EXHIBIT 99.1
ONTRACK DATA INTERNATIONAL, INC.
1996 STOCK INCENTIVE PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the ONTRACK Data International, Inc. 1996
Stock Incentive Plan (the "Plan"). The purpose of the Plan is to enable ONTRACK
Data International, Inc. (the "Company") to retain and attract executives and
other key employees, Non-Employee Directors and consultants who contribute to
the Company's success by their ability, ingenuity and industry, and to enable
such individuals to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of the Company as it may
be comprised from time to time.
b. "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony,
willful misconduct, dishonesty or intentional violation of a
statute, rule or regulation, any of which, in the judgment of
the Company, is harmful to the business or reputation of the
Company.
c. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
d. "Committee" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then
the functions of the Committee specified in the Plan shall be
exercised by the Board, unless the Plan specifically states
otherwise.
e. "Consultant" means any person, including an advisor, engaged
by the Company or a Parent of the Subsidiary of the Company to
render services and who is compensated for such services and
who is not an employee of the Company or any Parent
Corporation or Subsidiary of the Company. A Non-Employee
Director may serve as a Consultant.
f. "Company" means ONTRACK Data International, Inc., a
corporation organized under the laws of the State of Minnesota
(or any successor corporation).
g. "Deferred Stock" means an award made pursuant to Section 8
below of the right to receive stock at the end of a specified
deferral period.
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h. "Disability" means permanent and total disability as
determined by the Committee.
i. "Early Retirement" means retirement, with consent of the
Committee at the time of retirement, from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company.
j. "Fair Market Value" of Stock on any given date shall be
determined by the Committee as follows: (a) if the Stock is
listed for trading on one of more national securities
exchanges, or is traded on the Nasdaq Stock Market, the last
reported sales price on the principal such exchange or the
Nasdaq Stock Market on the date in question, or if such Stock
shall not have been traded on such principal exchange on such
date, the last reported sales price on such principal exchange
or the Nasdaq Stock Market on the first day prior thereto on
which such Stock was so traded; or (b) if the Stock is not
listed for trading on a national securities exchange or the
Nasdaq Stock Market, but is traded in the over-the-counter
market, including the Nasdaq Small Cap Market, the closing bid
price for such Stock on the date in question, or if there is
no such bid price for such Stock on such date, the closing bid
price on the first day prior thereto on which such price
existed; or (c) if neither (a) or (b) is applicable, by any
means fair and reasonable by the Committee, which
determination shall be final and binding on all parties.
k. "Incentive Stock Option" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
l. "Non-Employee Director" shall have the meaning set forth in
rule 16b-3(b)(3) as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, or any
successor definition adopted by the Commission.
m. "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, and is intended to be and is
designated as a "Non-Qualified Stock Option."
n. "Normal Retirement" means retirement from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company on or after age 65.
o. "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if each of the corporations (other than the Company)
owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations
in the chain.
p. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 7 below.
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q. "Retirement" means Normal Retirement or Early Retirement.
r. "Stock" means the Common Stock of the Company.
s. "Stock Appreciation Right" means the right pursuant to an
award granted under Section 6 below to surrender to the
Company all or a portion of a Stock Option in exchange for an
amount equal to the difference between (i) Fair Market Value,
as of the date such Stock Option or such portion thereof is
surrendered, of the shares of Stock covered by such Stock
Option or such portion thereof, and (ii) the aggregate
exercise price of such Stock Option or such portion thereof.
t. "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5 below.
u. "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company
if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one
of the other corporations in the chain.
SECTION 2. Administration.
The Plan shall be administered by the Board of Directors or by a
Committee of not less than two Non-Employee Directors, who shall be appointed
by the Board of Directors of the Company and who shall serve at the pleasure of
the Board.
The Committee shall have the power and authority to grant to eligible
employees or Consultants, pursuant to the terms of the Plan: (i) Stock Options,
(ii) Stock Appreciation Rights, (iii) Restricted Stock, or (iv) Deferred Stock
awards.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of the Company
and its Subsidiaries and other eligible persons to whom Stock
Options, Stock Appreciation Rights, Restricted Stock and
Deferred Stock awards may from time to time be granted
hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock and Deferred Stock awards, or a
combination of the foregoing, are to be granted hereunder;
(iii) to determine the number of shares to be covered by each such
award granted hereunder;
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(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder
(including, but not limited to, any restriction on any Stock
Option or other award and/or the shares of Stock relating
thereto), which authority shall be exclusively vested in the
Committee (and not the Board) for purposes of establishing
performance criteria used with Restricted Stock and Deferred
Stock awards provided, however, in the event of a merger or
asset sale, the applicable provisions of Sections 5(c) and
7(c) of the Plan shall govern the acceleration of the vesting
of any Stock option or awards;
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to
an award under this Plan shall be deferred either
automatically or at the election of the participant.
