UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarter Ended December 31, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-11336
CIPRICO INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 41-1749708
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2800 Campus Drive
Plymouth, Minnesota 55441
(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 551-4000
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
The number of shares outstanding of the registrant's Common Stock, $.01 par
value, as of January 26, 1999 was 4,858,867 shares.
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
Page
PART I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
December 31, 1998 and September 30, 1998 3
Condensed Consolidated Income Statements for
Three Months Ended December 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows for
Three Months Ended December 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-9
Item 3. Quantitative and Qualitative Disclosures about Market
Risk 10
PART II Other Information
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CIPRICO INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands) December 31, September 30,
1998 1998
ASSETS ------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,030 $ 9,030
Marketable securities 18,928 18,945
Accounts receivable, less allowance 5,386 5,667
Inventories 3,639 3,755
Deferred income taxes 738 738
Other current assets 693 1,586
---------- ----------
Total current assets 37,414 39,721
Property and equipment, net 4,402 4,511
Marketable securities 6,514 5,016
Other assets 218 225
---------- ----------
Total assets $ 48,548 $ 49,473
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,726 $ 2,438
Accrued expenses 882 908
Deferred revenue 819 818
---------- ----------
Total current liabilities 3,427 4,164
Shareholders' equity:
Capital stock 49 49
Additional paid-in capital 35,520 35,983
Retained earnings 9,635 9,353
Deferred compensation from restricted stock (83) (76)
---------- ---------
Total shareholders' equity 45,121 45,309
---------- ---------
Total liabilities and shareholders' equity $ 48,548 $ 49,473
========== =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands except Three Months Ended
per share amounts) December 31,
------------
1998 1997
------ ------
<S> <C> <C>
NET SALES $ 7,774 $ 7,260
Cost of sales 3,866 3,684
---------- ---------
GROSS PROFIT 3,908 3,576
OPERATING EXPENSES:
Research and development expense 1,140 879
Sales and marketing expenses 2,082 1,788
General and administrative expenses 676 631
---------- ---------
Total operating expenses 3,898 3,298
---------- ---------
INCOME FROM OPERATIONS 10 278
Other income, primarily interest 423 517
---------- ---------
INCOME BEFORE INCOME TAXES 433 795
Income tax expense 151 270
---------- ---------
NET INCOME $ 282 $ 525
========== =========
NET EARNINGS PER SHARE - BASIC $ .06 $ .10
========== =========
NET EARNINGS PER SHARE - DILUTED $ .06 $ .10
========== =========
Shares used to calculate net earnings per share:
Basic 4,899 5,137
Diluted 4,997 5,383
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands) Three Months Ended
December 31,
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 282 $ 525
Depreciation and amortization 652 465
Changes in operating assets and liabilities 564 (328)
---------- ----------
NET CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES 1,498 662
Cash flows from investing activities:
Equipment purchases (535) (757)
Purchases of marketable securities (12,781) (11,269)
Proceeds from sale or maturity of marketable
securities 11,300 11,338
---------- ----------
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (2,016) (688)
Cash flows from financing activities:
Repurchase of common stock (576) --
Proceeds from issuance of common stock 94 124
---------- ----------
NET CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES (482) 124
---------- ----------
Net increase (decrease) in cash and cash equivalents (1,000) 98
Cash and cash equivalents at beginning of period 9,030 4,512
---------- ----------
Cash and cash equivalents at end of period 8,030 4,610
Marketable securities, current 18,928 24,722
Marketable securities, non-current 6,514 7,499
---------- ----------
Total cash and marketable securities $ 33,472 $ 36,831
========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The principal business activity of Ciprico Inc. and subsidiaries (the Company)
is the design, manufacture, marketing and service of disk array solutions for
use in high performance computer systems for the visual computing markets. The
Company markets its products worldwide through a direct sales force and various
distribution channels.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all necessary adjustments, consisting only of a
recurring nature, and disclosures to present fairly the financial position as of
December 31, 1998 and the results of operations and cash flows for the
three-month periods ended December 31, 1998 and 1997. The results of operations
for the three months ended December 31, 1998 are not necessarily indicative of
the results for the full year. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto included in the Company's Annual Report to Shareholders for fiscal
1998.
In preparation of the Company's consolidated financial statements, management is
required to make estimates and assumptions that affect reported amounts of
assets and liabilities and related revenues and expenses. Actual results could
differ from the estimates used by management.
NOTE B - MARKETABLE SECURITIES
The Company has invested its excess cash in commercial paper and government
agencies. These investments are classified as held-to-maturity given the
Company's intent and ability to hold the securities to maturity and are carried
at amortized cost.
Investments that have maturities of less than one year have been classified as
current marketable securities. At December 31, 1998 and September 30, 1998,
amortized cost approximates fair value of held-to-maturity investments which
consist of the following:
(In thousands) December 31, September 30,
1998 1998
------------ -------------
Current marketable securities:
Commercial Paper $ 8,928 $ 8,945
U.S. Government Agencies 10,000 10,000
---------- ----------
18,928 18,945
Non-current marketable securities:
U.S. Government Agencies 6,514 5,016
---------- ----------
$ 25,442 $ 23,961
========== ==========
NOTE C - SHAREHOLDERS' EQUITY
During 1998, the Company initiated a stock buyback program of up to $6.0
million. As of December 31, 1998, 439,400 shares of common stock have been
repurchased for $4,827,200.
<PAGE>
NOTE D - NET EARNINGS PER SHARE
The Company's basic net earnings per share amounts have been computed by
dividing net earnings by the weighted average number of outstanding common
shares. The Company's diluted net earnings per share is computed by dividing net
earnings by the weighted average number of outstanding common shares and common
share equivalents relating to stock options, when dilutive. For the three months
ended December 31, 1998 and 1997, 97,930 and 246,045 shares of common stock
equivalents were included in the computation of diluted net earnings per share.
Options to purchase 689,325 and 445,438 shares of common stock with a weighted
average exercise price of $12.75 and $14.48 were outstanding at December 31,
1998 and 1997, but were excluded from the computation of common share
equivalents for the three-month period because they were antidilutive.
NOTE E - COMPREHENSIVE INCOME
On October 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." Comprehensive income
includes certain changes in equity that were excluded from net earnings. The
adoption of this statement did not impact the Company's consolidated financial
statement; historically there have been no differences between net earnings and
comprehensive income.
NOTE F - SEGMENT INFORMATION
The Company operates in a single reportable segment. The following presents net
sales by geographic area for the three months ended December 31, 1998 and 1997
(in thousands). The Company has no material long-lived assets outside of the
United States.
Geographic Area 1998 1997
- --------------- --------- ---------
United States $ 5,659 $ 5,660
Europe 969 359
Japan 399 832
Other foreign 747 409
---------- ----------
$ 7,774 $ 7,260
========== ==========
The following presents net sales to significant customers for the three months
ended December 31, 1998 and 1997 (in thousands).
Major Customers 1998 % 1997 %
- --------------- ---- ---------- ---- ----------
Customer A $ 2,473 31.8% $ 2,249 31.0%
Customer B 813 10.5% 841 11.6%
Customer C 139 1.8% 727 10.0%
----- ------ ------ ------
Total $ 3,425 44.1% $ 3,817 52.6%
======= ===== ======= =====
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Three Months Ended December 31, 1998 Compared to Three Months Ended
December 31, 1997
Net sales for the three-month period ended December 31, 1998 increased 7% to
$7.8 compared to $7.3 million for the same period last fiscal year. Sales in the
Company's key markets are shown in the chart below (in millions).
<TABLE>
<CAPTION>
Market 1998 % of Total 1997 % of Total
- ------ ---- ---------- ---- ----------
<S> <C> <C> <C> <C>
Remote Sensing and Defense Imaging $ 3.3 42.3 $ 2.4 32.9
Entertainment 2.8 35.9 2.5 34.2
Geosciences .6 7.7 1.8 24.7
Other 1.1 14.1 .6 8.2
----- ------- ----- -------
$ 7.8 100.0% $ 7.3 100.0%
===== ======= ===== =======
</TABLE>
The increase in the Remote Sensing and Defense Imaging market is partially due
to timing of large orders. Revenues in the Entertainment market came from
broadcast opportunities as well as postproduction opportunities. Historically,
revenues in this market have come almost exclusively from postproduction
applications. The Company anticipates modest growth in this market in fiscal
1999 as it continues to focus on broadcast applications. Revenues in the
Geosciences market are being impacted by the decrease in oil prices, while the
increase in other sales is primarily the result of an increase in emerging
market sales.
Export sales represented 27% and 22% of total sales for the three months ended
December 31, 1998 and 1997. Sales through Silicon Graphics Inc. (SGI) totaled
$2.5 million or 32% of total sales for the three months ended December 31, 1998
compared to $2.2 million or 31% for the same prior year period. For the three
months ended December 31, 1998, one customer in the Remote Sensing and Defense
Imaging market represented an additional $813,000 or 10% of total sales. In
addition, the Company released its new JBOD (an acronym for `just a bunch of
drives') product, which is called FibreSTORE, near the end of the quarter and is
experiencing a demand for the new product in all market segments.
The Company's revenue growth in fiscal 1999 is dependent on its ability to
provide new products and expand the applications of its products into targeted
market segments.
Gross profit of $3.9 million represented a 50% gross profit margin for the three
months ended December 31, 1998, compared to 49% for the same prior year period.
This increase in the margin percentage is the result of a strong sales mix of
higher margin Fibre Channel products as well as reduced component costs. Gross
profit margins are highly dependent on the Company's ability to transition to
new generation disk drives and to manage the rapid decline in disk drive prices.
The Company anticipates fiscal 1999 gross profit, as a percentage of net sales,
to continue in the high forty percent range.
