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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 21, 1997
REGISTRATION STATEMENT NO. 333-______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OVERLAND DATA, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3535285
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8975 BALBOA AVENUE
SAN DIEGO, CALIFORNIA 92123-1599
(619) 571-5555
(Address and telephone number, including area code, of
principal executive offices)
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1996 EMPLOYEE STOCK PURCHASE PLAN
1995 STOCK OPTION PLAN
1993-A STOCK OPTION PLAN
1993 STOCK OPTION PLAN
1992-A NON-QUALIFIED STOCK OPTION PLAN
1991 NON-QUALIFIED STOCK OPTION PLAN
1987 NON-QUALIFIED STOCK OPTION PLAN
SCOTT MCCLENDON NON-QUALIFIED STOCK OPTION AGREEMENT
(Full title of the plans)
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SCOTT MCCLENDON
PRESIDENT
8975 BALBOA AVENUE
SAN DIEGO, CALIFORNIA 92123-1599
(619) 571-5555
(Name, address and telephone number, including area code, of agent for service)
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THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON
FILING WITH THE SECURITIES AND EXCHANGE COMMISSION.
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED (1) PER UNIT (2) PRICE (1)(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, no par value . . . . . . . 2,000,000 $6.45 $12,892,399 $3,907
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(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
Company's outstanding shares of Common Stock.
(2) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457(h)(1). The proposed maximum aggregate offering
price is based on (i) the aggregate price of $951,609 at which the
805,921 options currently outstanding may be exercised and (ii) an
assumed offering price of $10.00 per share for the remaining 1,194,079
shares of Common Stock covered by this Registration Statement.
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RE-OFFER PROSPECTUS
OVERLAND DATA, INC.
2,000,000 Shares of Common Stock
no par value per share
All of the shares of Common Stock, no par value (the "Common Stock"), of
Overland Data, Inc., a California corporation ("Overland" or the "Company"),
registered hereunder are for the account of the holders (collectively, the
"Selling Shareholders") of (i) options granted under the Company's 1995 Stock
Option Plan (the "1995 Plan"), 1993-A Stock Option Plan (the "1993-A Plan"),
1993 Stock Option Plan (the "1993 Plan"), 1992-A Non-Qualified Stock Option
Plan (the "1992-A Plan"), 1991 Non-Qualified Stock Option Plan (the "1991
Plan"), 1987 Non-Qualified Stock Option Plan (the "1987 Plan"), and the Scott
McClendon Non-Qualified Stock Option Agreement (the "McClendon Agreement"),
and (ii) shares issued under the Company's 1996 Employee Stock Purchase Plan
(the "1996 Plan"). The Selling Shareholders shall include those individuals
specifically named in the section of this Prospectus entitled "Selling
Security Holders," as well as certain Selling Shareholders whose names are
not known as of the date of this Prospectus. For purposes of this
Prospectus, the 1996 Plan, the 1995 Plan, the 1993-A Plan, the 1993 Plan, the
1992-A Plan, the 1991 Plan, the 1987 Plan and the McClendon Agreement are
hereinafter collectively referred to as the "ODI Plans."
The Company will not receive any proceeds from the sale of shares of Common
Stock sold by the Selling Shareholders. The Company will receive, however, cash
in the amount of the exercise price with respect to the options granted under
the ODI Plans (collectively, "Options"), to the extent not previously exercised,
and such proceeds will be applied towards the Company's working capital. In
addition, the Company will receive proceeds from the Company's employees who
participate in the 1996 Plan and such proceeds will be applied towards the
Company's working capital.
The Company's Common Stock is traded on the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq"), under the symbol OVRL. This Prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such state.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN MATTERS THAT
SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 21, 1997.
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The Company anticipates that sales may be effected from time to time, by or for
the accounts of the Selling Shareholders, in the Nasdaq market, in negotiated
transactions, or otherwise. Sales will be made through broker-dealers acting as
agent for the Selling Shareholders or to broker-dealers who may purchase the
Common Stock as principals and thereafter sell the shares from time to time in
the Nasdaq market, in negotiated transactions, or otherwise. Sales will be made
either at market prices prevailing at the times of the sales or at negotiated
prices. (See "Plan of Distribution.")
