafter, an Option shall be exercisable
at such time or times and subject to such terms and conditions as shall
be determined by the Administrator and set forth in the Award Agreement.
If the Administrator provides that any Option is exercisable only in
installments, the Administrator may at any time waive such installment
exercise provisions, in whole or in part, based on such factors as the
Administrator may determine.
5
(d) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c) above, Options
may be exercised in whole or in part at any time during the term of the
Option, by giving written notice of exercise to the Company specifying
the number of shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in such form as the
Administrator may accept, provided that no officer or director of the
Company shall be permitted to make payment by promissory note or other
obligation payable in the future. Notwithstanding the foregoing, an
Option shall not be exercisable with respect to less than 100 shares of
Common Stock unless the remaining shares covered by an Option are fewer
than 100 shares. If and to the extent determined by the Administrator in
its sole discretion at or after grant, payment in full or in part may
also be made in the form of Common Stock owned by the Participant (and
for which the Participant has good title free and clear of any liens and
encumbrances and with respect to any shares of Common Stock acquired upon
the exercise of an Option, has been held by the Optionee for a period of
at least six (6) consecutive months), or by reduction in the number of
shares issuable upon such exercise based, in each case, on the Fair
Market Value of the Common Stock on the last trading date preceding
payment as determined by the Administrator. No shares of stock shall be
issued until payment has been made. A Participant shall generally have
the rights to dividends or other rights of a shareholder with respect to
shares subject to the Option when the person exercising such option has
given written notice of exercise, has paid for such shares as provided
herein, and, if requested, has given the representation described in
Section 13.1 of the Plan.
(e) Transferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than
through an agent as approved by the Administrator or by will or by the
laws of descent and distribution, provided, however, the Administrator
may, in its discretion, authorize all or a portion of a Nonqualified
Stock Option to be granted to an optionee to be on terms which permit
transfer by such optionee to a Permitted Transferee, provided that (i)
there may be no consideration for any such transfer (other than the
receipt of or interest in a family partnership or limited liability
company), (ii) the Award Agreement pursuant to which such Options are
granted must be approved by the Administrator, and must expressly provide
for transferability in a manner consistent with this Section 6.4(e), and
(iii) subsequent transfers of transferred Options shall be prohibited
except those in accordance with Section 6.4(h). Following transfer, any
such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer. The events
of termination of service of Sections 6.4(f), (g) and (h) hereof, and the
tax withholding obligations of Section 14.3 shall continue to be applied
with respect to the original optionee, following which the Options shall
be exercisable by the Permitted Transferee only to the extent, and for
the periods specified in Sections 6(f), (g), and (h). The Company shall
not be obligated to notify Permitted Transferee(s) of the expiration or
termination of any Option. Further, all Options shall be exercisable
during the Participant's lifetime only by such Participant and, in the
case of a Nonqualified Stock Option, by a Permitted Transferee. The
designation of a person entitled to exercise an Option after a person's
death will not be deemed a transfer.
(f) Termination of Service for Reasons other than Retirement,
Disability, or Death. Upon Termination of Service for any reason other
than Retirement or on account of Disability or death, each Option held by
the Participant shall, to the extent rights to purchase shares under such
Option have accrued at the date of such Termination of Service and shall
not have been fully exercised, be exercisable, in whole or in part, at
any time for a period of no more than three (3) months following
Termination of Service in the case of ISOs or no more than six (6) months
following Termination of Service in the case of NQSOs, subject, however,
to prior expiration of the term of such Options and any other limitations
on the exercise of such Options in effect at the date of exercise.
Whether an authorized leave of absence or absence because of military or
governmental service shall constitute Termination of Service for such
purposes shall be determined by the Administrator, which determination
shall be final and conclusive.
(g) Termination of Service for Retirement or Disability. Upon
Termination of Service by reason of Retirement or Disability, each Option
held by such Participant shall, to the extent rights to purchase shares
under the Option have accrued at the date of such Retirement or
Disability and shall not have been fully exercised, remain exercisable in
whole or in part, at any time during the twelve (12) month period
following
6
Termination of Service, subject, however, in any case, to the
prior expiration of the term of the Option and any other limitation on
the exercise of such Option in effect at the date of exercise.