Research and development expenses of $1.1 million for the three months ended
December 31, 1998 increased 30% compared to the same period last year primarily
due to additional staff, outside professional services and prototype material
costs. The Company expects that research and development expenses in fiscal 1999
will approximate the level of spending in fiscal 1998.
Sales and marketing expenses of $2.1 million for the three months ended December
31, 1998 increased 16% compared to the same period last year reflecting the
costs associated with realigning the Company's marketing and promotion efforts
along its vertical markets. The Company expects that sales and marketing
expenses will continue to grow at a lesser rate in fiscal 1999 than the 23% rate
of growth in fiscal 1998.
<PAGE>
General and administrative expenses of $676,000 for the three months ended
December 31, 1998 increased 7% compared to the same period last year primarily
attributable to a provision for management incentive compensation that was not
earned in the comparable prior year period.
Other Income of $423,000 for the three months ended December 31, 1998 decreased
18% compared to the same period last year due to interest income on lower
average cash and investment balances.
As a result of the factors described above, net income decreased $243,000 for
the three months ended December 31, 1998 compared to the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998, the Company had cash, cash equivalents and marketable
securities totaling $33.5 million compared to $33.0 million at the end of fiscal
1998.
Cash flows from operating activities were $1.5 million for the three months
ended December 31, 1998 compared to $662,000 for the same period last year. The
Company made capital expenditures totaling $535,000 during the three months
ended December 31, 1998 compared to $757,000 for the prior year period. The
Company anticipates that capital expenditures for fiscal 1999 will approximate
$3.7 million. During fiscal 1998, the Company initiated a stock buyback program
of up to $6.0 million. During the three months ended December 31, 1998, 80,000
shares of common stock were purchased for $576,000. The remaining authorization
as of December 31, 1998 is for $1.2 million.
Management believes that current cash balances and cash generated from
operations will be adequate to fund requirements for working capital and capital
expenditures, as well as any potential acquisition in fiscal 1999.
IMPACT OF YEAR 2000 ISSUE
The Company has completed an assessment of Year 2000 compliance for its critical
operating and application systems. Through this assessment, no major issues were
discovered. The Company expects to be fully Year 2000 compliant by March 31,
1999. The cost associated with the assessment and any modifications necessary is
expected to be less than $200,000. Ultimately, the potential impact of the Year
2000 issue will depend not only on the actions taken by the Company, but also on
the way in which the Year 2000 issue is addressed by customers, vendors, service
providers, utilities, governmental agencies and other entities with which the
Company does business. The Company is communicating with these parties to learn
how they are addressing the Year 2000 issue and to evaluate any likely impact on
the Company. The Year 2000 efforts of third parties are not within the Company's
control. Failure by these third parties, particularly those upon which the
Company may be dependent, to respond to Year 2000 issues successfully could
result in business disruption, operational problems, financial loss, legal
liability and similar risks for the Company. At the present time, it is not
possible to determine whether any such events are likely to occur, or to
quantify any potential negative impact they may have on the Company's future
results of operations and financial condition. The Company expects to assess its
need for contingency plans during 1999.
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q are forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. Such statements imply
continued financial improvement. Because of numerous risks and uncertainties in
the Company's business activity, actual results could differ materially from
those implied. Investors should consider: the impact on revenues and earnings of
the timing of product enhancements and new product releases; market acceptance
of new products; sales and distribution issues; competition; dependence on
suppliers; dependence on the cost of disk drives; limited backlog; the historic
and recurring pattern of a disproportionate percentage of total quarterly sales
occurring in the last month and weeks of a quarter and the impact of Year 2000
issues internally and from third parties. For a more complete description, see
"Forward-looking Information" under Item 1 of the Company's Form 10-K for the
year ended September 30, 1998.
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests its excess cash in commercial paper and highly rated U.S.
government agencies. All investments are held-to-maturity. The market risk on
such investments is minimal. Receivables from sales to foreign customers are
denominated in U.S. Dollars. If the currencies of these countries were to fall
significantly against the U.S. Dollar, there can be no assurance that such
companies would be able to repay the receivables in full. Transactions at the
Company's foreign subsidiaries, Ciprico International Limited and Ciprico
Asia-Pacific Inc. are denoted in pound sterling and yen, respectively. The
Company has historically had minimal exposure to changes in foreign currency
exchange rates, and as such, has not used derivative financial instruments to
manage foreign currency fluctuation risk.
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of the Registrant's shareholders was held on
Thursday, January 28, 1999.
(b) At the Annual Meeting, the number of directors was set at six by a
vote of 3,789,906 for, 21,853 against and 26,379 abstentions.
(c) Bruce J. Bergman and Ronald B. Thomas were elected to serve as Class
I directors for a term of three years and until their successors have
been duly elected and qualified. Mr. Bergman and Mr. Thomas each received
at least 3,753,840 shares voted in his favor. The term of office of Robert
H. Kill and Gary L. Deaner continues until the 2000 Annual Meeting. The
term of office of Donald H. Soukup and William N. Wray continues until
the 2001 Annual Meeting.
(d) The shareholders approved the 1999 Amended and Restated Stock Option
Plan as a consolidation of the Company's 1992 Nonqualified Stock Option
Plan and 1994 Incentive Stock Option Plan without the reservation of
additional shares by a vote of 3,486,798 for, 182,799 against, 160,901
abstentions and 7,640 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 1999 Amended and Restated Stock Option Plan
10.2 Form of Incentive Stock Option Agreement under 1999
Amended and Restated Stock Option Plan
10.3 Form of Nonqualified Stock Option Agreement under 1999
Amended and Restated Stock Option Plan
10.4 1996 Restricted Stock Plan, as amended to date
27 Financial Data Schedule (filed in electronic format only)
(b) No report on Form 8-K was filed during the quarter ended
December 31, 1998.
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CIPRICO INC.
Dated: February 2, 1999 /s/ Robert H. Kill
------------------------------------
Robert H. Kill, President
(Principal Executive Officer)
Dated: February 2, 1999 /s/ Joan K. Berg
------------------------------------
Joan K. Berg, Vice President of
Finance/Chief Financial Officer
(Principal Financial and Accounting
Officer)
<PAGE>
CIPRICO INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Number Description
10.1 1999 Amended and Restated Stock Option Plan
10.2 Form of Incentive Stock Option Agreement under 1999
Amended and Restated Stock Option Plan
10.3 Form of Nonqualified Stock Option Agreement under
1999 Amended and Restated Stock Option Plan
10.4 1996 Restricted Stock Plan, as amended to date
27 Financial Data Schedule (filed in electronic format only)
CIPRICO INC.
1999 AMENDED AND RESTATED
STOCK OPTION PLAN
On October 22, 1998, the Board of Directors of Ciprico Inc. adopted
this 1999 Amended and Restated Stock Option Plan (the "Amended and Restated
Plan" or the "Plan") as a consolidation of the Ciprico Inc. 1992 Nonqualified
Stock Option Plan (the "1992 Plan") and the 1994 Incentive Stock Option Plan
(the "1994 Plan"). Subject to the shareholder approval requirements set forth in
Section 2, the terms and conditions of this Amended and Restated Stock Option
Plan shall govern all options granted after October 22, 1998. All nonqualified
and incentive stock options granted prior to such date shall be governed by the
terms and conditions of the 1992 Plan and the 1994 Plan, respectively, which
were in effect as of the date such options were granted, and shall not be
modified by the adoption of this Plan.
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated
below:
(a) "Committee" shall mean a Committee of two or more
directors who shall be appointed by and serve at the pleasure of the
Board. If the Company's securities are registered pursuant to Section
12 of the Securities Exchange Act of 1934, as amended, then, to the
extent necessary for compliance with Rule 16b-3, or any successor
provision, each of the members of the Committee shall be a
"non-employee director." Solely for purposes of this Section 1(a),
"non-employee director" shall have the same meaning as set forth in
Rule 16b-3, or any successor provision, as then in effect, of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
(b) The "Company" shall mean Ciprico Inc., a Delaware
corporation.
(c) "Fair Market Value" as of any day shall mean (i) if such
stock is reported by the Nasdaq National Market or Nasdaq SmallCap
Market or is listed upon an established stock exchange or exchanges,
the reported closing price of such stock by the Nasdaq National Market
or Nasdaq SmallCap Market or on such stock exchange or exchanges on
such date or, if no sale of such stock shall have occurred on such
date, on the next preceding day on which there was a sale of stock;
(ii) if such stock is not so reported by the Nasdaq National Market or
Nasdaq SmallCap Market or listed upon an established stock exchange,
the average of the closing "bid" and "asked" prices quoted by the
National Quotation Bureau, Inc. (or any comparable reporting service)
on such date or, if there are no quoted "bid" and "asked" prices on
such date, on the next preceding date for which there are such quotes;
or (iii) if such stock is not publicly traded as of such date, the per
share value as determined by the Board, or the Committee, in its sole
discretion by applying principles of valuation with respect to the
Company's Common Stock.
<PAGE>
(d) The "Internal Revenue Code" is the Internal Revenue Code
of 1986, as amended from time to time.
(e) "Non-Employee Director" shall mean members of the Board
who are not employees of the Company or any Subsidiary.
(f) The "Optionee" means (i) an employee of the Company or any
Subsidiary to whom an incentive stock option has been granted pursuant
to Section 9, (ii) a director (including a Non-Employee Director),
employee or officer of or consultant or advisor to the Company or any
Subsidiary to whom a nonqualified stock option has been granted
pursuant to Section 10 or (iii) a Non-Employee Director to whom a
nonqualified stock option has been granted pursuant to Section 15.
