COLORADO MEDTECH INC
2001 LONG-TERM INCENTIVE PLAN
<DOCUMENT>
<TYPE>EX-10.51
<SEQUENCE>3
<FILENAME>d94228ex10-51.txt
<DESCRIPTION>2001 LONG-TERM INCENTIVE PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.51

                             COLORADO MEDTECH, INC.

                          2001 LONG-TERM INCENTIVE PLAN


         SECTION 1. PURPOSE. The purpose of this Plan is to advance the
interests of Colorado MEDtech, Inc. (the "Company") and its shareholders by
providing incentives to certain Eligible Persons (as defined below) who
contribute significantly to the strategic and long-term performance objectives
and growth of the Company.

         SECTION 2. DEFINITIONS. The definitions applicable to this Plan are
provided in Appendix A.

         SECTION 3. ADMINISTRATION. The Committee shall administer this Plan and
shall have all the powers vested in it by the terms of this Plan, such powers to
include without limitation exclusive authority to select the Eligible Persons to
be granted Awards under this Plan, to determine the type, size and terms of the
Award to be made to each Eligible Person selected, to modify the terms of any
Award that has been granted, to determine the time when Awards will be granted,
to establish performance objectives, to make any adjustments necessary or
desirable as a result of the granting of Awards to Eligible Persons located
outside the United States and to prescribe the form of the agreements evidencing
Awards made under this Plan. The Committee is authorized to interpret this Plan
and the Awards granted under this Plan, to establish, amend and rescind any
rules and regulations relating to this Plan, and to make any other
determinations that it deems necessary or desirable for the administration of
this Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the manner and to
the extent the Committee deems necessary or desirable to carry it into effect.
Any decision of the Committee in the interpretation and administration of this
Plan, as described in this Plan, shall lie within the Committee's sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned. The Committee may act only by a majority of its members in office,
except that the Committee may authorize any one or more of their members or any
officer of the Company to execute and deliver documents or to take any other
ministerial action on behalf of the Committee with respect to Awards made or to
be made to Participants.

         No member of the Committee and no officer of the Company shall be
liable for anything done or omitted to be done by him, by any other member of
the Committee or by any officer of the Company in connection with the
performance of duties under this Plan, except for his own willful misconduct or
as expressly provided by statute. In addition to all other rights of
indemnification and reimbursement to which a member of the Committee and an
officer of the Company may be entitled, the Company shall indemnify and hold
harmless each such member or officer who was or is a party or is threatened to
be made a party to any threatened, pending or completed proceeding or suit in
connection with the performance of duties under this Plan against expenses
(including reasonable attorneys' fees), judgments, fines, liabilities, losses
and amounts paid in settlement actually and reasonably incurred by him in
connection with such proceeding or suit, except for his own willful misconduct
or as expressly provided otherwise by statute. Expenses (including reasonable
attorneys' fees) incurred by a such a member or officer in defending any such
proceeding or suit shall be paid by the Company in advance of the final
disposition of such proceeding or suit upon receipt of a written affirmation by
such member or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification and a written undertaking by or on behalf
of such member or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Company as
authorized in this Section.

         SECTION 4. PARTICIPATION. Consistent with the purposes of this Plan,
the Committee shall have exclusive power to select the Eligible Persons who may
participate in this Plan and be granted Awards


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under this Plan. Eligible Persons may be selected individually or by groups or
categories, as determined by the Committee in its discretion.

         SECTION 5. AWARDS UNDER THIS PLAN.

                  (a) Types of Awards. Awards under this Plan may include, but
         need not be limited to, one or more of the following types, either
         alone or in any combination thereof: (i) Stock Options, (ii) Stock
         Appreciation Rights, (iii) Restricted Stock, (iv) Performance Grants
         and (v) any other type of Award deemed by the Committee in its
         discretion to be consistent with the purposes of this Plan (including,
         but not limited to, Awards of or options or similar rights granted with
         respect to unbundled stock units or components thereof, and Awards to
         be made to Participants who are foreign nationals or are employed or
         performing services outside the United States).

                  (b) Maximum Number of Shares that May be Issued. There may be
         issued under this Plan (as Restricted Stock, in payment of Performance
         Grants, pursuant to the exercise of Stock Options or Stock Appreciation
         Rights or in payment of or pursuant to the exercise of such other
         Awards as the Committee, in its discretion, may determine) an aggregate
         of not more than 1,000,000 Common Shares, subject to adjustment as
         provided in Section 15. No Eligible Person may receive Awards under
         this Plan for more than 250,000 Common Shares in any one fiscal year of
         the Company, subject to adjustment as provided in Section 15. Common
         Shares issued pursuant to this Plan may be either authorized but
         unissued shares, treasury shares, reacquired shares or any combination
         thereof. If any Common Shares issued as Restricted Stock or otherwise
         subject to repurchase or forfeiture rights are reacquired by the
         Company pursuant to such rights or, if any Award is canceled,
         terminates or expires unexercised, any Common Shares that would
         otherwise have been issuable pursuant thereto will be available for
         issuance under new Awards.