(h) Termination of Service for Death. Upon Termination of Service
due to death, each Option held by such Participant or Permitted
Transferee shall, to the extent rights to purchase shares under the
Options have accrued at the date of death and shall not have been fully
exercised, be exercisable, in whole or in part, by the personal
representative of the estate of the Participant or Permitted Transferee
or by any person or persons who shall have acquired the Option directly
from the Participant or Permitted Transferee by bequest or inheritance at
any time during the twelve (12) month period following death, subject,
however, in any case, to the prior expiration of the term of the Option
and any other limitation on the exercise of such Option in effect at the
date of exercise.
(i) Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Sections 6.4(f), (g) or
(h) is applicable shall terminate upon expiration of such exercise
period.
(j) Purchase and Settlement Provisions. The Administrator may at
any time offer to purchase an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate
to the Participant at the time that such offer is made. In addition, if
an Award Agreement so provides at the Award Date or is thereafter amended
to so provide, the Administrator may require that all or part of the
shares of Common Stock to be issued with respect to the exercise of an
Option, in an amount not greater than the Fair Market Value of the shares
that is in excess of the aggregate Option Price, take the form of
Performance Shares, which shall be valued on the date of exercise on the
basis of the Fair Market Value of such Performance Shares determined
without regard to the deferral limitations and/or forfeiture restrictions
involved.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of SARs. The Administrator may approve the grant of Stock
Appreciation Rights (SARs) that are related to Options only. A SAR may be
granted only at the time of grant of the related Option. A SAR will entitle
the holder of the related Option, upon exercise of the SAR, to surrender such
Option, or any portion thereof to the extent unexercised, with respect to the
number of shares as to which such SAR is exercised, and to receive payment of
an amount computed pursuant to Section 7.2. Such Option will, to the extent
surrendered, then cease to be exercisable. Subject to Section 6.4, a SAR
granted hereunder will be exercisable at such time or times, and only to the
extent that a related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.
7.2 Payment of SAR Amount. Upon the exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined
by multiplying (i) the difference between the Fair Market Value of a share of
Common Stock on the date of exercise over the Option Price, by (ii) the number
of shares of Common Stock with respect to which the SAR is exercised. At the
discretion of the Administrator, the payment upon SAR exercise may be in cash,
in shares of Common Stock of equivalent value, or in some combination thereof.
7.3 Nontransferability. Except as provided in Section 7.1 above, no SAR
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, and also except as provided for in Section 7.1 above, all SARs shall
be exercisable, during the Participant's lifetime, only by such Participant.
ARTICLE 8
RESTRICTED STOCK
8.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Administrator shall determine the eligible persons to whom, and the time or
times at which, grants of Restricted Stock will be made, the number of shares to be awarded, the price (if any) to be paid
7
by the
Participant, the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. The Administrator may condition the
grant of Restricted Stock upon the achievement of specific business objectives,
measurements of individual, business unit, Company or Subsidiary performances,
or such other factors as the Administrator may determine. The provisions of
Restricted Stock awards need not be the same with respect to each Participant,
and such Awards to individual Participants need not be the same in subsequent
years.
8.2 Awards and Certificates. A Participant selected to receive a
Restricted Stock Award shall not have any rights with respect to such Award,
unless and until such Participant has executed an Award Agreement evidencing
the Award and has delivered a fully executed copy thereof to the Company, and
has otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Acceptance. Awards of Restricted Stock must be accepted within
a period of thirty (30) days (or such shorter period as the Administrator
may specify at grant) after the Award Date, by executing an Award
Agreement and by paying whatever price (if any) the Administrator has
designated for such shares of Restricted Stock.
(b) Legend. Each Participant receiving a Restricted Stock Award
shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the
Applied Films Corporation Long-Term Incentive Plan and
related Award Agreement entered into between the
registered owner and the Company, dated
        . Copies of such Plan and Agreement are on file in
the offices of the Company, 9586 I-25 Frontage Road,
Suite 200, Longmont, Colorado 80504."
(c) Custody. The Administrator may require that the stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have
delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
8.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:
(a) Restriction Period. Subject to the provisions of this Plan and
the Award Agreement, during a period set by the Administrator commencing
with the Award Date (the "Restriction Period"), the Participant shall not
be permitted to sell, transfer, pledge, or assign shares of Restricted
Stock awarded under this Plan. Subject to these limits, the
Administrator, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or
such other factors or criteria as the Administrator may determine.
(b) Rights as Shareholder. Except as provided in this subsection
(b) and subsection (a) above, the Participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a holder of shares
of Common Stock of the Company including the right to vote and to receive
any dividends. The Administrator, in its sole discretion, as determined
at the time of Award, may permit or require the payment of dividends to
be deferred. If any dividends or other distributions are paid in shares
of Common Stock, such shares shall be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Stock with
respect to which they were paid.