(g) "Parent" shall mean any corporation which owns, directly
or indirectly in an unbroken chain, fifty percent (50%) or more of the
total voting power of the Company's outstanding stock.
(h) The "Plan" means the Ciprico Inc. 1999 Amended and
Restated Stock Option Plan, as amended hereafter from time to time,
including the form of Option Agreements as they may be modified by the
Board from time to time.
(i) "Stock" shall mean Common Stock of the Company (subject to
adjustment as described in Section 11) reserved for incentive and
nonqualified stock options pursuant to this Plan.
(j) A "Subsidiary" shall mean any corporation of which fifty
percent (50%) or more of the total voting power of outstanding stock is
owned, directly or indirectly in an unbroken chain, by the Company.
(k) The "1992 Plan" means the Ciprico Inc. 1992 Nonqualified
Stock Option Plan.
(l) The "1994 Plan" means the Ciprico Inc. 1994 Incentive
Stock Option Plan.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by facilitating the retention of competent personnel and by
furnishing incentive to officers, directors, employees, consultants, and
advisors upon whose efforts the success of the Company and its Subsidiaries will
depend to a large degree.
It is the intention of the Company to carry out the Plan through the
granting of stock options which will qualify as "incentive stock options" under
<PAGE>
the provisions of Section 422 of the Internal Revenue Code, or any successor
provision, pursuant to Section 9 of this Plan, and through the granting of
nonqualified stock options pursuant to Section 10 of this Plan. Adoption of this
Plan shall be and is expressly subject to the condition of approval by the
shareholders of the Company within 12 months before or after the adoption of the
Plan by the Board of Directors. Options shall not be granted under this Plan
until such shareholder approval is obtained. If shareholder approval is not
obtained within such 12-month period, this Plan shall have no force and effect,
and all future nonqualified and incentive stock options shall be granted under
the Company's 1992 Plan and 1994 Plan, respectively.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date of adoption by the Board of
Directors, subject to approval by the shareholders of the Company as required in
Section 2.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(hereinafter referred to as the "Board") or by a Committee which may be
appointed by the Board from time to time (collectively referred to as the
"Administrator"). The Administrator shall have all of the powers vested in it
under the provisions of the Plan, including but not limited to exclusive
authority (where applicable and within the limitations described in the Plan) to
determine, in its sole discretion, whether an incentive stock option or
nonqualified stock option shall be granted, the individuals to whom, and the
time or times at which, options shall be granted, the number of shares subject
to each option, the option price, and terms and conditions of each option. The
Administrator shall have full power and authority to administer and interpret
the Plan, to make and amend rules, regulations and guidelines for administering
the Plan, to prescribe the form and conditions of the respective stock option
and restricted stock option agreements (which may vary from Optionee to
Optionee) evidencing each option and to make all other determinations necessary
or advisable for the administration of the Plan. The Administrator's
interpretation of the Plan, and all actions taken and determinations made by the
Administrator pursuant to the power vested in it hereunder, shall be conclusive
and binding on all parties concerned.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the administration
of the Plan. In the event the Board appoints a Committee as provided hereunder,
any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
<PAGE>
SECTION 5.
PARTICIPANTS
The Administrator shall from time to time, at its discretion and
without approval of the shareholders, designate those employees and officers to
whom incentive stock options shall be granted pursuant to Section 9 of the Plan,
and those employees, officers, directors (including Non-Employee Directors),
consultants or advisors of the Company or of any Subsidiary to whom nonqualified
stock options shall be granted pursuant to Section 10 of the Plan; provided,
however, that consultants or advisors shall not be eligible to receive stock
options hereunder unless such consultant or advisor renders bona fide services
to the Company or Subsidiary and such services are not in connection with the
offer or sale of securities in a capital raising transaction. The Administrator
may grant additional incentive stock options and nonqualified stock options
under this Plan to some or all Optionees then holding options or may grant
options solely or partially to new Optionees. In designating Optionees, the
Administrator shall also determine the number of shares to be optioned to each
such Optionee. The Board may from time to time designate individuals as being
ineligible to participate in the Plan.
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized
but unissued shares of Stock. One Million Four Hundred Twenty-eight Thousand
Five Hundred and Eighty-two (1,428,582) shares of Stock shall be reserved and
available for stock options under the Plan, representing the total number of
shares originally reserved under the 1992 Plan and the 1994 Plan less the number
of shares issued upon exercise of options previously granted under the 1992 Plan
and the 1994 Plan; provided, however, that the total number of shares of Stock
reserved for options under this Plan shall be subject to adjustment as provided
in Section 11 of the Plan. In the event that any outstanding stock option
granted under the Plan, the 1992 Plan or the 1994 Plan for any reason expires or
is terminated prior to the exercise thereof, the shares of Stock allocable to
such portion of the option shall continue to be reserved for stock options under
the Plan and may be optioned hereunder.
SECTION 7.
DURATION OF PLAN
Incentive stock options may be granted pursuant to the Plan from time
to time after the effective date of the Plan and until October 22, 2008.
Nonqualified stock options may be granted pursuant to the Plan from time to time
after the effective date of the Plan and until the Plan is discontinued or
terminated by the Board. Any incentive stock option granted prior to October 22,
2008, and any nonqualified stock option granted prior to the termination of the
<PAGE>
Plan by the Board shall remain in full force and effect until the expiration of
the option as specified in the written stock option agreement shall remain
subject to the terms and conditions of this Plan.
SECTION 8.
PAYMENT
Optionees may pay for shares upon exercise of stock options granted
pursuant to this Plan with cash, personal check, certified check, previously
issued Common Stock of the Company valued at such Stock's then Fair Market
Value, or such other form of payment as may be authorized by the Administrator.
The Administrator may, in its sole discretion, limit the forms of payment
available to the Optionee and may exercise such discretion any time prior to the
termination of the option granted to the Optionee or upon any exercise of the
option by the Optionee.
With respect to payment in the form of Common Stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance with Rule 16b-3, or any successor provision, as
then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
SECTION 9.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Each incentive stock option granted pursuant to this Section 9 shall be
evidenced by a written stock option agreement (the "Option Agreement"). The
Option Agreement shall be in such form as may be approved from time to time by
the Administrator and may vary from Optionee to Optionee; provided, however,
that each Optionee and each Option Agreement shall comply with and be subject to
the following terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement
shall state the total number of shares covered by the incentive stock
option. To the extent required to qualify the Option as an incentive
stock option under Section 422 of the Internal Revenue Code, or any
successor provision, the option price per share shall not be less than
one hundred percent (100%) of the Fair Market Value of the Common Stock
per share on the date the Administrator grants the option; provided,
however, that if an Optionee owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company or of its Parent or any Subsidiary, the option
price per share of an incentive stock option granted to such Optionee
shall not be less than one hundred ten percent (110%) of the Fair
Market Value of the Common Stock per share on the date of the grant of
the option. The Administrator shall have full authority and discretion
in establishing the option price and shall be fully protected in so
doing.
(b) Term and Exercisability of Incentive Stock Option. The
term during which any incentive stock option granted under the Plan may
be exercised shall be established in each case by the Administrator. To
<PAGE>
the extent required to qualify the Option as an incentive stock option
under Section 422 of the Internal Revenue Code, or any successor
provision, in no event shall any incentive stock option be exercisable
during a term of more than 10 years after the date on which it is
granted; provided, however, that if an Optionee owns stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of its parent or any Subsidiary, the
incentive stock option granted to such Optionee shall be exercisable
during a term of not more than five years after the date on which it is
granted.
The Option Agreement shall state when the incentive stock
option becomes exercisable and shall also state the maximum term
during which the option may be exercised. In the event an incentive
stock option is exercisable immediately, the manner of exercise of the
option in the event it is not exercised in full immediately shall be
specified in the Option Agreement. The Administrator may accelerate the
exercisability of any incentive stock option granted hereunder which is
not immediately exercisable as of the date of grant.
(c) Nontransferability. No incentive stock option shall be
transferable, in whole or in part, by the Optionee other than by will
or by the laws of descent and distribution. During the Optionee's
lifetime, the incentive stock option may be exercised only by the
Optionee. If the Optionee shall attempt any transfer of any incentive
stock option granted under the Plan during the Optionee's lifetime,
such transfer shall be void and the incentive stock option, to the
extent not fully exercised, shall terminate.
(d) No Rights as Shareholder. An Optionee (or the Optionee's
successor or successors) shall have no rights as a shareholder with
respect to any shares covered by an incentive stock option until the
date of the issuance of a stock certificate evidencing such shares. No
adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other
rights for which the record date is prior to the date such stock
certificate is actually issued (except as otherwise provided in Section
11 of the Plan).
(e) Other Provisions. The Option Agreement authorized under
this Section 9 shall contain such other provisions as the Administrator
shall deem advisable. Any such Option Agreement shall contain such
limitations and restrictions upon the exercise of the option as shall
be necessary to ensure that such option will be considered an
"incentive stock option" as defined in Section 422 of the Internal
Revenue Code or to conform to any change therein.
SECTION 10.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each nonqualified stock option granted pursuant to this Section 10
shall be evidenced by a written Option Agreement. The Option Agreement shall be
in such form as may be approved from time to time by the Administrator and may
<PAGE>
vary from Optionee to Optionee; provided, however, that each Optionee and each
Option Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares and Option Price. The Option Agreement
shall state the total number of shares covered by the nonqualified
stock option. Unless otherwise determined by the Administrator, the
option price per share shall be one hundred percent (100%) of the Fair
Market Value of the Common Stock per share on the date the
Administrator grants the option; provided, however, that the option
price may not be less than eighty-five percent (85%) of the Fair Market
Value of the Common Stock per share on the date of grant.