The Committee 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 (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate to executive officers of the Company the authority to exercise the
powers specified in (i), (ii), (iii), (iv) and (v) above with respect to persons
who are not executive officers of the Company.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 2,400,000. Such shares may consist, in
whole or in part, of authorized and unissued shares.
Subject to paragraph (b)(iv) of Section 6 below, if any shares that
have been optioned cease to be subject to Stock Options, or if any shares
subject to any Restricted Stock or Deferred Stock award granted hereunder are
forfeited or such award otherwise terminates without a payment being made to the
participant, such shares shall again be available for distribution in connection
with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding options granted under the Plan, and in the number of
shares subject to Restricted Stock or Deferred Stock awards granted under the
Plan as may be determined to be appropriate by the Committee, in its sole
discretion, provided that the number of shares subject to any award shall always
be a whole number. Such adjusted option price shall also be used to determine
the amount payable by the Company upon the exercise of any Stock Appreciation
Right associated with any Option.
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SECTION 4. Eligibility.
Officers, other key employees of the Company and Subsidiaries,
Non-Employee Directors, and Consultants who are responsible for or contribute to
the management, growth and profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock awards under the Plan. The optionees
and participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares covered by each
award.
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) NonQualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after February 3, 2010.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options (in each
case with or without Stock Appreciation Rights). To the extent that any option
does not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
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 either the Plan or any Incentive Stock Option
under Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Option as
an Incentive Stock Option, provided the optionee consents in writing to the
modification or amendment.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at
the time of grant. In no event shall the option price per
share of Stock purchasable under an Incentive Stock Option be
less than 100% of Fair Market Value on the date the option is
granted. If an employee owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all
classes of
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stock of the Company or any Parent Corporation or Subsidiary
and an Incentive Stock Option is granted to such employee, the
option price shall be no less than 110% of the Fair Market
Value of the Stock on the date the option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be
exercisable more than ten years after the date the option is
granted. If an employee owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of
the Company or any Parent Corporation or Subsidiary and an
Incentive Stock Option is granted to such employee, the term
of such option shall be no more than five years from the date
of grant.
(c) Exercisability. Stock Options shall be exercisable at such
time or times as determined by the Committee at or after
grant. If the Committee provides, in its discretion, that any
option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time.
Notwithstanding anything contained in the Plan to the
contrary, the Committee may, in its discretion, extend or vary
the term of any Stock Option or any installment thereof,
whether or not the optionee is then employed by the Company,
if such action is deemed to be in the best interests of the
Company; provided, however, that in the event of a merger or
sale of assets, the provisions of this section 5(c) shall
govern vesting acceleration.
Notwithstanding the foregoing, unless the Stock Option
provides otherwise, any Stock Option granted under this Plan
shall be exercisable in full, without regard to any
installment exercise provisions, for a period specified by the
Committee, but not to exceed sixty (60) days, prior to the
occurrence of any of the following events: (i) dissolution or
liquidation of the Company other than in conjunction with a
bankruptcy of the Company or any similar occurrence, (ii) any
merger, consolidation, acquisition, separation,
reorganization, or similar occurrence, where the Company will
not be the surviving entity, or (iii) the transfer of
substantially all of the assets of the Company or 75% or more
of the outstanding Stock of the Company.
The grant of an option pursuant to the Plan shall not limit 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, exchange or consolidate or
to dissolve, liquidate, sell or transfer all or any part of
its business or assets.