(c) Termination of Service. Subject to the applicable provisions of
the Award Agreement and this Article 8, upon Termination of Service for
any reason during the Restriction Period, all Restricted Stock
8
still subject to restriction will vest or be forfeited in accordance
with the terms and conditions established by the Administrator as
specified in the Award Agreement.
(d) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock, the
certificates for such shares shall be delivered to the Participant.
(e) Waiver of Limitation. In the event of the Participant's
Retirement, Disability or death, or in cases of special circumstances,
the Administrator may, in its sole discretion, waive in whole or in part
any or all of the limitations imposed hereunder (if any) with respect to
any or all of an Award under this Article 8.
ARTICLE 9
PERFORMANCE SHARES
9.1 Award of Performance Shares. Performance Shares may be awarded either
alone or in addition to other Awards granted under this Plan. The
Administrator shall determine the eligible persons to whom and the time or
times at which Performance Shares shall be awarded, the number of Performance
Shares to be awarded to any person, the duration of the period (the
"Performance Period") during which, and the conditions under which, receipt of
the Performance Shares will be deferred, and the other terms and conditions of
the Award in addition to those set forth in Section 9.2, as specified in the
Award Agreement. The Administrator may condition the grant of Performance
Shares upon the achievement of specific business objectives, measurements of
individual, business unit, Company or Subsidiary performance, or such other
factors or criteria as the Administrator shall determine. The provisions of
the award of Performance Shares need not be the same with respect to each
Participant, and such Awards to individual Participants need not be the same in
subsequent years.
9.2 Terms and Conditions. Performance Shares awarded pursuant to this
Article 9 shall be subject to the following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan and
the related Award Agreement, Performance Shares may not be sold,
assigned, transferred, pledged or otherwise encumbered during the
Performance Period. At the expiration of the Performance Period, share
certificates or cash of an equivalent value (as the Administrator may
determine in its sole discretion) shall be delivered to the Participant,
or his legal representative, in a number equal to the shares covered by
the Award Agreement.
(b) Dividends. Unless otherwise determined by the Administrator at
the time of Award, amounts equal to any cash dividends declared during
the Performance Period with respect to the number of shares of Common
Stock covered by a Performance Share Award will not be paid to the
Participant.
(c) Termination of Employment. Subject to the provisions of the
Award Agreement and this Article 9, upon Termination of Service for any
reason during the Performance Period for a given Award, the Performance
Shares in question will vest or be forfeited in accordance with the terms
and conditions established by the Administrator at or after grant.
(d) Accelerated Vesting. Based on service, performance and/or such
other factors or criteria as the Administrator may determine and set
forth in the Award Agreement, the Administrator may, at or after grant,
accelerate the vesting of all or any part of any award of Performance
Shares and/or waive the deferral limitations for all or any part of such
Award.
ARTICLE 10
OTHER STOCK-BASED AWARDS
10.1 Other Awards. Other Awards of Common Stock and other Awards that are
valued in whole or in part by reference to, or are payable in or otherwise
based on, Common Stock ("Other Stock-Based Awards"), may be granted either
alone or in addition to or in tandem with other Awards under the Plan. Subject
to the provisions of this Plan, the Administrator shall have authority to
determine the persons to whom and the time or times at which such Awards shall be
9
made, the number of shares of Common
Stock to be awarded pursuant to such awards, and all other conditions of the
Awards. The Administrator may also provide for the grant of Common Stock under
such Awards upon the completion of a specified performance period. The
provisions of Other Stock-Based Awards need not be the same with respect to
each Participant and such Awards to individual Participants need not be the
same in subsequent years.
10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article 10 shall be set forth in an Award Agreement and shall be subject to the
following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan and
the Award Agreement, shares of Common Stock subject to Awards made under
this Article 10 may not be sold, assigned, transferred, pledged, or
otherwise encumbered prior to the date on which the shares are issued,
or, if later, the date on which any applicable restriction, performance
or deferral period lapses.
(b) Dividends. Unless otherwise determined by the Administrator at
the time of Award, subject to the provisions of this Plan and the Award
Agreement, the recipient of an Award under this Article 10 shall be
entitled to receive, currently or on a deferred stock basis, dividends or
other distributions with respect to the number of shares of Common Stock
covered by the Award.
(c) Vesting. Any Award under this Article 10 and any Common Stock
covered by any such Award shall vest or be forfeited to the extent so
provided in the Award Agreement, as determined by the Administrator, in
its sole discretion.