(b) Term and Exercisability of Nonqualified Stock Option. The
term during which any nonqualified stock option granted under the Plan
may be exercised shall be established in each case by the
Administrator. The Option Agreement shall state when the nonqualified
stock option becomes exercisable and shall also state the maximum term
during which the option may be exercised. In the event a nonqualified
stock option is exercisable immediately, the manner of exercise of the
option in the event it is not exercised in full immediately shall be
specified in the Option Agreement. The Administrator may accelerate the
exercisability of any nonqualified stock option granted hereunder which
is not immediately exercisable as of the date of grant.
(c) Withholding. The Company or its Subsidiary shall be
entitled to withhold and deduct from future wages of the Optionee all
legally required amounts necessary to satisfy any and all withholding
and employment-related taxes attributable to the Optionee's exercise of
a nonqualified stock option. In the event the Optionee is required
under the Option Agreement to pay the Company, or make arrangements
satisfactory to the Company respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and
pursuant to such rules as it may adopt, permit the Optionee to satisfy
such obligation, in whole or in part, by electing to have the Company
withhold shares of Common Stock otherwise issuable to the Optionee as a
result of the option's exercise equal to the amount required to be
withheld for tax purposes. Any stock elected to be withheld shall be
valued at its Fair Market Value, as of the date the amount of tax to be
withheld is determined under applicable tax law. The Optionee's
election to have shares withheld for this purpose shall be made on or
before the date the option is exercised or, if later, the date that the
amount of tax to be withheld is determined under applicable tax law.
Such election shall be approved by the Administrator and otherwise
comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
(d) Transferability. The Administrator may, in its sole
discretion, permit the Optionee to transfer any or all nonqualified
stock options to any member of the Optionee's "immediate family" as
such term is defined in Rule 16a-1(e) promulgated under the Securities
<PAGE>
Exchange Act of 1934, or any successor provision, or to one or more
trusts whose beneficiaries are members of such Optionee's "immediate
family" or partnerships in which such family members are the only
partners; provided, however, that the Optionee cannot receive any
consideration for the transfer and such transferred nonqualified stock
option shall continue to be subject to the same terms and conditions as
were applicable to such nonqualified stock option immediately prior to
its transfer.
(e) No Rights as Shareholder. An Optionee (or the Optionee's
successor or successors) shall have no rights as a shareholder with
respect to any shares covered by a nonqualified stock option until the
date of the issuance of a stock certificate evidencing such shares. No
adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other
rights for which the record date is prior to the date such stock
certificate is actually issued (except as otherwise provided in Section
11 of the Plan).
(f) Other Provisions. The Option Agreement authorized under
this Section 10 shall contain such other provisions as the
Administrator shall deem advisable.
SECTION 11.
RECAPITALIZATION, SALE, MERGER, EXCHANGE
OR LIQUIDATION
In the event of an increase or decrease in the number of shares of
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend or any other increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the Company,
the number of shares of Stock reserved under Section 6 hereof, the number of
shares of Stock covered by each outstanding stock option and the price per share
thereof, and the number of shares subject to automatic grants to Non-Employee
Directors pursuant to Section 15 below shall be automatically adjusted to
reflect such change; provided, that the Board in its discretion may in such
event decrease but not increase the number of shares subject to the automatic
grants of Section 15 below made subsequent to the date of such event. Additional
shares which may be credited pursuant to such adjustment shall be subject to the
same restrictions as are applicable to the shares with respect to which the
adjustment relates.
Unless otherwise provided in the Option Agreement, in the event of an
acquisition of the Company through the sale of substantially all of the
Company's assets and the consequent discontinuance of its business or through a
merger, consolidation, exchange, reorganization, reclassification, extraordinary
dividend, divestiture or liquidation of the Company (collectively referred to as
a "transaction"), the Board may provide for one or more of the following:
(a) the equitable acceleration of the exercisability of any
outstanding options hereunder;
(b) the complete termination of this Plan and the cancellation
of outstanding options not exercised prior to a date specified by the
<PAGE>
Board (which date shall give Optionees a reasonable period of time in
which to exercise the options prior to the effectiveness of such
transaction);
(c) that Optionees holding outstanding stock options shall
receive, with respect to each share of Stock subject to such options,
as of the effective date of any such transaction, cash in an amount
equal to the excess of the Fair Market Value of such Stock on the date
immediately preceding the effective date of such transaction over the
option price per share of such options; provided that the Board may, in
lieu of such cash payment, distribute to such Optionees shares of stock
of the Company or shares of stock of any corporation succeeding the
Company by reason of such transaction, such shares having a value equal
to the cash payment herein; or
(d) the continuance of the Plan with respect to the exercise
of options which were outstanding as of the date of adoption by the
Board of such plan for such transaction and provide to Optionees
holding such options the right to exercise their respective options as
to an equivalent number of shares of stock of the corporation
succeeding the Company by reason of such transaction.
The Board may restrict the rights of or the applicability of this Section 11 to
the extent necessary to comply with Section 16(b) of the Securities Exchange Act
of 1934, the Internal Revenue Code or any other applicable law or regulation.
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.
SECTION 12.
SECURITIES LAW COMPLIANCE
No shares of Common Stock shall be issued pursuant to the Plan unless
and until there has been compliance, in the opinion of Company's counsel, with
all applicable legal requirements, including without limitation, those relating
to securities laws and stock exchange listing requirements. As a condition to
the issuance of Stock to Optionee, the Administrator may require Optionee to (i)
represent that the shares of Stock are being acquired for investment and not
resale and to make such other representations as the Administrator shall deem
necessary or appropriate to qualify the issuance of the shares as exempt from
the Securities Act of 1933 and any other applicable securities laws, and (ii)
represent that Optionee shall not dispose of the shares of Stock in violation of
the Securities Act of 1933 or any other applicable securities laws.
As a further condition to the grant of any stock option or the issuance
of Stock to Optionee, Optionee agrees to the following:
(a) In the event the Company advises Optionee that it plans an
underwritten public offering of its Common Stock in compliance with the
Securities Act of 1933, as amended, and the underwriter(s) seek to
<PAGE>
impose restrictions under which certain shareholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of
part or all of their stock purchase rights of the underlying Common
Stock, Optionee will not, for a period not to exceed 180 days from the
prospectus, sell or contract to sell or grant an option to buy or
otherwise dispose of any stock option granted to Optionee pursuant to
the Plan or any of the underlying shares of Common Stock without the
prior written consent of the underwriter(s) or its representative(s).
(b) In the event of a transaction (as defined in Section 11 of
the Plan) which is treated as a "pooling of interests" under generally
accepted accounting principles, Optionee will comply with Rule 145 of
the Securities Act of 1933 and any other restrictions imposed under
other applicable legal or accounting principles if Optionee is an
"affiliate" (as defined in such applicable legal and accounting
principles) at the time of the transaction, and Optionee will execute
any documents necessary to ensure compliance with such rules.
The Company reserves the right to place a legend on any stock
certificate issued upon exercise of an option granted pursuant to the Plan to
assure compliance with this Section 12.
SECTION 13.
AMENDMENT OF THE PLAN
The Board may from time to time, insofar as permitted by law, suspend
or discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 11, shall
impair the terms and conditions of any stock option which is outstanding on the
date of such revision or amendment to the material detriment of the Optionee
without the consent of the Optionee. Notwithstanding the foregoing, no such
revision or amendment shall (i) materially increase the number of shares subject
to the Plan except as provided in Section 11 hereof, (ii) change the designation
of the class of employees eligible to receive stock options, (iii) decrease the
price at which options may be granted, or (iv) materially increase the benefits
accruing to Optionees under the Plan without the approval of the shareholders of
the Company if such approval is required for compliance with the requirements of
any applicable law or regulation. Furthermore, the Plan may not, without the
approval of the shareholders, be amended in any manner that will cause incentive
stock options to fail to meet the requirements of Section 422 of the Internal
Revenue Code.
SECTION 14.
NO OBLIGATION TO EXERCISE OPTION
The granting of a stock option shall impose no obligation upon the
Optionee to exercise such option. Further, the granting of a stock option
hereunder shall not impose upon the Company or any Subsidiary any obligation to
retain the Optionee in its employ for any period.
<PAGE>
SECTION 15.
NONQUALIFIED STOCK OPTIONS FOR OUTSIDE DIRECTORS
(a) Automatic Grants. No person shall have any discretion to
select the non-employee directors that shall be eligible for
nonqualified stock options or to determine the number of shares of
Common Stock to be subject to such options, the option price per share,
the term and exercisability for such options or the date of grant. No
action by the Board of Directors or the Committee shall be required for
the grant of nonqualified stock options under this Section 15, it being
the intention of the Company that such stock option grants will occur
automatically.
(b) Annual Grants to Non-employee Directors. Each Non-Employee
Director who, on and after the date this Plan is approved by the
Company's shareholders, is elected or re-elected as a director of the
Company or whose term of office continues after a meeting of
shareholders at which directors are elected shall, as of the date of
such election, re-election or shareholders meeting, automatically be
granted a nonqualified option to purchase 6,000 shares of the Company's
Common Stock; provided, however, if such Non-Employee Director is
elected other than by shareholders at an annual meeting, the number of
shares subject to the option shall be determined by multiplying 6,000
by a fraction, the numerator of which is the number of months until the
next regular annual meeting of shareholders and the denominator of
which is 12.
(c) Exercise Price. The exercise price per share for each
nonqualified stock option granted pursuant to this Section 15 shall be
equal to the Fair Market Value of the Company's Common Stock per share
on the date of such election, re-election or annual meeting.