                  (c) Rights with Respect to Common Shares and Other Securities.
         Except as provided in subsection 8(c) with respect to Awards of
         Restricted Stock and unless otherwise determined by the Committee in
         its discretion, a Participant to whom an Award is made (and any person
         succeeding to such a Participant's rights pursuant to this Plan) shall
         have no rights as a shareholder with respect to any Common Shares or as
         a holder with respect to other securities, if any, issuable pursuant to
         any such Award until the date of the issuance of a stock certificate to
         him for such Common Shares or other instrument of ownership, if any.
         Except as provided in Section 15, no adjustment shall be made for
         dividends, distributions or other rights (whether ordinary or
         extraordinary, and whether in cash, securities, other property or other
         forms of consideration, or any combination thereof) for which the
         record date is prior to the date such stock certificate or other
         instrument of ownership, if any, is required to be issued based upon
         the date any Award was exercised. In all events, a Participant with
         whom an Award agreement is made to issue Common Shares in the future,
         shall have no rights as a shareholder with respect to Common Shares
         related to such agreement until issuance to him of a stock certificate
         representing such shares.

         SECTION 6. STOCK OPTIONS. The Committee may sell Purchased Options or
grant other Stock Options either alone, or in conjunction with Associated
Awards, either at the time of grant or by amendment thereafter; provided that an
Incentive Stock Option may be granted only to Eligible Persons who are employees
of the Company and who have Associated Awards only to the extent that such
Associated Awards do not disqualify the Incentive Stock Option's status as such
under the Code. Each Stock Option granted or sold under this Plan shall be
evidenced by an agreement in such form as the Committee shall prescribe from
time to time in accordance with this Plan and shall comply with the applicable
terms and conditions of this Section and this Plan, and with such other terms



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and conditions, including, but not limited to, restrictions upon the Stock
Option or the Common Shares issuable upon exercise thereof, as the Committee, in
its discretion, shall establish.

                  (a) The exercise price of a Stock Option may be less than,
         equal to, or greater than, the Fair Market Value of the Common Shares
         subject to such Stock Option at the time the Stock Option is granted,
         as determined by the Committee; provided, however, that in the case of
         an Incentive Stock Option granted to an employee of the Company, the
         exercise price shall not be less than the Fair Market Value of the
         Common Shares subject to such Stock Option at the time the Stock Option
         is granted, or if granted to a Ten Percent Employee, such exercise
         price shall not be less than 110% of such Fair Market Value at the time
         the Stock Option is granted. In no event, however, will the exercise
         price per share of a Stock Option be less than the par value per share
         of a Common Share.

                  (b) The Committee shall determine the number of Common Shares
         to be subject to each Stock Option. In the case of a Stock Option
         awarded in conjunction with an Associated Award, the number of Common
         Shares subject to an outstanding Stock Option may be reduced on an
         appropriate basis to the extent that the Associated Award has been
         exercised, paid to or otherwise received by the Participant, as
         determined by the Committee.

                  (c) Any Stock Option may be exercised during its term only at
         such time or times and in such installments as the Committee may
         establish.

                  (d) A Stock Option shall not be exercisable:

                           (i) in the case of any Incentive Stock Option granted
                  to a Ten Percent Employee, after the expiration of five years
                  from the date it is granted, and, in the case of any other
                  Stock Option, after the expiration of ten years from the date
                  it is granted; and

                           (ii) unless payment in full is made for the shares
                  being acquired thereunder at the time of exercise as provided
                  in subsection 6(i).

                  (e) The Committee shall determine in its discretion and
         specify in each agreement evidencing a Stock Option the effect, if any,
         the termination of the Participant's employment with or performance of
         services for the Company shall have on the exercisability of the Stock
         Option; provided, however, that an Incentive Stock Option shall not be
         exercisable at a time that is beyond the time an Incentive Stock Option
         may be exercised in order to qualify as such under the Code.

                  (f) In the case of an Incentive Stock Option, the amount of
         the aggregate Fair Market Value of Common Shares (determined at the
         time of grant of the Stock Option) with respect to which incentive
         stock options are exercisable for the first time by an employee of the
         Company during any calendar year (under all such plans of his employer
         corporation and its parent and subsidiary corporations) shall not
         exceed $100,000 or such other amount as is specified in the Code.

                  (g) It is the intent of the Company that Nonqualified Stock
         Options granted under this Plan not be classified as Incentive Stock
         Options, that the Incentive Stock Options granted under this Plan be
         consistent with and contain or be deemed to contain all provisions
         required under Section 422 and the other appropriate provisions of the
         Code and any implementing regulations (and any successor provisions
         thereof), and that any ambiguities in construction shall be interpreted
         in order to effectuate such intent.


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<PAGE>


                  (h) A Purchased Option may contain such additional terms not
         inconsistent with this Plan, including but not limited to the
         circumstances under which the purchase price of such Purchased Option
         may be returned to the holder of the Purchased Option, as the Committee
         may determine in its sole discretion.

                  (i) For purposes of payments made to exercise Stock Options,
         such payment shall be made in such form (including, but not limited to,
         cash, Common Shares, the surrender of another outstanding Award under
         this Plan or any combination thereof) as the Committee may determine in
         its discretion; provided, however, that, unless the Committee
         determines otherwise, for purposes of making such payment in Common
         Shares, such shares shall be valued at their Fair Market Value on the
         day of exercise and shall have been held by the Participant for a
         period of at least six (6) months.

         SECTION 7. STOCK APPRECIATION RIGHTS. The Committee may grant Stock
Appreciation Rights either alone, or in conjunction with Associated Awards,
either at the time of grant or by amendment thereafter. Each Award of Stock
Appreciation Rights granted under this Plan shall be evidenced by an agreement
in such form as the Committee shall prescribe from time to time in accordance
with this Plan and shall comply with the applicable terms and conditions of this
Section and this Plan, and with such other terms and conditions, including, but
not limited to, restrictions upon the Award of Stock Appreciation Rights or the
Common Shares issuable upon exercise thereof, as the Committee, in its
discretion, shall establish.