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information filed with the Commission by the Company can be inspected and
copied, at prescribed rates, at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at the Commission's Regional Offices located at 7 World Trade Center, Suite
1300, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. The Company's Common Stock
is traded on the Nasdaq National Market System. Annual reports and other
reports and information concerning the Company can also be inspected at the
office of the National Association of Securities Dealers, Inc. at 1735 K Street
N.W., Washington, D.C. 20006-1500.
The Company has filed with the Commission a registration statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules promulgated thereunder, with respect to the
securities offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are omitted as permitted by the
rules and regulations of the Commission. Statements made in this Prospectus as
to the contents of any agreement or other document referred to herein are not
necessarily complete, and reference is made to the copy of such agreement or
other document filed as an exhibit or schedule to the Registration Statement and
each such statement shall be deemed qualified in its entirety by such reference.
For further information, reference is made to the Registration Statement and to
the exhibits and schedules filed therewith, which are available for inspection
without charge at the public reference facilities maintained by the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the material containing this information may be obtained from the
Commission upon payment of the prescribed fees. The Commission also maintains a
Web site that contains reports, proxy and information statements and other
materials that are filed through the Commission's Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR"). This Web site can be accessed at
http://www.sec.gov. The Company is subject to the periodic reporting and other
information requirements of the Exchange Act. Such reports may also be inspected
and obtained from the Commission as noted above.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Company documents shall be deemed to be incorporated in this
Prospectus and to be a part hereof from the date of the filing of such
documents:
(1) Form S-1 Registration Statement (No. 333-18583), filed with the Commission
on December 23, 1996, as amended, including all exhibits and schedules
thereto;
(2) Form 8-A Registration Statement (No. 000-22071), filed with the Commission
on January 29, 1997, including all exhibits and schedules thereto; and
(3) All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering described herein.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which is also incorporated herein by reference modifies or replaces
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this Prospectus
is delivered, on written or oral request of such persons, a copy (without
exhibits) of any or all documents incorporated by reference in this Prospectus.
Requests for such copies should be directed to Mr. Vernon A. LoForti, Chief
Financial Officer, Overland Data, Inc., (i) if by telephone to (619) 571-5555 or
(ii) if by mail to 8975 Balboa Avenue, San Diego, California 92123-1599.
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RISK FACTORS
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK INCLUDING, BUT NOT NECESSARILY LIMITED TO, THE RISK FACTORS DESCRIBED
BELOW. PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW AND CONSIDER THE FOLLOWING
RISKS AS WELL AS THE OTHER INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
RAPID TECHNOLOGICAL CHANGE AND DEPENDENCE ON NEW PRODUCT DEVELOPMENT
The market for the Company's products is generally characterized by rapid
technological change and evolving industry standards and is highly competitive
with respect to timely innovation. The future success of the Company will
depend on its ability to anticipate changes in technology, to develop new and
enhanced products on a timely and cost-effective basis and to introduce,
manufacture and achieve market acceptance of such new and enhanced products. In
particular, the Company's future success is dependent on its LibraryXpress
product line, the initial product of which, the LXB, commenced shipment in March
1996. During the first quarter of calendar year 1997, the Company intends to
commence shipment of the LXG global control unit of the LibraryXpress product
line, which will create what the Company believes will be the first automated
tape library in its capacity class which is truly "scalable." Prototypes of the
LXG were shipped in November 1996. The LXB and the other planned units of the
LibraryXpress product line have not yet achieved widespread market acceptance
and are anticipated to confront increasing competition both from competitive
automated tape library products, as well as other storage devices that may be
developed in the future. The DLT tape drives used by the Company in its
LibraryXpress products are obtained from a sole supplier, Quantum Corporation
("Quantum"), which from time to time has placed customers such as the Company
(and its competitors) on allocation due to shortages of its components.
Development schedules for high technology products are inherently subject to
uncertainty and there can be no assurance that the Company will be able to meet
its product development schedules, including those for the LibraryXpress product
line, or that development costs will be within budgeted amounts. If the
products or product enhancements that the Company develops are not deliverable
due to developmental problems, quality issues or component shortage problems or
if such products or product enhancements do not achieve market acceptance or are
unreliable, the Company's business, financial condition and results of
operations may be materially and adversely affected. The introduction (whether
by the Company or its competitors) of new products embodying new technology such
as new sequential or random access mass storage devices and the emergence of new
industry standards can render existing products obsolete or not marketable. For
example, the Company believes that its sales of Quantum products which it
distributes declined from $6.0 million in the first half of fiscal year 1996 to
$1.8 million in the first half of fiscal year 1997, largely as a result of a
decline in sales of the Quantum DLT 2500/2700/4500/4700 loaders which have been
replaced by the Company's sales of the LXB, which amounted to approximately
$5.4 million in revenues during the first half of fiscal year 1997. Similarly,
the Company anticipates a continued migration by users of its 18-track products
to its 36-track products. In addition, 9-track product sales of $5.8 million in
the first half of fiscal year 1997 declined 30.1% from the first half of fiscal
year 1996, reflecting the general maturity of the
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9-track tape technology and a movement by the Company's customers to more
technologically advanced products.