(d) Method of Exercise. Stock Options may be exercised in whole or
in part at any time during the option period 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, either by check, or by
any other form of legal consideration deemed sufficient by the
Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly
executed
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exercise notice together with irrevocable instructions to a
broker acceptable to the Company to promptly deliver to the
Company the amount of sale or loan proceeds to pay the
exercise price. As determined by the Committee at the time of
grant or exercise, in its sole discretion, payment in full or
in part may also be made in the form of Stock already owned by
the optionee (which in the case of Stock acquired upon
exercise of an option have been owned for more than six months
on the date of surrender) or, in the case of the exercise of a
Non-Qualified Stock Option, Restricted Stock or Deferred Stock
subject to an award hereunder (based, in each case, on the
Fair Market Value of the Stock on the date the option is
exercised, as determined by the Committee), provided, however,
that, in the case of an Incentive Stock Option, the right to
make a payment in the form of already owned shares may be
authorized only at the time the option is granted, and
provided further that in the event payment is made in the form
of shares of Restricted Stock or a Deferred Stock award, the
optionee will receive a portion of the option shares in the
form of, and in an amount equal to, the Restricted Stock or
Deferred Stock award tendered as payment by the optionee. No
shares of Stock shall be issued until full payment therefor
has been made. An optionee shall generally have the rights to
dividends and other rights of a shareholder with respect to
shares subject to the option when the optionee has given
written notice of exercise, has paid in full for such shares,
and, if requested, has given the representation described in
paragraph (a) of Section 12.
(e) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the
laws of descent and distribution, and all Stock Options shall
be exercisable, during the optionee's lifetime, only by the
optionee.
(f) Termination by Death. If an optionee's employment by the
Company and any Subsidiary or Parent Corporation terminates by
reason of death, the Stock Option may thereafter be
immediately exercised, to the extent then exercisable, by the
legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of
twelve months from the date of such death or until the
expiration of the stated term of the option, whichever period
is shorter.
(g) Termination by Reason of Disability. If an optionee's
employment by the Company and any Subsidiary or Parent
Corporation terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be exercised, to
the extent it was exercisable at the time of termination due
to Disability, but may not be exercised after twelve months
from the date of such termination of employment or the
expiration of the stated term of the option, whichever period
is the shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, the option will
thereafter be treated as a Non-Qualified Stock Option.
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(h) Termination by Reason of Retirement. If an optionee's
employment by the Company and any Subsidiary or Parent
Corporation terminates by reason of Retirement and the terms
of the Stock Option so provide, any Stock Option held by such
optionee may thereafter be exercised to the extent it was
exercisable at the time of such Retirement, but may not be
exercised after twelve months from the date of such
termination of employment or the expiration of the stated term
of the option, whichever period is the shorter. In the event
of termination of employment by reason of Retirement, if an
Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of
the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(i) Other Termination. In the event an Optionee's continuous
status as an Employee or Consultant terminates (other than
upon the Optionee's death or Disability), the Optionee may
exercise his or her Option, but only within such period of
time as is determined by the Committee, and only to the extent
that the Optionee was entitled to exercise it at the date of
termination (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant). In
the case of an Incentive Stock Option, the Committee shall
determine such period of time (in no event to exceed ninety
(90) days from the date of termination) when the Option is
granted. In the event an Optionee's employment with the
Company is terminated for Cause, or under such other
circumstances as the Committee shall define in the Option
Grant, all Options granted to such Optionee shall immediately
terminate.
(j) Annual Limit on Incentive Stock Options. The aggregate Fair
Market Value (determined as of the time the Stock Option is
granted) of the Common Stock with respect to which an
Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is
exercisable for the first time by an optionee during any
calendar year shall not exceed $100,000.