(d) Waiver of Limitation. In the event of the Participant's
Retirement, Disability or death, or in cases of special circumstances,
the Administrator may, in its sole discretion, waive in whole or in part
any or all of the limitations imposed hereunder (if any) with respect to
any or all of an Award under this Article 10.
(e) Price. Common Stock issued or sold under this Article 10 may be
issued or sold for no cash consideration or such consideration as the
Administrator shall determine and specify in the Award Agreement.
ARTICLE 11
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's shareholders, no
amendment may be made which would (i) increase the aggregate number of shares
of Common Stock that may be issued under this Plan (except by operation of
Article 4 or of Section 13.1 of the Plan); (ii) decrease the option price of
any Option to less than 100% of the Fair Market Value on the date of grant for
an Option; or (iii) extend the maximum option period under Section 6.4(b) of
the Plan. The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section 13.2 of the
Plan, no such amendment or other action by the Administrator shall impair the
rights of any Participant without the Participant's consent. Awards may not be
granted under the Plan after the Termination Date, but Awards granted prior to
such date shall remain in effect or become exercisable pursuant to their
respective terms and the terms of this Plan.
ARTICLE 12
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
10
ARTICLE 13
ADJUSTMENT PROVISIONS
13.1 Antidilution. Subject to the provisions of this Article 13, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalizations, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or
other securities, an appropriate and proportionate adjustment may be made in
(i) the maximum number and kind of shares provided in Article 4 of the Plan,
(ii) the number and kind of shares or other securities subject to the then
outstanding Awards, and (iii) the price for each share or other unit of any
other securities subject to the then outstanding Awards.
13.2 Change in Control. In the event of a merger or consolidation of the
Company with or into another corporation or any other entity or the exchange of
substantially all of the outstanding stock of the Company for shares of another
entity in which, after either transaction, the prior shareholders of the
Company own less than 50% of the voting shares of the continuing or surviving
entity, or in the event of the sale of all or substantially all of the assets
of the Company, (either event, a "Change of Control"), then each outstanding
Award shall be assumed or an equivalent option or award substituted by the
successor corporation or a parent or subsidiary of the successor corporation,
with appropriate adjustments as to the number and kind of shares and prices. In
the event that the Administrator determines that the successor corporation or a
parent or a subsidiary of the successor corporation has refused to assume or
substitute an equivalent option or award for each outstanding Award, then all
Awards then outstanding under the Plan will be fully vested and exercisable and
all restrictions will immediately cease. If an Award becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Change of
Control, the Administrator shall notify all Participants that all outstanding
Options shall be fully exercisable for a period of fifteen (15) days from the
date of such notice and that any Options that are not exercised within such
period shall terminate upon the expiration of such period.
13.3 Adjustments by Administrator. Any adjustments pursuant to this
Article 13 will be made by the Administrator, whose determination as to what
adjustments will be made and the extent thereof will be final, binding, and
conclusive. No fractional interest will be issued under the Plan on account of
any such adjustments. Only cash payments will be made in lieu of fractional
shares.
ARTICLE 14
GENERAL PROVISIONS
14.1 Legend. The Administrator may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations and other
requirements of the SEC, any stock exchange upon which the Common Stock is then
listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Administrator may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
14.2 No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other employee, director or consultant
any right with respect to continuance of employment, or any arrangement for
services with the Company or any Subsidiary, nor shall there be a limitation in
any way on the right of the Company or any Subsidiary by which an employee is
employed to terminate his or her employment or for any director or consultant to terminate his or
her relationship with the Company or its subsidiary at any time.
14.3 Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be
11
withheld. Unless otherwise prohibited by the
Administrator, each Participant may satisfy any such withholding tax obligation
by any of the following means or by a combination of such means: (a) tendering
a cash payment; (b) authorizing the Company to withhold from the shares
otherwise issuable to the Participant a number of shares having a Fair Market
Value as of the "Tax Date," less than or equal to the amount of the withholding
tax obligation; or (c) delivering to the Company unencumbered shares owned by
the Participant having a Fair Market Value, as of the Tax Date, less than or
equal to the amount of the withholding tax obligation. The "Tax Date" shall be
the date that the amount of tax to be withheld is determined.