COMPETITION AND PRICE PRESSURE
The worldwide tape storage market is intensely competitive as a large
number of manufacturers of alternative tape technologies compete for a limited
number of customers and barriers to entry are relatively low in the library
category. The Company currently participates in three market areas which are
defined by different tape technologies: (i) network data storage; (ii) data
backup and interchange based on IBM compatible 3480/3490 technology; and
(iii) data interchange based on 9-track reel-to-reel technology. In each of
these areas, many of the Company's competitors have substantially greater
financial and other resources, larger research and development staffs, and more
experience and capabilities in manufacturing, marketing and distributing
products than the Company. For network data storage, the LibraryXpress LXB
product currently competes with products made by Advanced Digital Information
Corporation, ATL Products, Inc., Breece Hill Technologies, Inc., Hewlett-Packard
Company ("Hewlett-Packard"), Quantum and Storage Technology Corporation, and the
Company believes that additional competitors can be expected to enter the
market. For the data backup and interchange market, which is based on IBM
compatible 3480/3490 technology, the Company offers a product line of 18 and
36-track products, which the Company believes compete primarily with products
made by Fujitsu Computer Products of America, Inc., Hitachi Data Systems
Corporation, Laser Magnetic Storage and Storage Technology. For the 9-track
data interchange market, the Company believes it competes with Anritsu American
Incorporated, Hewlett-Packard and M4 Data, Inc. Except for the 9-track data
interchange market, the markets for the Company's products are characterized by
significant price competition, and the Company anticipates that its products
will face increasing price pressure. This pressure could result in significant
price erosion, reduced profit margins and loss of market share, which could have
a material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE ON CERTAIN SUPPLIERS
The Company's products have a large number of components and subassemblies
produced by outside suppliers and it is highly dependent on such suppliers for
components and subassemblies, including DLT tape drives, read-write heads,
printed circuit boards and integrated circuits, which are essential to the
manufacture of the Company's products. In addition, for certain of these items,
the Company qualifies only a single source, which can magnify the risk of
shortages and decrease the Company's ability to negotiate with its suppliers on
the basis of price. If such shortages occur, or if the Company experiences
quality problems with suppliers, shipments of products could be significantly
delayed or costs significantly increased, which would have a material adverse
effect on the Company's business, financial condition and results of operations.
Specifically, the Company's new LibraryXpress automated tape libraries
incorporate DLT tape drives manufactured by Quantum, which is also a competitor
of the Company in that Quantum markets its own tape drives and tape loader
products. Currently, there are no alternative sources for the DLT tape drives
supplied by Quantum. The Company does not have a long-term contract with
Quantum, which
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could cease supplying DLT tape drives directly to the Company. From time to time
in the past, the Company has not been able to obtain as many drives as it has
needed from Quantum due to drive shortages or quality issues. Any prolonged
inability to obtain adequate deliveries could require the Company to pay more
for components, parts and other supplies, seek alternative sources of supply,
delay shipment of products and damage relationships with current and prospective
customers. Any such delay or damage could have a material adverse effect on the
Company's business, financial condition and results of operations. During the
past 12 months, the Company has experienced problems with the quality and
timeliness of the supply of DLT drives and read-write heads, each of which is a
sole source component. Such problems have adversely affected the Company's sales
during this period. While the Company believes that the problems relating to
these components have been resolved, no assurance can be given that such
problems will not re-occur or that the Company will not experience similar or
more serious disruptions in supply in the future.
DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS
The Company markets its products to original equipment manufacturers
("OEMs"), value-added resellers ("VARs"), systems integrators, distributors,
resellers and end-user customers. The Company's sales to its top five customers
accounted for 34% of the Company's total sales in fiscal year 1996, with
Digital Equipment Corporation ("DEC"), a major customer since 1993, accounting
for 23% of such sales. During the first half of fiscal year 1997, the Company's
sales to its top five customers and to DEC accounted for 34% and 21% of total
sales, respectively. In October 1996, the Company signed a five-year agreement
with IBM to supply its 36-track products. The Company anticipates that the
percentage of its sales to these top two customers will increase significantly
during fiscal year 1997 and could account for as much as 30% of the Company's
sales. As is typical in the industry, the Company's OEM contracts provide for
annual price reviews and the customers are not required to purchase minimum
quantities. Orders may be rescheduled or canceled outside 30 days of shipment
without penalty. The loss of one or more of these customers due to competition
from other vendors, consolidation, substantial cancellations by them, or the
receipt of orders below anticipated amounts would have a material adverse effect
on the Company's business, financial condition and results of operations.
FLUCTUATIONS IN RESULTS
The Company's results can fluctuate substantially from time to time for
various reasons. All of the markets served by the Company are volatile and
subject to market shifts, which may or may not be discernible in advance by the
Company. A slowdown in the demand for workstations, mid-range computer systems
and networks could have a significant adverse effect on the demand for the
Company's products in any given period. The Company has experienced delays in
receipt of purchase orders and, on occasion, anticipated purchase orders have
been rescheduled or have not materialized due to changes in customer
requirements. The Company's customers may cancel or delay purchase orders for a
variety of reasons, including the rescheduling of new product introductions,
changes in their inventory practices or forecasted demand, general economic
conditions affecting the computer market, changes in pricing by the Company and
its competitors, new product announcements by the Company or others, quality or
reliability problems related to the
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Company's products, or selection of competitive products as alternate sources of
supply. In addition, because a large portion of the Company's sales are
generated by its European distributor channel (20% in fiscal year 1996), the
first fiscal quarter (July through September) is impacted by seasonally slow
European orders, reflecting the summer holiday period in Europe. The Company's
operations may reflect substantial fluctuations from period to period as a
consequence of such industry shifts, price erosion, general economic conditions
affecting the timing of orders from customers, as well as other factors
discussed herein. In particular, the Company's ability to forecast sales to
distributors and VARs and, increasingly to OEMs, is especially limited as such
customers typically provide the Company with relatively short order lead times
or are permitted to change orders on short notice, respectively. A portion of
the Company's expenses are fixed and difficult to reduce should revenues not
meet the Company's expectations, thus magnifying the material adverse effect of
any revenue shortfall. The Company's gross profit has fluctuated and will
continue to fluctuate quarterly and annually based upon a variety of factors
such as the level of utilization of the Company's production capacity, changes
in product mix, average selling prices, demand or manufacturing yields,
increases in production and engineering costs associated with initial production
of new programs, changes in the cost of or limitations on availability of
materials and labor shortages. During the first half of fiscal year 1997, the
Company reported a gross margin of 36% which was higher than its average
quarterly gross margin during fiscal years 1994, 1995 and 1996. Management does
not believe that this gross margin level, which was positively affected by an
increase in the sales of the LibraryXpress and a decrease in sales of
distributed product, will be maintained. Generally, new products have higher
gross margins than more mature products. Therefore, the Company's ability to
introduce new products in a timely fashion is an important factor to its
profitability. Based upon all of the foregoing, the Company believes that
period-to-period comparisons of its revenues and operating results will continue
to fluctuate and are not necessarily meaningful and should not be relied on as
indications of future performance. Furthermore, in some future quarter the
Company's revenues and operating results could be below the expectations of
public market analysts or investors, which could result in a material adverse
effect on the price of the Common Stock.
REPLACEMENT OF INFORMATION SYSTEMS
In July 1996, the Company began a project to replace its enterprise-wide
information and business systems by the end of fiscal year 1997 to more
effectively address the complexities of the Company's business and to support
its growth in the next five years. Although the Company has not experienced any
delays in this effort to date, there can be no assurance that future delays in
the implementation process will not occur. The failure to successfully
accomplish the replacement of these systems in a timely manner, or any failure
otherwise to achieve the necessary levels of information and business system
support, could have a material adverse effect on the Company's business,
financial condition and results of operations.