(d) Term and Exercisability. Each nonqualified stock option
granted pursuant to this Section 15 shall become exercisable one year
from the date of grant if the Optionee has served as a director
throughout such period, and shall expire seven (7) years from the date
of grant. Each nonqualified stock option granted pursuant to this
Section 15 shall be subject to such additional terms and conditions not
inconsistent with this Plan as the Option Agreement issued to the
Optionee by the Company may contain.
INCENTIVE STOCK OPTION AGREEMENT
CIPRICO INC.
1999 AMENDED AND RESTATED STOCK OPTION PLAN
THIS AGREEMENT, made effective as of this ____ day of _____________,
______, by and between Ciprico Inc., a Delaware corporation (the "Company"), and
____________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee on the date hereof is an employee or officer of the
Company or one of its Subsidiaries; and
WHEREAS, the Company wishes to grant an incentive stock option to
Optionee to purchase shares of the Company's Common Stock pursuant to the
Company's 1999 Amended and Restated Stock Option Plan (the "Plan"); and
WHEREAS, the Administrator of the Plan has authorized the grant of an
incentive stock option to Optionee and has determined that, as of the effective
date of this Agreement, the fair market value of the Company's Common Stock is
$_______ per share;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee on the date
set forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of _________________ shares of Common
Stock at a per share price of $________ on the terms and conditions set forth
herein, and subject to adjustment pursuant to Section 12 of the Plan. Except as
otherwise provided in Paragraphs 2(b) and 2(c), this Option is intended to be an
incentive stock option within the meaning of Section 422, or any successor
provision, of the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder.
2. Duration and Exercisability.
a. The term during which this Option may be exercised shall
terminate on ____________, ______, except as otherwise provided in Paragraphs
2(b) through 2(e) below. This Option shall become exercisable according to the
following schedule:
Number of Shares Date Exercisable
<PAGE>
Once the Option becomes exercisable to the extent of one hundred percent (100%)
of the aggregate number of shares specified in Paragraph 1, Optionee may
continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If Optionee
does not purchase upon an exercise of this Option the full number of shares
which Optionee is then entitled to purchase, Optionee may purchase upon any
subsequent exercise prior to this Option's termination such previously
unpurchased shares in addition to those Optionee is otherwise entitled to
purchase.
b. Termination of Employment (other than Change of Control,
Disability or Death). If Optionee's employment with the Company or any
Subsidiary is terminated for any reason other than because of a "change of
control transaction" as described in Paragraph 2(c) or because of disability or
death, this Option shall completely terminate on the earlier of (i) the close of
business on the three-month anniversary date of such termination of employment,
and (ii) the expiration date of this Option stated in Paragraph 2 above.
Notwithstanding the foregoing, if, upon such termination of employment, Optionee
continues to serve as a consultant, advisor or nonemployee director of the
Company or Subsidiary, this Option shall terminate on the earlier of (i) the
close of business on the three-month anniversary date of the termination of all
of Optionee's relationships with the Company or Subsidiary, and (ii) the
expiration date of this Option stated in Paragraph 2(a) above, and the Option
shall not, upon Optionee's termination of employment, be treated as an incentive
stock option within the meaning of Code Section 422.
In such period following the termination of Optionee's
employment or, if applicable, such other relationship, this Option shall
be exercisable only to the extent the Option was exercisable on the vesting
date immediately preceding such termination of employment or such other
relationship, but had not previously been exercised. To the extent this Option
was not exercisable upon such termination of employment or such other
relationship, or if Optionee does not exercise the Option within the time
specified in this Paragraph 2(b), all rights of Optionee under this Option
shall be forfeited.
c. Change of Control. Except to the extent and as provided
below with respect to termination of employment of an affiliate in connection
with a transaction accounted for as a pooling of interests, in the event of the
sale of substantially all of the assets of the Company or change in control
transaction, the Company through its board of directors as more fully set forth
in Section 11 of the Plan, may provide in its discretion for the acceleration,
termination, exchange or continuation of this Option.
If (i) Optionee's employment with the Company or any
Subsidiary is terminated because of a "change of control transaction,"
(ii) such transaction is treated as a "pooling of interests" under generally
accepted accounting principles, and (iii) Optionee is an "affiliate" of the
Company or Subsidiary under applicable legal and accounting principles, this
Option shall completely terminate on the later of (A) the close of business
on the three-month anniversary date of such termination of employment or
<PAGE>
(B) the close of business on the date that is sixty (60) days after the
date on which affiliates are no longer restricted from selling, transferring
or otherwise disposing of the shares of stock received in the change of
control transaction. Notwithstanding the foregoing, if, upon such termination
of employment, Optionee continues to serve as a consultant, advisor or
nonemployee director of the Company or Subsidiary, this Option shall terminate
on the later of (X) the close of business on the three-month anniversary date
of the termination of all of Optionee's relationships with the Company or
Subsidiary, and (Y) the close of business on the date that is sixty (60)
days after the date on which affiliates are no longer restricted from selling,
transferring or otherwise disposing of the shares of stock received in the
change of control transaction, and this Option shall not, upon Optionee's
termination of employment, be treated as an incentive stock option within the
meaning of Code Section 422.
In such period following the termination of Optionee's
employment or, if applicable, such other relationship, this Option shall
be exercisable only to the extent the Option was exercisable on the vesting
date immediately preceding such termination of employment or such other
relationship, but had not previously been exercised, unless the exercisability
of this Option has been accelerated as provided in Section 11 of the Plan.
To the extent this Option was not exercisable upon such termination of
employment or such other relationship, or if Optionee does not exercise the
Option within the time specified in this Paragraph 2(c), all rights of
Optionee under this Option shall be forfeited. If Optionee exercises this
Option on a date that is after the three-month anniversary of the termination of
Optionee's employment or on a date that is more than ten years (or five years,
if applicable) after the Date of Grant, this Option shall not be treated as an
incentive stock option within the meaning of Code Section 422.
For purposes of this Paragraph 2(c), a "change of control
transaction" means an acquisition of the Company through the sale of
substantially all of the Company's assets and the consequent discontinuance
of its business or through a merger, consolidation, exchange, reorganization,
reclassification, extraordinary dividend, divestiture (including a spin-off)
or liquidation of the Company.
d. Disability. If Optionee ceases to be an employee of the
Company or any Subsidiary due to disability (as such term is defined in Code
Section 22(e)(3), or any successor provision), this Option shall completely
terminate on the earlier of (i) the close of business on the six-month
anniversary date of such termination of employment, and (ii) the expiration date
under this Option stated in Paragraph 2(a) above. In such period following such
termination of employment, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding the date of
Optionee's termination of employment. If Optionee does not exercise the Option
within the time specified in this Paragraph 2(d), all rights of Optionee under
this Option shall be forfeited.
e. Death. In the event of Optionee's death, this Option shall
terminate on the earlier of (i) the close of business on the twelve-month
anniversary date of the date of Optionee's death, and (ii) the expiration date
of this Option stated in Paragraph 2(a) above. In such period following
Optionee's death, this Option shall be exercisable by the person or persons to
<PAGE>
whom Optionee's rights under this Option shall have passed by Optionee's will or
by the laws of descent and distribution only to the extent the Option was
exercisable on the vesting date immediately preceding the date of Optionee's
death. If such person or persons do not exercise this Option within the time
specified in this Paragraph 2(e), all rights under this Option shall be
forfeited.
3. Manner of Exercise.
a. General. The Option may be exercised only by Optionee (or
other proper party in the event of death or incapacity), subject to the
conditions of the Plan and subject to such other administrative rules as the
Administrator may deem advisable, by delivering within the Option Period written
notice of exercise to the Company at its principal office. The notice shall
state the number of shares as to which the Option is being exercised and shall
be accompanied by payment in full of the Option price for all shares designated
in the notice. The exercise of the Option shall be deemed effective upon receipt
of such notice by the Company and upon payment that complies with the terms of
the Plan and this Agreement. The Option may be exercised with respect to any
number or all of the shares as to which it can then be exercised and, if
partially exercised, may be so exercised as to the unexercised shares any number
of times during the Option period as provided herein.
b. Form of Payment. Subject to approval by the Administrator,
payment of the Option price by Optionee shall be in the form of cash, personal
check, certified check or previously acquired shares of Common Stock of the
Company, or any combination thereof. Any stock so tendered as part of such
payment shall be valued at its Fair Market Value as provided in the Plan. For
purposes of this Agreement, "previously acquired shares of Common Stock" shall
include shares of Common Stock that are already owned by Optionee at the time of
exercise.
c. Stock Transfer Records. As soon as practicable after the
effective exercise of all or any part of the Option, Optionee shall be recorded
on the stock transfer books of the Company as the owner of the shares purchased,
and the Company shall deliver to Optionee one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.
4. Miscellaneous.
a. Employment; Rights as Shareholder. This Agreement shall not
confer on Optionee any right with respect to continuance of employment by the
Company or any of its Subsidiaries, nor will it interfere in any way with the
right of the Company to terminate such employment. Optionee shall have no rights
as a shareholder with respect to shares subject to this Option until such shares
have been issued to Optionee upon exercise of this Option. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such shares are issued, except as provided in Section 12 of
the Plan.
b. Securities Law Compliance. The exercise of all or any parts
of this Option shall only be effective at such time as counsel to the Company
shall have determined that the issuance and delivery of Common Stock pursuant to
<PAGE>
such exercise will not violate any state or federal securities or other laws.