14.4 No Assignment of Benefits. No Award or other benefit payable under
this Plan shall, except as otherwise specifically provided by law, be subject
in any manner to anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge. Any attempt to anticipate,
alienate, attach, sell, transfer, assign, pledge, encumber or charge, any such
benefits shall be void, and any such benefit shall not in any manner be subject
to the debts, contracts, liabilities, engagements or torts of any person who
shall be entitled to such benefit, nor shall such benefit be subject to
attachment or legal process for or against such person.
14.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed, construed and enforced in accordance with the laws and in
the courts of the state of Colorado.
14.6 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.
14.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
14.8 Non-U.S. Awards. The Administrator may grant Awards to Participants
who are subject to the laws of nations other than the United States, which
Awards may have terms and conditions that differ from the terms provided
elsewhere in this plan for the purpose of complying with the laws or practices
of nations other than the United States.
12
EXHIBIT 4.4
APPLIED FILMS
CORPORATION
NON-EMPLOYEE, NON-DIRECTOR
OFFICER & CONSULTANT
NON-QUALIFIED STOCK
OPTION PLAN
1.
Name and Purpose
. This plan shall be called the Applied Films Corporation
          Non-employee, Non-director Officer & Consultant Stock Option Plan (the
          "Plan"). The Plan is intended to encourage stock ownership by
          non-employee, non-director officers and consultants ("Consultants") of
          Applied Films Corporation (the "Company"), to provide such Consultants
          with an additional incentive to better service the Company effectively, to
          contribute to its success, and to provide a form of compensation which shall
          attract and retain highly qualified individuals as Consultants to the Company.
2.
Effective Date and Term of the Plan
. The Plan shall become effective upon
          its approval by the Board of Directors of the Company (the "Effective
          Date"). Options may not be granted under the Plan after the tenth (10th)
          anniversary of the Effective Date (the "Term"); provided, however,
          that all options outstanding as of that date shall remain or become exercisable
          pursuant to their terms and the terms of the Plan.
3.
Administration
. The Plan shall be administered by the Compensation
          Committee of the Company's Board of Directors (the "Committee")
          consisting of not less than three (3) directors who shall be appointed from time
          to time by the Board.
The
Committee may, from time to time, establish such regulations, provisions and procedures,
within the terms of the Plan, as in the opinion of its members may be advisable in the
administration of the Plan. The Committee shall keep minutes of its meetings. A majority
of the Committee shall constitute a quorum, and the acts of a majority of a quorum at any
meeting, or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee.
The
interpretation and construction by the Committee of any provisions of the Plan or of any
option granted pursuant to the Plan shall be final and binding upon the Company, the Board
of Directors of the Company and any optionee. No member of the Board of Directors of the
Company or the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted pursuant thereto.
1
4.
Participation
. Subject to the limitations contained in this Section 4,
          those Consultants to the Company, who are neither contractual nor common law
          employees or directors of the Company or any of its subsidiaries, whom the
          Committee shall select from time to time, shall be granted options to purchase
          shares of the Company's common stock in accordance with the provisions of
          Section 6 of the Plan and consistent with the terms and conditions of the Plan.
          In making such selections, the Committee shall consider the nature of the
          services rendered by the respective Consultant, the Consultant's present
          and prospective potential contributions for the Company's success and such
          other factors as the Committee, in its discretion, shall deem relevant. An
          optionee may hold more than one option, but only on the terms and subject to the
          restrictions hereafter set forth.
5.
Stock Available for Options
. Subject to the adjustments as provided in
          Subsection 6(h), the aggregate number of shares reserved for purposes of
          the Plan shall be twenty-four thousand (24,000) authorized and unissued shares
          or issued shares reacquired by the Company (the "Shares").
          Determinations as to the number of Shares that remain available for issuance
          under the Plan shall be made in accordance with such rules and procedures as the
          Committee shall determine from time to time. If any outstanding option under the
          Plan expires or is terminated for any reason before the end of the Term of the
          Plan, the shares allocable to the unexercised portion of such option shall
          become available for the grant of other options under the Plan. No shares
          delivered to the Company in full or partial payment upon exercise of an option
          pursuant to Subsection 6(d) or in full or partial payment of any withholding tax
          liability permitted under Section 9 shall become available for the grant of
          other options under the Plan.
6.
Terms and Conditions of Option Agreement
. Options granted under this Plan
          shall be evidenced by agreements in such form as the Committee shall from time
          to time approve, which agreements shall comply with and be subject to the
          following conditions:
(a)
Optionee's Agreement
. Each optionee shall agree to continue to serve
               as a Consultant to the Company for at least twelve (12) months from the date of
               the grant of the option. Such agreement shall not impose upon the Company, its
               Board of Directors, or its shareholders any obligation to retain the optionee as
               a Consultant for any period.