                  (a) The Committee shall determine the number of Common Shares
         to be subject to each Award of Stock Appreciation Rights. In the case
         of an Award of Stock Appreciation Rights awarded in conjunction with an
         Associated Award, the number of Common Shares subject to an outstanding
         Award of Stock Appreciation Rights may be reduced on an appropriate
         basis to the extent that the Associated Award has been exercised, paid
         to or otherwise received by the Participant, as determined by the
         Committee.

                  (b) The Award of Stock Appreciation Rights shall not be
         exercisable:

                           (i) unless the Associated Award, if any, is at the
                  time exercisable;

                           (ii) if the Associated Award is a Stock Option and
                  the Fair Market Value per share of the Common Shares on the
                  exercise date does not exceed the exercise price per share of
                  such Stock Option; and

                           (iii) if the Associated Award is an Incentive Stock
                  Option and the exercise of the Award of Stock Appreciation
                  Rights would disqualify the Incentive Stock Option as such
                  under the Code.

                  (c) The Committee shall determine in its discretion and
         specify in each agreement evidencing an Award of Stock Appreciation
         Rights the effect, if any, the termination of the Participant's
         employment with or performance of services for the Company shall have
         on the exercisability of the Award of Stock Appreciation Rights.

                  (d) An Award of Stock Appreciation Rights shall entitle the
         holder to exercise such Award or to surrender unexercised an Associated
         Award (or any portion of such Associated Award) to the Company and to
         receive from the Company in exchange thereof, without payment to the
         Company, that number of Common Shares having an aggregate value equal
         to (or, in the



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<PAGE>

         discretion of the Committee, less than) the excess of the Fair Market
         Value of one share, at the time of such exercise, over the exercise
         price, times the number of shares subject to the Award or the
         Associated Award, or portion thereof, that is so exercised or
         surrendered, as the case may be. The Committee shall be entitled in its
         discretion to elect to settle the obligation arising out of the
         exercise of a Stock Appreciation Right by the payment of cash or Other
         Securities or property, or other forms of payment or any combination
         thereof, as determined by the Committee, equal to the aggregate value
         of the Common Shares it would otherwise be obligated to deliver. Any
         such election by the Committee shall be made as soon as practicable
         after the receipt by the Committee of written notice of the exercise of
         the Stock Appreciation Right.

                  (e) A Stock Appreciation Right may provide that it shall be
         deemed to have been exercised at the close of business on the business
         day preceding the expiration date of the Stock Appreciation Right or of
         the related Stock Option (or other Award), or such other date as
         specified by the Committee, if at such time such Stock Appreciation
         Right has a positive value. Such deemed exercise shall be settled or
         paid in the same manner as a regular exercise thereof as provided in
         subsection 7(d) of this Agreement.

         SECTION 8. RESTRICTED STOCK. The Committee may grant Awards of
Restricted Stock either alone, or in conjunction with Associated Awards, either
at the time of grant or by amendment thereafter. Each Award of Restricted Stock
under this Plan shall be evidenced by an agreement in such form as the Committee
shall prescribe from time to time in accordance with this Plan and shall comply
with the applicable terms and conditions of this Section and this Plan, and with
such other terms and conditions as the Committee, in its discretion, shall
establish.

                  (a) The Committee shall determine the number of Common Shares
         to be issued to a Participant pursuant to the Award of Restricted
         Stock, and the extent, if any, to which they shall be issued in
         exchange for cash, other consideration, or both.

                  (b) Until the expiration of such period as the Committee shall
         determine from the date on which the Award is granted and subject to
         such other terms and conditions as the Committee in its discretion
         shall establish (the "RESTRICTED PERIOD"), a Participant to whom an
         Award of Restricted Stock is made shall be issued, but shall not be
         entitled to the delivery of, a stock certificate representing the
         Common Shares subject to such Award.

                  (c) Unless otherwise determined by the Committee in its
         discretion, a Participant to whom an Award of Restricted Stock has been
         made (and any person succeeding to such a participant's rights pursuant
         to this Plan) shall have, after issuance of a certificate for the
         number of Common Shares awarded and prior to the expiration of the
         Restricted Period, ownership of such Common Shares, including the right
         to vote such Common Shares and to receive dividends or other
         distributions made or paid with respect to such Common Shares (provided
         that such Common Shares, and any new, additional or different shares,
         or Other Securities or property, or other forms of consideration that
         the Participant may be entitled to receive with respect to such Common
         Shares as a result of a stock split, stock dividend or any other change
         in the corporation or capital structure of the Company, shall be
         subject to the restrictions set forth in this Plan as determined by the
         Committee in its discretion), subject, however, to the options,
         restrictions and limitations imposed thereon pursuant to this Plan.

                  (d) The Committee shall determine in its discretion and
         specify in each agreement evidencing an Award of Restricted Stock the
         effect, if any, the termination of the Participant's employment with or
         performance of services for the Company during the Restricted Period
         shall have on such Award of Restricted Stock.


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         SECTION 9. PERFORMANCE GRANTS. The Committee may grant Awards of
Performance Grants either alone, or in conjunction with Associated Awards,
either at the time of grant or by amendment thereafter. The Award of a
Performance Grant to a Participant will entitle him to receive a specified
amount determined by the Committee (the "ACTUAL VALUE"), if the terms and
conditions specified in this Plan and in the Award are satisfied. Each Award of
a Performance Grant shall be subject to the applicable terms and conditions of
this Section and this Plan, and to such other terms and conditions, including
but not limited to, restrictions upon any cash, Common Shares, Other Securities
or property, or other forms of payment, or any combination thereof, issued with
respect to the Performance Grant, as the Committee, in its discretion, shall
establish, and shall be embodied in an agreement in such form and substance as
is determined by the Committee.