(k) Directors. Each person who is not an employee of the Company,
any Parent Corporation or Subsidiary, serving as a Director of
the Company on the effective date of the Company's initial
public offering shall automatically be granted an Option to
purchase 10,000 shares of Stock at an option price per share
equal to 100% of the offering price per share of the Company's
common stock on the effective date of the registration
statement for the Company's initial public offering. Each
person who is elected as a Director of the Company subsequent
to the effective date of the Company's initial public offering
and who was not serving as a Director at such date, and who is
not an employee of the Company, any Parent Corporation or
Subsidiary, shall automatically be granted an Option to
purchase 10,000 shares of Stock at an option price per share
equal to 100% of the Fair Market Value of a share of Stock on
the date of election (whether or not such election is by the
Board of Directors or the shareholders of the Company). All
such Options shall be designated as Non-Qualified Stock
Options and shall be subject to the same terms and provisions
as are then in
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effect with respect to the grant of Non-Qualified Stock
Options to officers and key employees of the Company, except
that (i) the term of each such Option shall be equal to ten
years and (ii) the Option shall become exercisable as to
one-fourth of the shares subject to the Option beginning one
year after the date the Option is granted, the second fourth
beginning two years after the date the Option is granted, the
third fourth beginning three years after the date the Option
is granted, and the final fourth beginning four years from the
date the Option is granted. Upon termination of such person's
service as a Director of the Company, the unvested portion of
an Option held by such Director shall terminate immediately
and such Director will be allowed to exercise the vested
portion of such Option for a period of one year after the date
on which such person ceased to be a Director, after which date
the vested portion of the Option, if not exercised, shall
terminate. Any person who is elected as a Director of the
Company at an Annual Meeting of Shareholders after the fourth
anniversary date of the granting of an Option to such Director
pursuant to this Section 5(k) who is not an employee of the
Company, any Parent Corporation or Subsidiary shall be
automatically granted an Option to purchase an additional
10,000 shares of Stock at an option price equal to 100% of the
fair market value of a share of stock on such date. Subject to
the foregoing, all provisions of this Plan not inconsistent
with the foregoing shall apply to Options granted under this
Section 5(k).
(l) The maximum aggregate number of shares as to which Options may
be granted to any Participant in any calendar year shall be
500,000.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted
under the Plan. In the case of a Non-Qualified Stock Option,
such rights may be granted either at or after the time of the
grant of such Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the
grant of the option.
A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate
and no longer be exercisable upon the termination or exercise
of the related Stock Option, except that a Stock Appreciation
Right granted with respect to less than the full number of
shares covered by a related stock Option shall not be reduced
until the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Stock
Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in
accordance with paragraph (b) of this Section 6, by
surrendering the applicable portion of the related Stock
Option. Upon such exercise and surrender, the optionee shall
be entitled to receive an amount determined in the manner
prescribed in paragraph (b) of this Section 6. Stock Options
which have been so surrendered, in whole or in part, shall
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no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with
the provisions of the Plan, as shall be determined from time
to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only
at such time or times and to the extent that the
Stock Options to which they relate shall be
exercisable in accordance with the provisions of
Section 5 and this Section 6 of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not
more than, an amount in cash or shares of Stock equal
in value to the excess of the Fair Market Value of
one share of Stock over the option price per share
specified in the related option multiplied by the
number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with
the Committee having the right to determine the form
of payment.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock
Option would be transferable under Section 5 of the
Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have
been exercised for the purpose of the limitation set
forth in Section 3 of the Plan on the number of
shares of Stock to be issued under the Plan, but only
to the extent of the number of shares issued or
issuable under the Stock Appreciation Right at the
time of exercise based on the value of the Stock
Appreciation Right at such time.
(v) A Stock Appreciation Right granted in connection with
an Incentive Stock Option may be exercised only if
and when the market price of the Stock subject to the
Incentive Stock Option exceeds the exercise price of
such Option.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued
either alone or in addition to other awards granted under the
Plan. The Committee shall determine the officers, key
employees and Consultants of the Company and Subsidiaries to
whom, and the
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time or times at which, grants of Restricted Stock will be
made, the number of shares to be awarded, the time or times
within which such awards may be subject to forfeiture, and all
other conditions of the awards. The Committee may also
condition the grant of Restricted Stock upon the attainment of
specified performance goals. The provisions of Restricted
Stock awards need not be the same with respect to each
recipient.
(b) Awards and Certificates. The prospective recipient of an award
of shares of Restricted Stock shall not have any rights with
respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a
fully executed copy thereof to the Company, and has otherwise
complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate
in respect of shares of Restricted Stock awarded
under the Plan. Such certificate shall be registered
in the name of the 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 ONTRACK Data
International, Inc. 1996 Stock Incentive
Plan and an Agreement entered into between
the registered owner and ONTRACK Data
International, Inc. Copies of such Plan and
Agreement are on file in the offices of
ONTRACK Data International, Inc., 9023
Columbine Road, Eden Prairie, Minnesota
55347."
(ii) The Committee shall 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
Restricted Stock award, the participant shall have
delivered a stock power, endorsed in blank, relating
to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock
awarded pursuant to the Plan shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee
commencing with the date of such award (the
"Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge or assign shares
of Restricted Stock awarded under the Plan. Within
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these limits, the Committee may provide for the lapse
of such restrictions in installments where deemed
appropriate.