(b)
Number of Shares and Term of Options
. Each option shall state the number
               of shares of the Common Stock of the Company to which it pertains. The term of
               each option shall be for a period of not greater than ten (10) years from the
               date of grant of the option.
2
(c)
Option Price
. The exercise price of each option shall be equal to one
               hundred percent (100%) of the Fair Market Value of the shares of Common Stock on
               the date of the grant of the option. If the shares are traded in the
               over-the-counter market, the Fair Market Value per share shall be the closing
               price on the national market list as quoted in the National Association of
               Securities Dealers Automated Quotation System ("NASDAQ") on the day
               the option is granted or if no sale of shares is reflected in NASDAQ on that
               day, on the next preceding day on which there was a sale of shares reflected in
               NASDAQ. If the shares are not traded in the over-the-counter market but are
               listed upon an established stock exchange or exchanges, such Fair Market Value
               shall be deemed to be the closing price of the shares on such stock exchange or
               exchanges on the day the option is granted or if no sale of the shares shall
               have been made on any stock exchange on that day, on the next preceding day on
               which there was a sale of the shares.
(d)
Medium of Payment
. The option price shall be payable to the Company
               either (i) in United States dollars in cash or by check, bank draft, or money
               order payable to the order of the Company, (ii) through the delivery of shares
               of the Company's Common Stock with a Fair Market Value on the date of the
               exercise equal to the option price, provided such shares are utilized as payment
               to acquire at least one hundred (100) shares of Common Stock, or (iii) by a
               combination of (i) and (ii) above. Fair Market Value shall be determined in the
               manner specified in Subsection 6(c) except as to the date of determination.
(e)
Exercise of Options
. Except as provided in Subsection 6(h) no option
               shall be exercisable, either in whole or in part, prior to the first
               (1
st
) anniversary of the date of grant of the option. Subject to the
               foregoing, the Committee shall have the authority to determine, at the time of
               the grant of each Option, the times at which an Option may be exercised and any
               conditions precedent to the exercise of an Option. An option shall be
               exercisable upon written notice to the Chief Financial Officer of the Company,
               as to any or all shares covered by the option, until its termination or
               expiration in accordance with its terms or the provisions of the Plan.
               Notwithstanding the foregoing, an option shall not at any time be exercisable
               with respect to less than one hundred (100) shares unless the remaining shares
               covered by an option are less than one hundred (100) shares. The purchase price
               of the shares purchased pursuant to an option shall be paid in full upon
               delivery to the optionee of certificates for such shares. Exercise by an
               optionee's heir or personal representative shall be accompanied by evidence
               of his or her authority to act, in a form reasonably satisfactory to the
               Company.
3
(f)
Options not Transferable
. Options may not be sold, pledged, assigned, or
               transferred in any manner otherwise than by will or the laws of descent or
               distribution to the extent provided in Subsection 6(g). During the lifetime of
               an optionee, the options shall be exercisable only by the optionee. Following
               the death of an optionee, the options shall be exercisable only to the extent
               provided in Subsection 6(g).
(g)
Termination of Service as Consultant
.
(i)
Termination of Service for any Reason Other than Death
. In the event an
               optionee shall cease to serve the Company as a Consultant for any reason other
               than such optionee's death, each option held by such optionee shall remain
               exercisable, subject to prior expiration according to its terms and other
               limitations imposed by the Plan, for a period of one (1) year following the
               optionee's cessation of service as a Consultant of the Company. If the
               optionee dies after such cessation of service, the optionee's options shall
               be exercisable in accordance with Subsection 6(g)(ii) hereof.
(ii)
Termination of Service for Death
. If an optionee ceases to be a
               Consultant by reason of death, each option held by such optionee shall, to the
               extent rights to purchase shares under the option have been accrued at the time
               of death and shall not have been fully exercised, be exercisable, in whole or in
               part, by the personal representative of the optionee's estate or by any
               person or persons who have acquired the option directly from the optionee by
               bequest or inheritance during the shorter of the following periods: (i) the term
               of the option, or (ii) a period of one (1) year from the death of such optionee.
               If an optionee dies during the extended exercise period following cessation of
               service specified in Subsection 6(g)(i) above, such option may be exercised any
               time within the longer of such extended period or one (1) year after death,
               subject to the prior expiration of the term of the option.