Optionee may be required by the Company, as a condition of the effectiveness of
any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Optionee's own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.
c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and
subject to Section 12 of the Plan, certain changes in the number or character of
the Common Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Optionee's rights with
respect to any unexercised portion of the Option (i.e., Optionee shall have such
"anti-dilution" rights under the Option with respect to such events, but shall
not have "preemptive" rights).
d. Shares Reserved. The Company shall at all times during the
option period reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of this Agreement.
e. Withholding Taxes on Disqualifying Disposition. In the
event of a disqualifying disposition of the shares acquired through the exercise
of this Option, Optionee hereby agrees to inform the Company of such
disposition. Upon notice of a disqualifying disposition, the Company may take
such action as it deems appropriate to insure that, if necessary to comply with
all applicable federal or state income tax laws or regulations, all applicable
federal and state payroll, income or other taxes are withheld from any amounts
payable by the Company to Optionee. If the Company is unable to withhold such
federal and state taxes, for whatever reason, Optionee hereby agrees to pay to
the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. Optionee may, subject to the
approval and discretion of the Administrator or such administrative rules it may
deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company's Common Stock having
a fair market value equal to such obligations.
f. Nontransferability. During the lifetime of Optionee, the
accrued Option shall be exercisable only by Optionee or by the Optionee's
guardian or other legal representative, and shall not be assignable or
transferable by Optionee, in whole or in part, other than by will or by the laws
of descent and distribution.
g. 1999 Amended and Restated Stock Option Plan. The Option
evidenced by this Agreement is granted pursuant to the Plan, a copy of which
Plan has been made available to Optionee and is hereby incorporated into this
Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. The Plan governs this Option and, in the
event of any questions as to the construction of this Agreement or in the event
of a conflict between the Plan and this Agreement, the Plan shall govern, except
as the Plan otherwise provides.
<PAGE>
h. Accounting Compliance. Optionee agrees that, in the event a
"change of control transaction" (as defined in Paragraph 2(c) above) is treated
as a "pooling of interests" under generally accepted accounting principles and
Optionee is an "affiliate" of the Company or any Subsidiary (as defined in
applicable legal and accounting principles) at the time of such change of
control transaction, Optionee will comply with all requirements of Rule 145 of
the Securities Act of 1933, as amended, and the requirements of such other legal
or accounting principles, and will execute any documents necessary to ensure
such compliance.
i. Scope of Agreement. This Agreement shall bind and inure to
the benefit of the Company and its successors and assigns and Optionee and any
successor or successors of Optionee permitted by Paragraph 4(f) above.
j. Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement of any
such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by binding arbitration. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be a retired state or federal judge or an attorney
who has practiced securities or business litigation for at least 10 years. If
the parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator. Arbitration will be conducted pursuant to the provisions
of this Agreement, and the commercial arbitration rules of the American
Arbitration Association, unless such rules are inconsistent with the provisions
of this Agreement and without submitting the dispute to such Association.
Limited civil discovery shall be permitted for the production of documents and
taking of depositions. Unresolved discovery disputes may be brought to the
attention of the arbitrator who may dispose of such dispute. The arbitrator
shall have the authority to award any remedy or relief that a court of this
state could order or grant; provided, however, that punitive or exemplary
damages shall not be awarded. The arbitrator may award to the prevailing party,
if any, as determined by the arbitrator, all of its costs and fees, including
the arbitrator's fees, administrative fees, travel expenses, out-of-pocket
expenses and reasonable attorneys' fees. Unless otherwise agreed by the parties,
the place of any arbitration proceedings shall be Hennepin County, Minnesota.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
CIPRICO INC.
By:________________________________
Its:_____________________________
___________________________________
Optionee
NONQUALIFIED STOCK OPTION AGREEMENT
CIPRICO INC.
1999 AMENDED AND RESTATED STOCK OPTION PLAN
THIS AGREEMENT, made effective as of this ______ day of
______________,_____, by and between Ciprico Inc., a Delaware corporation (the
"Company"), and _____________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee on the date hereof is a key employee, officer,
consultant, nonemployee director or advisor of the Company or one of its
Subsidiaries; and
WHEREAS, the Company wishes to grant a nonqualified stock option to
Optionee to purchase shares of the Company's Common Stock pursuant to the
Company's 1999 Amended and Stock Option Plan (the "Plan"); and
WHEREAS, the Administrator has authorized the grant of a nonqualified
stock option to Optionee and has determined that, as of the effective date of
this Agreement, the fair market value of the Company's Common Stock is
$_________per share;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee on the date
set forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of __________ shares of Common Stock at
a per share price of $______ on the terms and conditions set forth herein, and
subject to adjustment pursuant to Section 12 of the Plan. This Option is a
nonqualified stock option and will not be treated as an incentive stock option,
as defined under Section 422, or any successor provision, of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder.
2. Duration and Exercisability.
a. The term during which this Option may be exercised shall
terminate on ________________, _____ except as otherwise provided in Paragraphs
2(b) through 2(e) below. This Option shall become exercisable according to the
following schedule:
Number of Shares Date Exercisable
<PAGE>
Once the Option becomes exercisable to the extent of one hundred percent (100%)
of the aggregate number of shares specified in Paragraph 1, Optionee may
continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If Optionee
does not purchase upon an exercise of this Option the full number of shares
which Optionee is then entitled to purchase, Optionee may purchase upon any
subsequent exercise prior to this Option's termination such previously
unpurchased shares in addition to those Optionee is otherwise entitled to
purchase.
b. Termination of Relationship (other than Change of Control,
Disability or Death). If Optionee ceases to be an employee, consultant,
nonemployee director or an advisor of the Company or any Subsidiary for any
reason other than because of a "change of control transaction" as described in
Paragraph 2(c) or because of disability or death, this Option shall completely
terminate on the earlier of (i) the close of business on the three-month
anniversary date of the termination of all such relationships, and (ii) the
expiration date of this Option stated in Paragraph 2(a) above. In such period
following such termination, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding the date on
which all of Optionee's relationships with the Company or Subsidiary have
terminated, but had not previously been exercised. To the extent this Option was
not exercisable upon the termination of such relationship, or if Optionee does
not exercise the Option within the time specified in this Paragraph 2(b), all
rights of Optionee under this Option shall be forfeited.
c. Change of Control. Except to the extent and as provided
below with respect to termination of employment of an affiliate in connection
with a transaction accounted for as a pooling of interests, in the event of the
sale of substantially all of the assets of the Company or change in control
transaction, the Company through its board of directors as more fully set forth
in Section 11 of the Plan, may provide in its discretion for the acceleration,
termination, exchange or continuation of this Option.
If (i) Optionee ceases to be an employee, consultant,
nonemployee director or advisor of the Company or any Subsidiary because of a
"change of control transaction," (ii) such transaction is treated as a "pooling
of interests" under generally accepted accounting principles, and (iii) Optionee
is an "affiliate" of the Company or Subsidiary under applicable legal and
accounting principles, this Option shall completely terminate on the later of
(A) the close of business on the three-month anniversary date of the termination
of all such relationships, and (B) the close of business on the date that is
sixty (60) days after the date on which affiliates are no longer restricted from
selling, transferring or otherwise disposing of the shares of stock received in
the change of control transaction. In such period following such termination,
this Option shall be exercisable only to the extent the Option was exercisable
on the vesting date immediately preceding the date on which all of Optionee's
relationships with the Company or Subsidiary have terminated, but had not
previously been exercised, unless the exercisability of this Option has been
accelerated as provided in Section 11 of the Plan. To the extent this Option was
not exercisable upon such termination of such relationships, or if Optionee does
not exercise the Option within the time specified in this Paragraph 2(c), all
rights of Optionee under this Option shall be forfeited.
<PAGE>
For purposes of this Paragraph 2(c), a "change of control
transaction" means an acquisition of the Company through the sale of
substantially all of the Company's assets and the consequent discontinuance
of its business or through a merger, consolidation, exchange, reorganization,
reclassification, extraordinary dividend, divestiture or liquidation of the
Company.
d. Disability. If Optionee ceases to be an employee,
consultant, nonemployee director or advisor of the Company or any Subsidiary
because of disability (as such term is defined in Code Section 22(e)(3), or any
successor provision), this Option shall completely terminate on the earlier of
(i) the close of business on the six-month anniversary date of the termination
of all such relationships, and (ii) the expiration date under this Option stated
in Paragraph 2(a) above. In such period following such termination, this Option
shall be exercisable only to the extent the Option was exercisable on the
vesting date immediately preceding the termination of all of Optionee's
relationships. If Optionee does not exercise the Option within the time
specified in this Paragraph 2(d), all rights of Optionee under this Option shall
be forfeited.
e. Death. In the event of Optionee's death, this Option shall
terminate on the earlier of (i) the close of business on the twelve-month
anniversary date of the date of Optionee's death, and (ii) the expiration date
of this Option stated in Paragraph 2(a) above. In such period following
Optionee's death, this Option may be exercised by the person or persons to whom
Optionee's rights under this Option shall have passed by Optionee's will or by
the laws of descent and distribution only to the extent the Option was
exercisable on the vesting date immediately preceding the date of Optionee's
death. If such person or persons fail to exercise this Option within the time
specified in this Paragraph 2(e), all rights under this Option shall be
forfeited.
3. Manner of Exercise.
a. General. The Option may be exercised only by Optionee (or
other proper party in the event of death or incapacity), subject to the
conditions of the Plan and subject to such other administrative rules as the
Administrator may deem advisable, by delivering within the option period written
notice of exercise to the Company at its principal office. The notice shall
state the number of shares as to which the Option is being exercised and shall
be accompanied by payment in full of the option price for all shares designated
in the notice. The exercise of the Option shall be deemed effective upon receipt
of such notice by the Company and upon payment that complies with the terms of
the Plan and this Agreement. The Option may be exercised with respect to any
number or all of the shares as to which it can then be exercised and, if
partially exercised, may be exercised as to the unexercised shares any number of
times during the option period as provided herein.
b. Form of Payment. Subject to the approval of the
Administrator, payment of the option price by Optionee shall be in the form of
cash, personal check, certified check or previously acquired shares of Common
Stock of the Company, or any combination thereof. Any stock so tendered as part
of such payment shall be valued at its Fair Market Value as provided in the
Plan. For purposes of this Agreement, "previously acquired shares of Common
Stock" shall include shares of Common Stock that are already owned by Optionee
at the time of exercise.