                  (a) The Committee shall determine the value or range of values
         of a Performance Grant to be awarded to each Participant selected for
         an Award and whether or not such a Performance Grant is granted in
         conjunction with an Associated Award. As determined by the Committee,
         the maximum value of each Performance Grant (the "MAXIMUM VALUE") shall
         be: (i) an amount fixed by the Committee at the time the Award is made
         or amended thereafter, (ii) an amount that varies from time to time
         based in whole or in part on the then current value of the Common
         Shares, Other Securities or property, or other securities or property,
         or any combination thereof or (iii) an amount that is determinable from
         criteria specified by the Committee. Performance Grants may be issued
         in different classes or series having different names, terms and
         conditions. In the case of a Performance Grant awarded in conjunction
         with an Associated Award, the Performance Grant may be reduced on an
         appropriate basis to the extent that the Associated Award has been
         exercised, paid to or otherwise received by the Participant, as
         determined by the Committee.

                  (b) The award period ("AWARD PERIOD") related to any
         Performance Grant shall be a period determined by the Committee. At the
         time each Award is made, the Committee shall establish performance
         objectives to be attained within the Award Period as the means of
         determining the Actual Value of such a Performance Grant. The
         performance objectives shall be based on such measure or measures of
         performance, which may include, but need not be limited to, the
         performance of the Participant, the Company or one or more of its
         divisions or units, or any combination of the foregoing, as the
         Committee shall determine, and may be applied on an absolute basis or
         be relative to industry or other indices or any combination thereof.
         The Actual Value of a Performance Grant shall be equal to its Maximum
         Value only if the performance objectives are attained in full, but the
         Committee shall specify the manner in which the Actual Value of
         Performance Grants shall be determined if the performance objectives
         are met in part. Such performance measures, the Actual Value or the
         Maximum Value, or any combination thereof, may be adjusted in any
         manner by the Committee in its discretion at any time and from time to
         time during or as soon as practicable after the Award Period, if it
         determines that such performance measures, the Actual Value or the
         Maximum Value, or any combination thereof, are not appropriate under
         the circumstances.

                  (c) The Committee shall determine in its discretion and
         specify in each agreement evidencing a Performance Grant the effect, if
         any, the termination of the Participant's employment with or
         performance of services for the Company during the Award Period shall
         have on such Performance Grant.

                  (d) The Committee shall determine whether the conditions of a
         Performance Grant have been met and, if so, shall ascertain the Actual
         Value of the Performance Grant. If the Performance Grant has no Actual
         Value, the Award and such Performance Grant shall be deemed



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         to have been canceled and the Associated Award, if any, may be canceled
         or permitted to continue in effect in accordance with its terms. If the
         Performance Grant has any Actual Value and:

                           (i) was not awarded in conjunction with an Associated
                  Award, the Committee shall cause an amount equal to the Actual
                  Value of the Performance Grant earned by the Participant to be
                  paid to him or his permitted assignee or Beneficiary; or

                           (ii) was awarded in conjunction with an Associated
                  Award, the Committee shall determine, in accordance with
                  criteria specified by the Committee (A) to cancel the
                  Performance Grant, in which event no amount with respect
                  thereto shall be paid to the Participant or his permitted
                  assignee or Beneficiary, and the Associated Award may be
                  permitted to continue in effect in accordance with its terms,
                  (B) to pay the Actual Value of the Performance Grant to the
                  Participant or his permitted assignee or Beneficiary as
                  provided below, in which event the Associated Award may be
                  canceled or (C) to pay to the Participant or his Beneficiary,
                  the Actual Value of only a portion of the Performance Grants,
                  in which event all or a portion of the Associated Award may be
                  permitted to continue in effect in accordance with its terms
                  or be canceled, as determined by the Committee.

                  Such determination by the Committee shall be made as promptly
         as practicable following the end of the Award Period or upon the
         earlier termination of employment or performance of services, or at
         such other time or times as the Committee shall determine, and shall be
         made pursuant to criteria specified by the Committee.

                  (e) Payment of any amount with respect to the Performance
         Grants that the Committee determines to pay as provided above shall be
         made by the Company as promptly as practicable after the end of the
         Award Period or at such other time or times as the Committee shall
         determine, and may be made in cash, Common Shares, Other Securities or
         property, or other forms of payment, or any combination thereof or in
         such other manner, as determined by the Committee in its discretion.
         Notwithstanding anything in this Section to the contrary, the Committee
         may, in its discretion, determine and pay out the Actual Value of the
         Performance Grants at any time during the Award Period.

         SECTION 10. DEFERRAL OF COMPENSATION. The Committee shall determine
whether or not an Award shall be made in conjunction with the deferral of the
Participant's salary, bonus or other compensation, or any combination thereof,
and whether or not such deferred amounts may be:

                  (a) forfeited to the Company or to other Participants or any
         combination thereof, under certain circumstances (which may include,
         but need not be limited to, certain types of termination of employment
         or performance of services for the Company);

                  (b) subject to increase or decrease in value based upon the
         attainment of or failure to attain, respectively, certain performance
         measures; and/or

                  (c) credited with income equivalents (which may include, but
         need not be limited to, interest, dividends or other rates of return)
         until the date or dates of payment of the Award, if any.