(h)
Adjustment in Shares Covered by Option
. The number of shares covered by
               each outstanding option, and the purchase price per share thereof, shall be
               proportionately adjusted for any increase or decrease in the number of issued
               and outstanding shares resulting from a split in or combination of shares or the
               payment of a stock dividend on the shares or any other increase or decrease in
               the number of such shares effected without receipt of consideration by the
               Company.
4
If
the Company shall be the surviving corporation in any merger or consolidation or if the
Company is merged into a wholly owned subsidiary solely for purposes of changing the
Company's state of incorporation, each outstanding option shall pertain to and apply
to the securities to which a holder of the number of shares subject to the option would
have been entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, except as above
provided, shall cause each outstanding option to terminate, provided, that each optionee
shall, in that event, have the right immediately prior to such dissolution or liquidation,
or merger or consolidation in which the Company is not the surviving corporation, to
exercise his or her option in whole or in part.
In
the event of a change in the shares as presently constituted, which is limited to a change
of all of its authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any such change shall
be deemed to be the shares within the meaning of the Plan.
To
the extent that the foregoing adjustments relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose determination in that respect shall
be final, binding and conclusive. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an option.
Except
as hereinbefore expressly provided in this Subsection 6(h), the optionee shall have no
rights by reason of any split or combination of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, merger, or consolidation
or spinoff of assets or stock of another corporation, and any issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of stock subject to the option.
The
grant of an option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure, or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.
5
(i)
Rights of a Shareholder
. An optionee shall have no rights as a
               shareholder with respect to any shares covered by his or her option until the
               date on which the optionee becomes the holder of record of such shares. No
               adjustment shall be made for dividends, distributions, or other rights for which
               the record date is prior to the date on which he or she shall have become the
               holder of record thereof, except as provided in Subsection 6(h).
(j)
Postponement of Delivery of Shares and Representations
. The Company, in
               its discretion, may postpone the issuance and/or delivery of shares upon any
               exercise of an option until completion of the registration or other
               qualification of such shares under any state and/or federal law, rule or
               regulation as the Company may consider appropriate, and may require any person
               exercising an option to make such representations, including a representation
               that it is the optionee's intention to acquire shares for investment and
               not with a view to distribution thereof, and furnish such information as it may
               consider appropriate in connection with the issuance or delivery of the shares
               in compliance with applicable laws, rules, and regulations. In such event no
               shares shall be issued to such holder unless and until the Company is satisfied
               with the accuracy of any such representations.
(k)
Other Provisions
. The option agreements authorized under the Plan shall
               contain such other provisions, including, without limitation, restrictions upon
               the exercise of the option, as the Committee shall deem advisable.
7.
Adjustments in Shares Available for Options
. The adjustments in number
          and kind of shares and the substitution of shares, affecting outstanding options
          in accordance with Subsection 6(h) hereof, shall also apply to the number
          and kind of shares reserved for issuance pursuant to the Plan, but not yet
          covered by options.
8.
Amendment of the Plan
. The Committee, insofar as permitted by law, shall
          have the right from time to time, with respect to any shares at the time not
          subject to options, to suspend or discontinue the Plan or revise or amend it in
          any respect whatsoever, and except that, without approval of the Board of
          Directors of the Company, no such revision or amendment shall:
(a)       
          increase the maximum number of shares which may be subject to the Plan;
(b)       
          materially increase the benefits accruing to option holders under the Plan;
(c)       
          decrease the exercise price of options granted under the Plan;
6
(d)       
          remove the administration of the Plan from the Committee; or
(e)       
          permit the granting of options under the Plan after the Term of the Plan.
9.
Withholding of Taxes
. The Company shall have the right to deduct from any
          payment to be made pursuant to this Plan, or to otherwise require, prior to the
          issuance or delivery of any shares of Common Stock, payment by the optionee of
          any federal, state, or local taxes required by law to be withheld, if any.
          Unless otherwise prohibited by the Committee, an optionee may satisfy any such
          withholding tax obligation by any of the following means or by a combination of
          such means:
(a)       
               tendering a cash payment;
(b)       
               authorizing the Company to withhold from the shares otherwise issuable to the
               optionee a number of shares having a Fair Market Value as of the "Tax
               Date," less than or equal to the amount of withholding tax obligation; or
(c)       
               delivering to the Company unencumbered shares owned by the optionee having a
               Fair Market Value, as of the Tax Date, less than or equal to the amount of the
               withholding tax obligation.