(ii) Except as provided in paragraph (c)(i) of this
Section 7, the participant shall have, with respect
to the shares of Restricted Stock, all of the rights
of a shareholder of the Company, including the right
to vote the shares and the right to receive any cash
dividends. The Committee, in its sole discretion, may
permit or require the payment of cash dividends to be
deferred and, if the Committee so determines,
reinvested in additional shares of Restricted Stock
(to the extent shares are available under Section 3
and subject to paragraph (f) of Section 12).
Certificates for shares of unrestricted Stock shall
be delivered to the grantee promptly after, and only
after, the period of forfeiture shall have expired
without forfeiture in respect of such shares of
Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (C)(iv) of this Section 7, upon termination
of employment for any reason during the Restriction
Period, all shares still subject to restriction shall
be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is unforeseeable
emergency of a participant still in service, the
Committee may, in its sole terminated (other than for
Cause), including death, Disability or Retirement, or
in the event of an discretion, when it finds that a
waiver would be in the best interest of the Company,
waive in whole or in part any or all remaining
restrictions with respect to such participant's
shares of Restricted Stock.
(v) Notwithstanding the foregoing, all restrictions with
respect to any participant's shares of Restricted
Stock shall lapse, on the date determined by the
Committee, prior to, but in no event more than sixty
(60) days prior to, the occurrence of any of the
following events: (i) dissolution or liquidation of
the Company other than in conjunction with a
bankruptcy of the Company or any similar occurrence,
(ii) any merger, consolidation, acquisition,
separation, reorganization, or similar occurrence,
where the Company will not be the surviving entity,
or (iii) the transfer of substantially all of the
assets of the Company or 75% or more of the
outstanding Stock of the Company.
SECTION 8. Deferred Stock Awards.
(a) Administration. Deferred Stock may be awarded either alone or
in addition to other awards granted under the Plan. The
Committee shall determine the officers, key
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employees and Consultants of the Company and Subsidiaries to
whom and the time or times at which Deferred Stock shall be
awarded, the number of Shares of Deferred Stock to be awarded
to any participant or group of participants, the duration of
the period (the "Deferral Period") during which, and the
conditions under which, receipt of the Stock will be deferred,
and the terms and conditions of the award in addition to those
contained in paragraph (b) of this Section 8. The Committee
may also condition the grant of Deferred Stock upon the
attainment of specified performance goals. The provisions of
Deferred Stock awards need not be the same with respect to
each recipient.
(b) Terms and Conditions.
(i) Subject to the provisions of this Plan and the award
agreement, Deferred Stock awards may not be sold,
assigned, transferred, pledged or otherwise
encumbered during the Deferral Period. At the
expiration of the Deferral Period (or Elective
Deferral Period, where applicable), share
certificates shall be delivered to the participant,
or his legal representative, in a number equal to the
shares covered by the Deferred Stock award.
(ii) Amounts equal to any dividends declared during the
Deferral Period with respect to the number of shares
covered by a Deferred Stock award will be paid to the
participant currently or deferred and deemed to be
reinvested in additional Deferred Stock or otherwise
reinvested, all as determined at the time of the
award by the Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and
paragraph (b)(iv) of this Section 8, upon termination
of employment for any reason during the Deferral
Period for a given award, the Deferred Stock in
question shall be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other
than for Cause) including death, Disability or
Retirement, or in the event of an unforeseeable
emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds
that a waiver would be in the best interest of the
Company, waive in whole or in part any or all of the
remaining deferral limitations imposed hereunder with
respect to any or all of the participant's Deferred
Stock.
(v) A participant may elect to further defer receipt of
the award for a specified period or until a specified
event (the "Elective Deferral Period"), subject in
each case to the Committee's approval and to such
terms as are determined by the Committee, all in its
sole discretion. Subject to any exceptions adopted by
the Committee, such election must generally be made
prior to completion of
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one half of the Deferral Period for a Deferred Stock
award (or for an installment of such an award).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the
Company and the participant.