         SECTION 11. DEFERRED PAYMENT OF AWARDS. The Committee may specify that
the payment of all or any portion of cash, Common Shares, Other Securities or
property, or any other form of payment, or any combination thereof, under an
Award shall be deferred until a later date. Deferrals shall be for such



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periods or until the occurrence of such events, and upon such terms, as the
Committee shall determine in its discretion. Deferred payments of Awards may be
made by undertaking to make payment in the future based upon the performance of
certain investment equivalents (which may include, but need not be limited to,
government securities, Common Shares, other securities, property or
consideration, or any combination thereof), together with such additional
amounts of income equivalents (which may be compounded and may include, but need
not be limited to, interest, dividends or other rates of return or any
combination thereof) as may accrue thereon until the date or dates of payment,
such investment equivalents and such additional amounts of income equivalents to
be determined by the Committee in its discretion.

         SECTION 12. TRANSFERABILITY OF AWARDS. A Participant's rights and
interest under this Plan or any Award may not be assigned or transferred,
hypothecated or encumbered in whole or in part either directly or by operation
of law or otherwise, including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided,
however, the Committee may permit such transfer to a Permitted Transferee; and
provided, further, that, unless otherwise permitted by the Code, any Incentive
Stock Option granted pursuant to this Plan shall not be transferable other than
by will, by the laws of descent and distribution, and shall be exercisable
during the Participant's lifetime only by Participant or by such Permitted
Transferee.

         SECTION 13. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THIS PLAN. The
terms of any outstanding Award under this Plan may be amended or modified from
time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of any Award and/or payments thereunder) if the Committee could grant such
amended or modified Award under the terms of this Plan at the time of such
amendment or modification; provided that no such amendment or modification shall
adversely affect in a material manner any right of a Participant under the Award
without his written consent, unless the Committee determines in its discretion
that there have occurred or are about to occur significant changes in the
Participant's position, duties or responsibilities, or significant changes in
economic, legislative, regulatory, tax, accounting or cost/benefit conditions
that are determined by the Committee in its discretion to have or to be expected
to have a substantial effect on the performance of the Company, or any
affiliate, division or department thereof, on this Plan or on any Award under
this Plan. The Committee may, in its discretion, permit holders of Awards under
this Plan to surrender outstanding Awards in order to exercise or realize the
rights under other Awards, or in exchange for the grant of new Awards, or
require holders of Awards to surrender outstanding Awards as a condition
precedent to the grant of new Awards under this Plan.

         SECTION 14. TERMINATION OF A PARTICIPANT. For all purposes under this
Plan, the Committee shall determine whether a Participant has terminated
employment with, or the performance of services for, the Company; provided,
however, an absence or leave approved by the Company, to the extent permitted by
applicable provisions of the Code, shall not be considered an interruption of
employment or performance of services for any purpose under this Plan.

         SECTION 15. DILUTION AND OTHER ADJUSTMENTS. If any change in the
outstanding Common Shares of the Company occurs by reason of any stock split of
or stock dividend on the Common Shares, then, except as otherwise determined by
the Committee, the terms of any outstanding Awards and the number of Common
Shares available for Awards shall be equitably adjusted. If any change in the
outstanding Common Shares occurs by reason of any split-up, split-off, spin-off,
recapitalization, merger, consolidation, rights offering, reorganization,
combination or exchange of shares, sale by the Company of all of its assets,
distribution to shareholders (other than a stock dividend or a normal cash
dividend on the Common Shares), or other extraordinary or unusual event (other
than a stock split of the Common Stock as provided above), then the Committee
may determine, in its discretion, to terminate all outstanding Awards
immediately prior to the consummation of any such event, or make an equitable
adjustment in the



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terms of any outstanding Award and/or the number of Common Shares available for
Awards. Any such termination or adjustment made by the Committee shall be final,
conclusive and binding for all purposes of the Plan. Unless otherwise provided
by the Committee, all outstanding Awards shall terminate immediately prior to
the consummation of any dissolution or liquidation of the Company.

         SECTION 16. DESIGNATION OF BENEFICIARY BY PARTICIPANT. A Participant
may name a beneficiary to receive any payment to which he may be entitled with
respect to any Award under this Plan in the event of his death, on a written
form to be provided by and filed with the Committee, and in a manner determined
by the Committee in its discretion (a "BENEFICIARY"). The Committee reserves the
right to review and approve Beneficiary designations. A Participant may change
his Beneficiary from time to time in the same manner, unless such Participant
has made an irrevocable designation. Any designation of a Beneficiary under this
Plan (to the extent it is valid and enforceable under applicable law) shall be
controlling over any other disposition, testamentary or otherwise, as determined
by the Committee in its discretion. If no designated Beneficiary survives the
Participant and is living on the date on which any amount becomes payable to
such a Participant's Beneficiary, such payment will be made to the legal
representatives of the Participant's estate, and the term "BENEFICIARY" as used
in this Plan shall be deemed to include such person or persons. If there are any
questions as to the legal right of any Beneficiary to receive a distribution
under this Plan, the Committee in its discretion may determine that the amount
in question be paid to the legal representatives of the estate of the
Participant, in which event the Company, the Board, the Committee, the
Designated Administrator (if any), and the members thereof, will have no further
liability to anyone with respect to such amount.

         SECTION 17. FINANCIAL ASSISTANCE. If the Committee determines that such
action is advisable, the Company may assist any Participant in obtaining
financing from the Company (or under any program of the Company approved
pursuant to applicable law), or from a bank or other third party, on such terms
as are determined by the Committee, and in such amount as is required to
accomplish the purposes of this Plan, including, but not limited to, to permit
the exercise of an Award, the participation therein, and/or the payment of any
taxes with respect thereto. Such assistance may take any form that the Committee
deems appropriate, including, but not limited to, a direct loan from the
Company, a guarantee of the obligation by the Company or the maintenance by the
Company of deposits with such bank or third party.