<PAGE>
c. Stock Transfer Records. As soon as practicable after the
effective exercise of all or any part of the Option, Optionee shall be recorded
on the stock transfer books of the Company as the owner of the shares purchased,
and the Company shall deliver to Optionee one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.
4. Miscellaneous.
a. Rights as Shareholder. This Agreement shall not confer on
Optionee any right with respect to the continuance of any relationship with the
Company or any of its Subsidiaries, nor will it interfere in any way with the
right of the Company to terminate any such relationship. Optionee shall have no
rights as a shareholder with respect to shares subject to this Option until such
shares have been issued to Optionee upon exercise of this Option. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property), distributions or other rights for which the
record date is prior to the date such shares are issued, except as provided in
Section 12 of the Plan.
b. Securities Law Compliance. The exercise of all or any parts
of this Option shall only be effective at such time as counsel to the Company
shall have determined that the issuance and delivery of Common Stock pursuant to
such exercise will not violate any state or federal securities or other laws.
Optionee may be required by the Company, as a condition of the effectiveness of
any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Optionee's own account without a view to any
further distribution thereof and that such shares will be not transferred or
disposed of except in compliance with applicable state and federal securities
laws.
c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and
subject to Section 12 of the Plan, certain changes in the number or character of
the Common Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Optionee's rights with
respect to any unexercised portion of the Option (i.e., Optionee shall have such
"anti-dilution" rights under the Option with respect to such events, but shall
not have "preemptive" rights).
d. Shares Reserved. The Company shall at all times during the
option period reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of this Agreement.
e. Withholding Taxes. In order to permit the Company to comply
with all applicable federal or state income tax laws or regulations, the Company
may take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, income or other taxes are withheld from any
<PAGE>
amounts payable by the Company to Optionee. If the Company is unable to withhold
such federal and state taxes, for whatever reason, Optionee hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. Optionee may, subject to the
approval and discretion of the Administrator or such administrative rules it may
deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company's Common Stock having
a fair market value equal to such obligations.
f. Transferability of Options. Optionee may, for no
consideration, transfer this Option to a member of Optionee's immediate family,
to a trust for the benefit of Optionee's immediately family member(s) or to a
partnership in which such family member(s) are the only partners. The family
member to whom, or the trust or partnership to which, this Option has been
transferred shall be subject to all terms and conditions set forth herein, and
shall not subsequently assign or transfer this Option, either voluntarily or
involuntarily, unless such transfer is to another family member, trust or
partnership which meets the requirements of this Paragraph 4(f). If Optionee
does not transfer this Option to such a family member, trust or partnership,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
other legal representative and, upon Optionee's death, shall be exercisable by
the person or persons to whom Optionee's rights under this Option have passed by
will or by the laws of descent and distribution.
g. 1999 Amended and Restated Stock Option Plan. The Option
evidenced by this Agreement is granted pursuant to the Plan, a copy of which
Plan has been made available to Optionee and is hereby incorporated into this
Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. The Plan governs this Option and, in the
event of any questions as to the construction of this Agreement or in the event
of a conflict between the Plan and this Agreement, the Plan shall govern, except
as the Plan otherwise provides.
h. Accounting Compliance. Optionee agrees that, in the event a
"change of control transaction" (as defined in Paragraph 2(c) above) is treated
as a "pooling of interests" under generally accepted accounting principles and
Optionee is an "affiliate" of the Company or any Subsidiary (as defined in
applicable legal and accounting principles) at the time of such change of
control transaction, Optionee will comply with all requirements of Rule 145 of
the Securities Act of 1933, as amended, and the requirements of such other legal
or accounting principles, and will execute any documents necessary to ensure
such compliance.
i. Scope of Agreement. This Agreement shall bind and inure to
the benefit of the Company and its successors and assigns and Optionee and any
successor or successors of Optionee permitted by Paragraph 4(f) above.
j. Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement of any
such controversy. If, notwithstanding, such dispute cannot be resolved, such
<PAGE>
dispute shall be settled by binding arbitration. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be a retired state or federal judge or an attorney
who has practiced securities or business litigation for at least 10 years. If
the parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator. Arbitration will be conducted pursuant to the provisions
of this Agreement, and the commercial arbitration rules of the American
Arbitration Association, unless such rules are inconsistent with the provisions
of this Agreement and without submitting the dispute to such Association.
Limited civil discovery shall be permitted for the production of documents and
taking of depositions. Unresolved discovery disputes may be brought to the
attention of the arbitrator who may dispose of such dispute. The arbitrator
shall have the authority to award any remedy or relief that a court of this
state could order or grant; provided, however, that punitive or exemplary
damages shall not be awarded. The arbitrator may award to the prevailing party,
if any, as determined by the arbitrator, all of its costs and fees, including
the arbitrator's fees, administrative fees, travel expenses, out-of-pocket
expenses and reasonable attorneys' fees. Unless otherwise agreed by the parties,
the place of any arbitration proceedings shall be Hennepin County, Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
CIPRICO INC.
By:________________________________________
Its:____________________________________
___________________________________________
Optionee
CIPRICO, INC.
1996 RESTRICTED STOCK PLAN (As
Amended though December 31, 1998))
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated
below:
(a) "Affiliates" shall mean a Parent or Subsidiary of the Company.
(b) "Committee" shall mean a Committee of two or more directors who
shall be appointed by and serve at the pleasure of the Board. Each of
the members of the Committee shall be a "disinterested" person within
the meaning of Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934 as amended. As of the effective date of the Plan,
a "disinterested" person under Rule 16b-3 generally means a person who,
among other things, has not been, at any time within one year prior to
his or her appointment to the Committee (or, if shorter, during the
period beginning with the initial registration of the Company's equity
securities under Section 12 of the Securities Exchange Act of 1934, as
amended, and ending with the director's appointment to the Committee)
and who will not be, while serving on such Committee, granted or
awarded options under the Plan, or under any other plan of the Company
or any of its Affiliates entitling participants to acquire stock, stock
options, stock appreciation rights or similar rights that have an
exercise or conversion privilege or a value derived from equity
securities issued by the Company or its Affiliate, except to the extent
permitted by Rule 16b-3, or any successor provision.
(c) The "Company" shall mean CIPRICO, INC., a Delaware corporation.
(d) The "Internal Revenue Code" is the Internal Revenue Code of 1986,
as amended from time to time.
(e) "Parent" shall mean any corporation which owns, directly or
indirectly in an unbroken chain, fifty percent (50%) or more of the
total voting power of the Company's outstanding stock.
(f) The "Participant" is the employee or officer of or consultant or
advisor to the Company or any Subsidiary to whom a restricted stock
award has been granted.
(g) The "Plan" means the Ciprico, Inc. 1996 Restricted Stock Plan, as
amended hereafter from time to time, including the form of restricted
stock agreements as they may be modified by the Board from time to
time.
<PAGE>
(h) "Stock" shall mean Common Stock of the Company (subject to
adjustment as described in Section 11) reserved for restricted stock
awards pursuant to this Plan.
(i) A "Subsidiary" shall mean any corporation of which fifty percent
(50%) or more of the total voting power of outstanding stock is owned,
directly or indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by facilitating the employment and retention of competent
personnel and by furnishing incentive to officers and employees upon whose
efforts the success of the Company and its Subsidiaries will depend to a large
degree.
It is the intention of the Company to carry out the Plan through the
granting of restricted stock awards. Adoption of this Plan shall be and is
expressly subject to the condition of approval by the shareholders of the
Company after the adoption of the Plan by the Board of Directors. In no event
shall the risks of forfeiture on any restricted stock awards lapse prior to the
date this Plan is approved by the shareholders of the Company. If shareholder
approval of this Plan is not obtained, any restricted stock awards previously
granted shall be revoked.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective upon its adoption by the Board of Directors
of the Company, subject to approval by the shareholders of the Company as
required in Section 2.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(hereinafter referred to as the "Board") or by a Committee which may be
appointed by the Board from time to time. The Board or the Committee, as the
case may be, shall have all of the powers vested in it under the provisions of
the Plan, including but not limited to, the exclusive authority (where
applicable and within the limitations described herein) to determine, in its
sole discretion, the individuals to whom, and the time or times at which,
restricted stock awards shall be granted, the number of shares of Stock subject
to each award, the price (if any) to be paid for such shares of Stock, the risks
of forfeiture that will apply to such shares of Stock and the manner in which
such risks of forfeiture will lapse, and all other terms and conditions of each
award.
<PAGE>
The Board, or the Committee, shall have full power and authority to
administer and interpret the Plan, to make and amend rules, regulations and
guidelines for administering the Plan, to prescribe the form and conditions of
the written restricted stock agreements (which may vary from Participant to
Participant) evidencing each award and to make all other determinations
necessary or advisable for the administration of the Plan. The Board's, or the
Committee's, interpretation of the Plan, and all actions taken and
determinations made by the Board or the Committee pursuant to the power vested
in it hereunder, shall be conclusive and binding on all parties concerned. No
member of the Board or the Committee shall be liable for any action taken or
determination made in good faith in connection with the administration of the
Plan.
In the event the Board appoints a Committee as provided hereunder, any
action of the Committee with respect to the administration of the Plan shall be
taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
SECTION 5.