RISKS RELATED TO FOREIGN SOURCING AND FOREIGN SALES
Because a number of the Company's key components are currently manufactured
in Singapore and Malaysia, its results of operations can be affected by
fluctuations in currency exchange rates. The Company's international
procurement is also subject to certain other risks
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common to foreign operations in general, including government regulation and
import restrictions. During fiscal year 1996, approximately 10% of the
Company's cost of goods sold consisted of materials purchased from suppliers in
Singapore and Malaysia. An adverse foreign exchange movement of the U.S. dollar
versus the Singapore dollar or other currency, or the imposition of import
restrictions or tariffs by the U.S. government on products or components shipped
from Singapore, Malaysia or another country could have a material adverse effect
on the Company's business, financial condition and results of operations. In
addition, because of the Company's use of components produced overseas, the sale
of the Company's products to domestic federal or state agencies may be
restricted by limitations imposed by the Buy American Act or the Trade Agreement
Act.
Direct international sales accounted for 27% of sales in fiscal year
1996 and the Company expects that international sales will continue to grow
and represent an even greater proportion of the Company's revenue. Sales to
customers outside the U.S. are subject to various risks, including the
imposition of governmental controls, the need to comply with a wide variety
of foreign and U.S. export laws, political and economic instability, trade
restrictions, changes in tariffs and taxes, longer payment cycles typically
associated with international sales and the greater difficulty of
administering business overseas. Furthermore, although the Company endeavors
to meet standards established by foreign regulatory bodies, there can be no
assurance that the Company will be able to comply with changes in foreign
standards in the future. The inability of the Company to design products
that comply with foreign standards could have a material adverse effect on
the Company. Currently, all of the Company's sales are U.S. dollar
denominated and fluctuations in the value of foreign currencies relative to
the U.S. dollar could therefore make the Company's products less price
competitive. However, the Company has plans to expand its presence in Europe
through its operation in the United Kingdom in the last half of fiscal year
1997 and to bill customers for product shipped from England in other foreign
currencies. When this occurs, a decrease in the value of the other foreign
currencies in relation to the U.S. dollar after establishing prices and
before receipt of payment by the Company would have an adverse effect on the
Company's business, financial condition and results of operations.
DEPENDENCE ON KEY EMPLOYEES
The Company's future success depends in large part on its ability to retain
certain key executives and other key personnel, many of whom have been
instrumental in developing new technologies and setting strategic plans. The
Company's growth and future success will depend in large part on its continuing
ability to hire, motivate and retain highly qualified management, technical,
sales and marketing team members. Competition for such personnel is intense and
there can be no assurance that the Company will be able to retain its existing
personnel or attract additional qualified personnel in the future.
TECHNOLOGY AND INTELLECTUAL PROPERTY
The Company believes that, because of the rapid pace of technological
change in the tape storage industry, patent and trade secret protection are less
significant than factors such as the
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knowledge, ability and experience of the Company's personnel, new product
introductions and product enhancements. Nonetheless, the Company's ability to
compete effectively depends in part on its ability to develop and maintain
proprietary aspects of its technology. There can be no assurance that any
future patents will be granted or that any patents will be valid or provide
meaningful protection for the Company's product innovations. In addition, the
laws of certain foreign countries may not protect the Company's intellectual
property to the same extent as U.S. laws. Furthermore, there can be no
assurance that others will not independently develop similar products, duplicate
the Company's products or, if patents are issued to the Company, design around
the patents issued to the Company. The Company also relies on a combination of
copyright, trademark, trade secret and other intellectual property laws to
protect its proprietary rights. Such rights, however, may not preclude
competitors from developing substantially equivalent or superior products to
those of the Company's. In addition, many aspects of the Company's products are
not subject to significant intellectual property protection. While the Company
is not currently engaged in any intellectual property litigation or proceedings,
there can be no assurance that it will not become so involved in the future or
that its products do not infringe any intellectual property or other proprietary
right of any third party. An adverse outcome in litigation or similar
proceedings could subject the Company to significant liabilities to third
parties, require disputed rights to be licensed from others or require the
Company to cease marketing or using certain products, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS
The Company may in the future pursue acquisitions of complementary
businesses, products or technologies as it seeks to expand and increase the
value-added component of its product offerings. Acquisitions involve numerous
risks, including difficulties in the assimilation of the operations and
personnel of the acquired business, the diversion of management's attention from
other business concerns, risks of entering markets in which the Company has no
direct prior experience, and the potential loss of key employees of the acquired
business. In addition, future acquisitions by the Company may result in
potentially dilutive issuances of equity securities and the incurrence of
additional debt and amortization expenses related to goodwill and other
intangible assets which could adversely affect the Company's business, financial
condition and results of operations.