         SECTION 18.  MISCELLANEOUS PROVISIONS.

                  (a) Any proceeds from Awards shall constitute general funds of
         the Company.

                  (b) Except as otherwise determined by the Committee,
         fractional shares may be delivered under an Award, or in lieu thereof a
         cash or other adjustment may be made as determined by the Committee in
         its discretion.

                  (c) No Eligible Person or other person shall have any claim or
         right to be granted an Award under this Plan. Determinations made by
         the Committee under this Plan need not be uniform and may be made
         selectively among Eligible Persons under this Plan, whether or not such
         Eligible Persons are similarly situated. Neither this Plan nor any
         action taken hereunder shall be construed as giving any Eligible Person
         any right to continue to be employed by or perform services for the
         Company, and the right to terminate the employment of or performance of
         services by Eligible Persons at any time and for any reason is
         specifically reserved.

                  (d) No Participant or other person shall have any right with
         respect to this Plan, the Common Shares reserved for issuance under
         this Plan or in any Award, contingent or otherwise, until written
         evidence of the Award shall have been delivered to the recipient and
         all the terms,



                                      -9-
<PAGE>

         conditions and provisions of this Plan and the Award applicable to such
         recipient (and each person claiming under or through him) have been
         met.

                  (e) No Common Shares, Other Securities or property, or other
         forms of payment shall be issued hereunder with respect to any Award
         unless counsel for the Company shall be satisfied that such issuance
         will be in compliance with applicable law and any applicable rules of
         any stock exchange or other market quotation system on which Common
         Shares are listed.

                  (f) It is the intent of the Company that this Plan comply in
         all respects with Rule 16b-3 and Section 162(m) with respect to Awards
         granted to executive officers of the Company, that any ambiguities or
         inconsistencies in construction of this Plan be interpreted to give
         effect to such intention and that if any provision of this Plan is
         found not to be in compliance with Rule 16b-3 or Section 162(m), such
         provision shall be deemed null and void with respect to Awards granted
         to executive officers of the Company to the extent required to permit
         such Awards to comply with Rule 16b-3 and Section 162(m). It is also
         the intent of the Company that this Plan comply in all respects with
         the provisions of the Code providing favorable treatment to Incentive
         Stock Options, that any ambiguities or inconsistencies in construction
         of this Plan be interpreted to give effect to such intention and that
         if any provision of this Plan is found not to be in compliance with the
         Incentive Stock Option provisions of the Code, such provision shall be
         deemed null and void with respect to Incentive Stock Options granted to
         employees of the Company to the extent required to permit such
         Incentive Stock Options to receive favorable treatment under the Code.

                  (g) The Company shall have the right to deduct from any
         payment made under this Plan any federal, state, local or foreign
         income or other taxes required by law to be withheld with respect to
         such payment. It shall be a condition to the obligation of the Company
         to issue Common Shares, Other Securities or property, or other forms of
         payment, or any combination thereof, upon exercise, settlement or
         payment of any Award under this Plan, that the Participant (or any
         Beneficiary or person entitled to act) pay to the Company, upon its
         demand, such amount as may be required by the Company for the purpose
         of satisfying any liability to withhold federal, state, local or
         foreign income or other taxes. If the amount requested is not paid, the
         Company may refuse to issue Common Shares, Other Securities or
         property, or other forms of payment, or any combination thereof.
         Notwithstanding anything in this Plan to the contrary, the Committee
         may, in its discretion, permit an Eligible Person (or any Beneficiary
         or person entitled to act) to elect to pay a portion or all of the
         amount requested by the Company for such taxes with respect to such
         Award, at such time and in such manner as the Committee shall deem to
         be appropriate (including, but not limited to, by authorizing the
         Company to withhold, or agreeing to surrender to the Company on or
         about the date such tax liability is determinable, Common Shares, Other
         Securities or property, or other forms of payment, or any combination
         thereof, owned by such person or a portion of such forms of payment
         that would otherwise be distributed, or have been distributed, as the
         case may be, pursuant to such Award to such person, having a Fair
         Market Value equal to the amount of such taxes).

                  (h) The expenses of this Plan shall be borne by the Company;
         provided, however, the Company may recover from a Participant or his
         Beneficiary, heirs or assigns any and all damages, fees, expenses and
         costs incurred by the Company arising out of any actions taken by a
         Participant in breach of this Plan or any agreement evidencing such
         Participant's Award.

                  (i) This Plan shall be unfunded. The Company shall not be
         required to establish any special or separate fund or to make any other
         segregation of assets to assure the payment of any



                                      -10-
<PAGE>

         Award under this Plan, and rights to the payment of Awards shall be no
         greater than the rights of the Company's general creditors.

                  (j) By accepting any Award or other benefit under this Plan,
         each Participant and each person claiming under or through him shall be
         conclusively deemed to have indicated his acceptance and ratification
         of, and consent to, any action taken under this Plan by the Company,
         the Board, the Committee or the Designated Administrator (if
         applicable).

                  (k) The appropriate officers of the Company shall cause to be
         filed any reports, returns or other information regarding Awards
         hereunder of any Common Shares issued pursuant hereto as may be
         required by applicable law and any applicable rules of any stock
         exchange or other market quotation system on which Common Shares are
         listed.

                  (l) The validity, construction, interpretation, administration
         and effect of this Plan, and of its rules and regulations, and rights
         relating to this Plan and to Awards granted under this Plan, shall be
         governed by the substantive laws, but not the choice of law rules, of
         the State of Colorado.