The "Tax Date" shall be the
date that the amount of tax to be withheld is determined. Fair Market Value shall be
determined in the manner specified in Subsection 6(c), except as to the date of
determination. An optionee's election to pay the withholding tax obligation by either
of (b) or (c) above shall be irrevocable, may be disapproved by the Committee, and must be
made either six months prior to the Tax Date or during the period beginning on the third
business day following the date of release of the Company's quarterly or annual
summary statement of sales and earnings and ending on the twelfth business day following
such date.
10.
Right of Board of Directors to Terminate Consultant's Service
.
          Nothing in this Plan or in the grant of any option hereunder shall in any way
          limit or effect the right of the Board of Directors of the Company to terminate
          a Consultant's service as a Consultant, pursuant to law, the Articles of
          Incorporation, or Bylaws of the Company.
7
11.
Application of Funds
. The proceeds received by the Company from the sale
          of stock pursuant to options shall be used for general corporate purposes.
12.
No Obligation to Exercise Option
. The granting of an option shall impose
          no obligation upon the optionee to exercise such option.
13.
Construction
. This Plan shall be construed under the laws of the State of
          Colorado, United States of America.
APPROVED:
/s/ Thomas T. Edman
———————————————————
Thomas T. Edman, President and Chief Executive Officer
CERTIFICATION
This
Plan was duly adopted by the Board of Directors of the Company the 24th day of October,
2001.
/s/ Lawrence D. Firestone
———————————————————
Lawrence D. Firestone, Secretary and Chief Financial Officer
EXHIBIT 5.1
April 23, 2004
Applied Films Corporation
9586
 I-25 Frontage Road, Suite 200
Longmont, Colorado 80504
Re:
Registration
Statement on Form S-8 Relating to the Applied Films CorporationLong-Term Incentive Plan
and the Applied Films Corporation Non-Employee,Non-Director Officer &Consultant
Non-Qualified Stock Option Plan (the "Plans")
Gentlemen:
With
respect to the Registration Statement on Form S-8 (the "Registration Statement")
filed by Applied Films Corporation, a Colorado corporation (the "Company") with
the Securities and Exchange Commission, for the purpose of registering under the
Securities Act of 1933, as amended, 1,224,000 shares of the Company's common stock,
no par value, for issuance pursuant to the Plans, we have examined such documents and
questions of law we consider necessary or appropriate for the purpose of giving this
opinion. On the basis of such evaluation, we advise you that in our opinion the 1,224,000
shares covered by the Registration Statement, including shares issued upon the exercise of
options, at the prices described in the Registration Statement, and upon delivery of such
shares and payment therefor in accordance with the terms stated in the Plans and the
Registration Statement, will be duly and legally authorized, issued and outstanding, and
will be fully paid and nonassessable.
We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as amended, or
under the rules and regulations of the Securities and Exchange Commission relating
thereto.
Sincerely,
VARNUM, RIDDERING,
SCHMIDT & HOWLETT LLP
/s/ VARNUM, RIDDERING,
SCHMIDT & HOWLETT LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT
AUDITORS
We consent to the incorporation by
reference in the Registration Statement (Form S-8) pertaining to the Applied Films
Corporation Long-Term Incentive Plan and the Applied Films Corporation Non-Employee,
Non-Director Officer & Consultant Non-Qualified Stock Option Plan, of our report dated
July 24, 2003, with respect to the consolidated financial statements and schedule of
Applied Films Corporation and subsidiaries included in its Annual Report (Form 10-K) for
the year ended June 28, 2003, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Denver, Colorado
April 22,
2004
EXHIBIT 23.2
CONSENT OF INDEPENDENT
AUDITORS
PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers
Zhong Tian CPA Co., Ltd.
12th Floor, Shui On Plaza
333 Huai Hai Zhong Lu
Shanghai 200021
People's Republic of China
Telephone +86 (21) 6386-3388
Facsimile +86 (21) 6386-3300
23 April 2004
CONSENT OF INDEPENDENT
ACCOUNTANTS
To: Applied Films
Corporation
We hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of Applied Films
Corporation of our report dated 21 February 2003 relating to the financial statements of
Suzhou NSG AFC Thin Films Electronics Co., Ltd. as of 31 December 2002 and 2001 and for
the three years ended 31 December 2002, which appears in the Annual Report on Form 10-K/A
filed 30 June 2003.
/s/ PricewaterhouseCoopers Zhong Tian
CPAs Co., Ltd.
PricewaterhouseCoopers
Zhong Tian CPA Co., Ltd.