See "http://www.cisco.com/warp/public/779/smbiz/service/knowledge/general/recovery1.htm" for complete details on the hows and whys.
1. Press Ctrl+Break during the first 60 seconds after power-up
2. Type "confreg 0x142"
3. Type "reset"
4. When prompted if you want to enter the initial configuration dialog, type "n" for no.
5. Type "enable"
6. Type "copy startup-config running-config"
7. Type "config term"
8. Type "enable secret [new_password]"
9. Type "config-reg 0x2102"
10. Type "end"
11. Type "copy running-config startup-config"
12. Type "reload"