                  (m) Records of the Company shall be conclusive for all
         purposes under this Plan or any Award, unless determined by the
         Committee to be incorrect.

                  (n) If any provision of this Plan or any Award is held to be
         illegal or invalid for any reason, the illegality or invalidity shall
         not affect the remaining provisions of this Plan or any Award, but such
         provision shall be fully severable, and this Plan or Award, as
         applicable, shall be construed and enforced as if the illegal or
         invalid provision had never been included in this Plan or Award, as
         applicable.

                  (o) The terms of this Plan shall govern all Awards under this
         Plan and in no event shall the Committee have the power to grant any
         Award under this Plan that is contrary to any of the provisions of this
         Plan.

                  (p) For purposes of interpretation of this Plan, the masculine
         pronoun includes the feminine and the singular includes the plural
         wherever appropriate.

         SECTION 19. PLAN AMENDMENT OR SUSPENSION. The Board at any time, and
from time to time, may amend or suspend the Plan. However, except as provided in
Section 15 relating to adjustments upon changes in Common Stock, no amendment
shall be effective unless approved by the shareholders of the Company to the
extent shareholder approval is necessary to satisfy the requirements of Section
422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing
requirements. No amendment of this Plan shall adversely affect in a material
manner any right of any Participant with respect to any Award previously granted
without such Participant's written consent, except as permitted under Section
13.

         SECTION 20. PLAN TERMINATION. This Plan shall terminate upon the
earlier of the following dates or events to occur:

                  (a) upon the adoption of a resolution of the Board terminating
         this Plan; or

                  (b) the tenth anniversary of the Effective Date; provided,
         however, that the Board may, prior to such date, extend the term of
         this Plan for an additional period of up to five years for the grant of
         Awards other than Incentive Stock Options. No termination of this Plan
         shall materially alter or impair any of the rights or obligations of
         any person, without his consent,



                                      -11-
<PAGE>

         under any Award previously granted under this Plan, except that
         subsequent to termination of this Plan, the Committee may make
         amendments or modifications permitted under Section 13.

         SECTION 21. EFFECTIVE DATE. This Plan shall be effective, and Awards
may be granted under this Plan, on or after the Effective Date.

ADOPTED BY THE BOARD:                          AUGUST 24, 2001
EFFECTIVE DATE:                                AUGUST 24, 2001

         EXECUTED to evidence this Colorado MEDtech, Inc. 2001 Long-Term
Incentive Plan adopted by the Board on August 24, 2001.

                                               COLORADO MEDTECH, INC.




                                               By:   /s/ Peter J. Jensen
                                                     Peter J. Jensen, Secretary




                                      -12-
<PAGE>



                                   APPENDIX A


         The following terms shall have the meaning indicated:

                  (a) "ACTUAL VALUE" has the meaning set forth in Section 9.

                  (b) "ASSOCIATED AWARD" shall mean an Award granted
         concurrently or subsequently in conjunction with another Award.

                  (c) "AWARD" shall mean an award of rights to an Eligible
         Person under this Plan.

                  (d) "AWARD PERIOD" has the meaning set forth in subsection
         9(b).

                  (e) "BENEFICIARY" has the meaning set forth in Section 16.

                  (f) "BOARD" shall mean the board of directors of the Company.

                  (g) "CODE" shall mean the Internal Revenue Code of 1986, as it
         now exists or may be amended from time to time, and the rules and
         regulations promulgated thereunder, as they may exist or may be amended
         from time to time.

                  (h) "COMMITTEE" shall mean the person or persons responsible
         for administering the Plan. The Board shall constitute the Committee
         until the Board appoints a Board Committee, after which time the Board
         Committee shall constitute the Committee, provided, however, that at
         any time the Board may designate itself as the Committee or designate
         itself to administer certain of the Committee's authority under the
         Plan, including administering certain Awards under the Plan. The Board
         or the Board Committee may designate a Designated Administrator to
         constitute the Committee or to administer certain of the Committee's
         authority under the Plan, including administering certain Awards under
         the Plan, subject to the right of the Board or the Board Committee, as
         applicable, to revoke its designation at any time and to make such
         designation on such terms and conditions as it may determine in its
         discretion. For purposes of this definition, the "BOARD COMMITTEE"
         shall mean a committee of the Board designated by the Board to
         administer this Plan. Except as otherwise determined by the Board, the
         Board Committee (i) shall be comprised of not fewer than two directors,
         (ii) shall meet any applicable requirements under Rule 16b-3, including
         any requirement that the Board Committee consist of "nonemployee
         directors" (as defined in Rule 16b-3), (iii) shall meet any applicable
         requirements under Section 162(m), including any requirement that the
         Board Committee consist of "outside directors" (as defined in Treasury
         Regulation Section 1.162-27(e)(3)(i) or any successor regulation), and
         (iv) shall meet any applicable requirements of any stock exchange or
         other market quotation system on which Common Shares are listed. For
         purposes of this definition, the "DESIGNATED ADMINISTRATOR" shall mean
         a person or person designated by the Board or a Board Committee to act
         as a Designated Administrator pursuant to this Plan. Except as
         otherwise determined by the Board, a Designated Administrator shall
         only be appointed if Rule 16b-3 permits such appointment and the
         exercise of any authority without adversely affecting the ability of
         Awards to officers of the Company to comply with the conditions for
         Rule 16b-3 or Section 162(m).

                  (i) "COMPANY" shall mean Colorado MEDtech, Inc. and any
         parent, subsidiary or affiliate of Colorado MEDtech, Inc.



                                      -13-
<PAGE>


                  (j) "COMMON SHARES" shall mean shares of common stock, no par
         value per share, of the Company and stock of any other class into which
         such shares may thereafter be changed.