PARTICIPANTS
The Board or the Committee, as the case may be, shall from time to
time, at its discretion and without approval of the shareholders, designate
those officers and employees of or consultants or advisors to the Company or any
Subsidiary to whom restricted stock awards shall be granted under this Plan. The
Board or the Committee may grant additional restricted stock awards under this
Plan to some or all Participants then holding awards or may grant restricted
stock awards solely or partially to new Participants. In designating
Participants, the Board or the Committee shall also determine the number of
shares to be awarded to each such Participant, subject to the provisions of
Section 8. The Board may from time to time designate individuals as being
ineligible to participate in the Plan.
SECTION 6.
STOCK
One Hundred Fifty Thousand (150,000) shares of authorized but unissued
shares of Stock shall be reserved and available for restricted stock awards
under the Plan; provided, however, that the total number of shares of Stock
reserved for restricted stock awards under this Plan shall be subject to
adjustment as provided in Section 11 of the Plan. In the event that all or any
part of a restricted stock award under the Plan is forfeited for any reason, the
shares of Stock allocable to the portion of such award for which the risks of
forfeiture have not lapsed shall continue to be reserved for restricted stock
awards under the Plan and may be subject to new restricted stock awards
hereunder.
<PAGE>
SECTION 7.
DURATION OF PLAN
Restricted stock awards may be granted pursuant to the Plan from time
to time after the effective date of the Plan and until the Plan is discontinued
or terminated by the Board.
SECTION 8.
TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
Each restricted stock award granted pursuant to the Plan shall be
evidenced by a written restricted stock agreement. The restricted stock
agreement shall be in such form as may be approved from time to time by the
Board or the Committee and may vary from Participant to Participant; provided,
however, that each Participant and each restricted stock agreement shall comply
with and be subject to the following terms and conditions:
(a) Number of Shares. The restricted stock agreement shall state the
total number of shares covered by the restricted stock award.
(b) Issuance of Restricted Shares. The Company shall cause to be issued
a stock certificate representing such shares of Stock in the
Participant's name, and shall deliver such certificate to the
Participant; provided, however, that the Company shall place a legend
on such certificate describing the risks of forfeiture and other
transfer restrictions set forth in the Participant's restricted stock
agreement and providing for the cancellation and return of such
certificate if the shares of Stock subject to the restricted stock
award are forfeited. Until such risks of forfeiture have lapsed or the
shares subject to such restricted stock award have been forfeited, the
Participant shall be entitled to vote the shares represented by such
stock certificates and shall receive all dividends attributable to such
shares, but the Participant shall not have any other rights as a
shareholder with respect to such shares.
(c) Withholding Taxes. In order to provide the Company with the
opportunity to claim the benefit of any income tax deduction which may
be available to it as from the grant of restricted stock awards to a
Participant under this Plan and to permit the Company to comply with
all applicable federal or state income tax laws or regulations, the
Company may take such action as it deems appropriate to insure that, if
necessary, all applicable federal or state payroll, income or other
taxes are withheld from any future wages or other amounts payable by
the Company to the Participant. If the Company is unable to withhold
such federal and state taxes, for whatever reason, the Participant
hereby agrees to pay to the Company an amount equal to the amount the
Company would otherwise be required to withhold under federal or state
law prior to the transfer of any certificates for the shares of Stock
subject to such restricted stock awards.
<PAGE>
The Participant may, subject to the discretion of the Board or
the Committee, as the case may be, and such other administrative rules
it may deem advisable, elect to have all or a portion of such tax
withholding obligations satisfied by delivering previously-acquired
shares of Stock, including shares received pursuant to a restricted
stock award on which the risks of forfeiture have lapsed, such shares
having a fair market value, as of the date the amount of tax to be
withheld is determined under applicable tax law, equal to such
obligations. Such election shall comply with such rules as may be
adopted by the Board or the Committee to assure compliance with Rule
16b-3, or any successor provision, as then in effect, of the General
Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
(d) For purposes of Section 8(c), the "fair market value" of the Stock
shall mean the last sale price of such stock as reported by Nasdaq on
the date the amount of tax to be withheld is determined or, if no sale
of such stock shall have occurred on that date, on the next preceding
day on which there was a sale of such stock.
(e) Other Provisions. The restricted stock agreement authorized under
this Section 8 shall contain such other provisions as the Board or the
Committee, as the case may be, shall deem advisable.
SECTION 9
TRANSFER OF AWARD
No restricted stock award shall be transferable, in whole or in part,
by the Participant, other than by will or by the laws of descent and
distribution, prior to the date the risks of forfeiture described in the
restricted stock agreement have lapsed. If the Participant shall attempt any
transfer of any restricted stock award granted under the Plan prior to such
date, such transfer shall be void and the restricted stock award shall
terminate.
SECTION 10.
CHANGE OF CONTROL
Notwithstanding anything in this Plan or any restricted stock agreement
to the contrary, all risks of forfeiture applicable to a Participant's
restricted stock awards shall immediately lapse upon a "change of control." For
purposes of this Section 10, a "change of control" shall mean any of the
following events:
(a) Any exchange, reorganization, reclassification, extraordinary
dividend, divestiture (including a spin-off), merger, consolidation or
<PAGE>
similar transaction (collectively referred to as the "transaction") to
which the Company is a party, whether or not such transaction is
approved by the Company's Board of Directors, if the individuals and
entities who were shareholders of the Company immediately prior to the
effective date of such transaction have, immediately following the
effective date of such transaction, beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of less than
fifty percent (50%) of the total combined voting power (with respect to
the election of directors) of all classes of securities issued by the
surviving corporation;
(b) A change in the direct or indirect beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of securities
of the Company representing, in the aggregate, a majority of the total
combined voting power of all classes of the Company's then issued and
outstanding securities by any person or entity or by a group of
associated persons or entities acting in concert;
(c) The sale of substantially all of the properties and assets of the
Company to any person or entity which is not a wholly-owned subsidiary
of the Company;
(d) The approval of any plan or proposal for the liquidation of the
Company by its shareholders; or
(e) A change in the composition of the Board of Directors at any time
during any consecutive twenty-four (24) month period such that the
"Continuing Directors" cease for any reason to constitute at least a
seventy percent (70%) majority of the Board. For purpose of this event,
"Continuing Directors" means those members of the Board who either (1)
were directors at the beginning of such consecutive twenty-four (24)
month period; or (2) were elected by, or on the nomination or
recommendation of, at least a two-thirds (2/3) majority of the then
existing Board of Directors.
SECTION 11.
RECAPITALIZATION, SALE, MERGER, EXCHANGE
OR LIQUIDATION
In the event of an increase or decrease in the number of shares of
Stock resulting from a subdivision or consolidation of shares or the payment of
a stock dividend or any other increase or decrease in the number of shares of
Stock effected without receipt of consideration by the Company, the number of
shares of Stock reserved under Section 6 hereof and the number of shares of
Stock covered by each outstanding restricted stock award shall be adjusted by
the Board to reflect such change. Additional shares which may be credited
pursuant to such adjustment shall be subject to the same risks of forfeiture and
other restrictions as are applicable to the shares with respect to which the
adjustment relates.
<PAGE>
Unless otherwise provided in the restricted stock agreement, in the
event of the sale by the Company of substantially all of its assets and the
consequent discontinuance of its business, or in the event of a merger,
consolidation, exchange, reorganization, reclassification, extraordinary
dividend, divestiture (including a spin-off) or liquidation of the Company
(collectively referred to as a "transaction"), the Board may, in connection with
the Board's adoption of the plan for such transaction, provide for one or more
of the following: (i) that all risks of forfeiture on any outstanding restricted
stock awards shall immediately lapse; (ii) that this Plan shall completely
terminate and any outstanding restricted stock awards for which the risks of
forfeiture have not lapsed prior to a date specified by the Board shall be
cancelled; and (iii) that this Plan shall continue with respect to the any
restricted stock awards which were outstanding as of the date of adoption by the
Board of such plan for such transaction and provide to Participants holding such
awards the right to receive an equivalent number of shares of stock of the
corporation succeeding the Company by reason of such transaction. The grant of a
restricted stock award 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.
SECTION 12.
INVESTMENT PURPOSE
No shares of Stock issued pursuant to the Plan shall be transferred or
otherwise disposed of by a Participant unless and until there has been
compliance, in the opinion of Company's counsel, with all applicable legal
requirements, including without limitation, those relating to securities laws
and stock exchange listing requirements. As a condition to the issuance of Stock
to a Participant, the Board or the Committee may require the Participant to (a)
represent that the shares of Stock are being acquired for investment and not
resale and to make such other representations as the Board, or the Committee, as
the case may be, shall deem necessary or appropriate to qualify the issuance of
the shares as exempt from the Securities Act of 1933 and any other applicable
securities laws, and (b) represent that the Participant shall not dispose of the
shares of Stock in violation of the Securities Act of 1933 or any other
applicable securities laws. The Company reserves the right to place a legend on
any stock certificate issued pursuant to the Plan to assure compliance with this
Section 12.
SECTION 13.
AMENDMENT OF THE PLAN
The Board may from time to time, insofar as permitted by law, suspend
or discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 11, shall
impair the terms and conditions of any restricted stock award which is
<PAGE>
outstanding on the date of such revision or amendment to the material detriment
of the Participant without the consent of the Participant. Notwithstanding the
foregoing, no such revision or amendment shall (i) materially increase the
number of shares subject to the Plan except as provided in Section 11 hereof,
(ii) change the designation of the class of employees eligible to receive
restricted stock awards, or (iii) materially increase the benefits accruing to
Participants under the Plan, unless such revision or amendment is approved by
the shareholders of the Company.
SECTION 14.
NO OBLIGATION TO CONTINUE EMPLOYMENT
The granting of a restricted stock award hereunder shall not impose
upon the Company or any Subsidiary any obligation to retain the Participant in
its employ for any period.
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