SECTION 9. Transfer, Leave of Absence, etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer of an employee from the Company to a Parent
Corporation or Subsidiary, or from a Parent Corporation or
Subsidiary to the Company, or from one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose
approved by the Company if the period of such leave does not
exceed ninety (90) days (or such longer period as the
Committee may approve, in its sole discretion); and (c) a
leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to
reemployment is guaranteed either by a statute or by contract,
and provided that, in the case of any leave of absence, the
employee returns to work within 30 days after the end of such
leave.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option, Restricted Stock or other
Stock-based award theretofore granted, without the optionee's or participant's
consent, or (ii) which without the approval of the stockholders of the Company
would cause the Plan to no longer comply with Rule 16b-3 under the Securities
Exchange Act of 1934, Section 422 of the Code or any other regulatory
requirements.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively to the extent such amendment is
consistent with the terms of this Plan, but no such amendment shall impair the
rights of any holder without his or her consent except to the extent authorized
under the Plan. The Committee may also substitute new Stock Options for
previously granted options, including previously granted options having higher
option prices.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the
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Company, nothing contained herein shall give any such participant or optionee
any rights that are greater than those of a general creditor of the Company. In
its sole discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Stock or
payments in lieu of or with respect to awards hereunder, provided, however, that
the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.
SECTION 12. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option under the Plan to represent to and
agree with the Company in writing that the optionee is
acquiring the shares without a view to distribution thereof.
The certificates for such shares may include any legend which
the Committee deems appropriate to reflect any restrictions on
transfer.
All certificates for shares of Stock delivered under the Plan
pursuant to any Restricted Stock, Deferred Stock or other
Stock-based awards shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange
upon which the Stock is then listed, and any applicable
Federal or state securities laws, and the Committee may cause
a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted
Stock, Deferred Stock and other Stock-based awards under the
Plan (other than Stock Options) are not required to make any
payment or provide consideration other than the rendering of
services.
(c) Nothing contained in this Plan shall prevent the Board of
Directors from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval
is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company
or any Subsidiary any right to continued employment with the
Company or a Subsidiary, as the case may be, nor shall it
interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees
at any time.
(d) Each participant shall, no later than the date as of which any
part of the value of an award first becomes includible as
compensation in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment
of, any Federal, state, or local taxes of any kind required by
law to be withheld with respect to the award. The obligations
of the Company under the Plan shall be conditional on such
payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right
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to deduct any such taxes from any payment of any kind
otherwise due to the participant. With respect to any award
under the Plan, if the terms of such award so permit, a
participant may elect by written notice to the Company to
satisfy part or all of the withholding tax requirements
associated with the award by (i) authorizing the Company to
retain from the number of shares of Stock that would otherwise
be deliverable to the participant, or (ii) delivering to the
Company from shares of Stock already owned by the participant,
that number of shares having an aggregate Fair Market Value
equal to part or all of the tax payable by the participant
under this Section 12(d). Any such election shall be in
accordance with, and subject to, applicable tax and securities
laws, regulations and rulings.
(e) At the time of grant, the Committee may provide in connection
with any grant made under this Plan that the shares of Stock
received as a result of such grant shall be subject to a
repurchase right in favor of the Company, pursuant to which
the participant shall be required to offer to the Company upon
termination of employment for any reason any shares that the
participant acquired under the Plan, with the price being the
then Fair Market Value of the Stock or, in the case of a
termination for Cause, an amount equal to the cash
consideration paid for the Stock, subject to such other terms
and conditions as the Committee may specify at the time of
grant. The Committee may, at the time of the grant of an award
under the Plan, provide the Company with the right to
repurchase, or require the forfeiture of, shares of Stock
acquired pursuant to the Plan by any participant who, at any
time within two years after termination of employment with the
Company, directly or indirectly competes with, or is employed
by a competitor of, the Company.
(f) The reinvestment of dividends in additional Restricted Stock
(or in Deferred Stock or other types of Plan awards) at the
time of any dividend payment shall only be permissible if the
Committee (or the Company's chief financial officer) certifies
in writing that under Section 3 sufficient shares are
available for such reinvestment (taking into account then
outstanding Stock Options and other Plan awards).
(g) The Plan is expressly made subject to the approval by
shareholders of the Company. If the Plan is not so approved by
the shareholders on or before one year after this Plan's
adoption by the Board of Directors, this Plan shall not come
into effect. The offering of the shares hereunder shall be
also subject to the effecting by the Company of any
registration or qualification of the shares under any federal
or state law or the obtaining of the consent or approval of
any governmental regulatory body which the Company shall
determine, in its sole discretion, is necessary or desirable
as a condition to or in connection with, the offering or the
issue or purchase of the shares covered thereby.
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