                  (k) "EFFECTIVE DATE" shall mean the date the Board adopts this
         Plan.

                  (l) "ELIGIBLE PERSON(S)" shall mean those persons who are full
         or part-time employees of the Company or other individuals who perform
         services for the Company, including, without limitation, directors who
         are not employees of the Company and consultants and independent
         contractors who perform services for the Company.

                  (m) "EXCHANGE ACT" shall mean the Securities Exchange Act of
         1934, as it now exists or may be amended from time to time, and the
         rules promulgated thereunder, as they may exist or may be amended from
         time to time.

                  (n) "FAIR MARKET VALUE" shall mean such value rounded up to
         the nearest cent as determined by the Committee in accordance with
         applicable law.

                  (o) "INCENTIVE STOCK OPTION" shall mean a Stock Option that is
         an incentive stock option as defined in Section 422 of the Code.
         Incentive Stock Options are subject, in part, to the terms, conditions
         and restrictions described in Section 6.

                  (p) "MAXIMUM VALUE" has the meaning set forth in subsection
         9(a).

                  (q) "NONQUALIFIED STOCK OPTION" shall mean a Stock Option that
         is not an incentive stock option as defined in Section 422 of the Code.
         Nonqualified Stock Options are subject, in part, to the terms,
         conditions and restrictions described in Section 6.

                  (r) "OTHER SECURITIES" shall mean securities the Company
         (which may include, but need not be limited to, unbundled stock units
         or components thereof, debentures, preferred stock, warrants,
         securities convertible into Common Shares or other property) other than
         Common Shares.

                  (s) "PARTICIPANT" shall mean an Eligible Person to whom an
         Award has been granted under this Plan.

                  (t) "PERFORMANCE GRANT" shall mean an Award subject, in part,
         to the terms, conditions and restrictions described in Section 9,
         pursuant to which the recipient may become entitled to receive cash,
         Common Shares, Other Securities or property, or other forms of payment,
         or any combination thereof, as determined by the Committee.

                  (u) "PERMITTED TRANSFEREE" means (i) any person defined as an
         employee in the Instructions to Registration Statement Form S-8
         promulgated by the Securities and Exchange Commission, as such Form may
         be amended from time to time, which persons include, as of the date of
         adoption of the Plan, (a) executors, administrators or beneficiaries of
         the estates of deceased Participants, guardians or members of a
         committee for incompetent former Participants, or similar persons duly
         authorized by law to administer the estate or assets of former
         Participants, and (b) Participants' family members who acquire Awards
         from the Participant other than for value, through a gift or a domestic
         relations order. For purposes of this definition, "FAMILY MEMBER"
         includes any child, stepchild, grandchild, parent, stepparent,
         grandparent, spouse, former spouse, sibling, niece, nephew,
         mother-in-law, father-in-law, son-in-law, daughter-in-law,
         brother-in-law, or sister-in-law, including adoptive relationships, any
         person sharing the



                                      -14-
<PAGE>

         Participant's household (other than a tenant or employee), a trust in
         which these persons have more than fifty percent of the beneficial
         interest, a foundation in which these persons (or the Participant)
         control the management of assets, and any other entity in which these
         persons (or the Participant) own more than fifty percent of the voting
         interests. For purposes of this definition, neither (i) a transfer
         under a domestic relations order in settlement of marital property
         rights; nor (ii) a transfer to an entity in which more than fifty
         percent of the voting interests are owned by family members (or the
         Participant) in exchange for an interest in that entity is considered a
         transfer for "VALUE".

                  (v) "PLAN" shall mean this Colorado MEDtech, Inc. 2001
         Long-Term Incentive Plan.

                  (w) "PURCHASED OPTION" shall mean a Stock Option that is sold
         to an Eligible Person at a price determined by the Committee. Purchased
         Options are subject, in part, to the terms, conditions and restrictions
         described in Section 6.

                  (x) "RESTRICTED PERIOD" has the meaning set forth in
         subsection 8(b).

                  (y) "RESTRICTED STOCK" shall mean an Award of Common Shares
         that are issued subject, in part, to the terms, conditions and
         restrictions described in Section 8.

                  (z) "RULE 16b-3" shall mean Rule 16b-3 promulgated by the
         Securities and Exchange Commission under the Exchange Act and any
         successor rule.

                  (aa) "SECTION 162(m)" shall mean Section 162(m) of the Code,
         any rules or regulations promulgated thereunder, as they may exist or
         may be amended from time to time, or any successor to such section.

                  (bb) "STOCK APPRECIATION RIGHT" shall mean an Award of a right
         to receive (without payment to the Company) cash, Common Shares, Other
         Securities or property, or other forms of payment, or any combination
         thereof, as determined by the Committee, based on the increase in the
         value of the number of Common Shares specified in the Stock
         Appreciation Right. Stock Appreciation Rights are subject, in part, to
         the terms, conditions and restrictions described in Section 7.

                  (cc) "STOCK OPTION" shall mean an Award of a right to purchase
         Common Shares. The term Stock Option shall include Nonqualified Stock
         Options, Incentive Stock Options and Purchased Options.

                  (dd) "TEN PERCENT EMPLOYEE" shall mean an employee of the
         Company who owns stock representing more than ten percent of the voting
         power of all classes of stock of the Company or any parent or
         subsidiary of the Company.

                  (ee) "TREASURY REGULATION" shall mean a final, proposed or
         temporary regulation of the Department of Treasury under the Code and
         any successor regulation.



                                      -15-

</TEXT>
</DOCUMENT>