WARRANTY EXPOSURE
The Company generally provides a two-year, return-to-factory warranty on
its products. For certain products, it provides a two-year on-site warranty
which is supplied by a third party service provider. The Company pays the
service provider in advance the negotiated price of the contract and the service
provider is then responsible for the costs of providing warranty service during
the term of the contract. For products which the Company distributes and for
tape drives used in the Company's products but manufactured by a third party,
the Company passes on to the customer the related manufacturer's warranty.
Although the Company has established reserves for the estimated liability
associated with product warranties, there can be no assurance that such reserves
will be
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adequate or that the Company will not incur substantial warranty expenses in the
future with respect to new or established products.
ABSENCE OF PRIOR PUBLIC MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK
PRICE
Prior to the date of this Prospectus, there has been no public trading
market for the Common Stock, and there can be no assurance that an active
trading market will develop or be sustained. The stock market has from time to
time experienced extreme price and volume fluctuations which often have been
unrelated to the operating performance of particular companies. Announcements of
new products or accounts by the Company or its competitors, changes in earnings
estimated by analysts and economic and other external factors, as well as
period-to-period fluctuations in financial results of the Company, may have a
significant impact on the market price and marketability of the Common Stock.
Fluctuations or decreases in the trading price of the Common Stock may adversely
affect the liquidity of the trading market for the Common Stock and the
Company's ability to raise capital through future equity financing.
ABSENCE OF DIVIDENDS
The Company has not paid any dividends on its Common Stock and does not
anticipate paying any dividends on such stock in the foreseeable future. In
addition, the Company's current bank credit line prohibits the payment of
dividends.
EFFECT ON SHARE PRICE OF SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Company's initial public offering, 3,000,000
shares of Common Stock (3,450,000 shares if the over-allotment option is
exercised in full) will be eligible for immediate sale in the public market
without restriction unless they are held by affiliates of the Company. After
the completion of such offering, 6,932,862 of the outstanding shares will be
"restricted securities" within the meaning of Rule 144 ("Rule 144")
promulgated under the Securities Act, and may not be sold in the absence of
registration under the Securities Act unless an exemption from registration
is available. However, substantially all of these shares will be eligible for
sale pursuant to Rule 144 beginning 90 days after the completion of such
offering. Of this total, approximately 6,221,024 shares will be subject to
the volume and manner of sale limitations of Rule 144 and approximately
711,838 shares will be eligible for resale without such restrictions
pursuant to Rule 144(k) after the completion of such offering. In addition,
under Rule 701 of the Securities Act ("Rule 701"), any employee, consultant
or advisor of the Company who purchased shares from the Company in connection
with a compensatory stock or option plan or other written compensatory
agreement is entitled to resell such shares without having to comply with the
public information, holding period, volume limitation or notice provisions of
Rule 144 and affiliates are entitled to sell their Rule 701 shares without
having to comply with holding-period restrictions under Rule 144, in each
case commencing 90 days after the Company becomes subject to the reporting
requirements of Section 13 of the Exchange Act. During the two-year period
ended December 31, 1996, approximately 435,820 shares of Common Stock were
issued pursuant to the exercise of stock options and, at December 31, 1996,
stock options for 805,921 shares of Common Stock were
-10-
<PAGE>
outstanding. The directors, officers and certain current shareholders of the
Company, beneficially holding an aggregate of 6,005,079 shares, have agreed
not to sell or otherwise dispose of any such shares for at least 180 days
from the date of this Prospectus. Thereafter, these shares will generally be
eligible for immediate sale in the public market without restriction.
Furthermore, certain of the Company's current shareholders and the holder of
the Company's outstanding warrant have been granted certain "piggy-back"
registration rights with respect to the shares of Common Stock owned by them
or to be issued to them. No predictions can be made as to the effect, if
any, that public sales of shares or the availability of shares for sale will
have on the market price prevailing from time to time. Nevertheless, sales
of substantial amounts of the Common Stock in the public market, particularly
by directors and officers of the Company, or the perception that such sales
could occur, could have an adverse impact on the market price of the Common
Stock.
FAIR PRICE PROVISION
The Company's Articles of Incorporation (the "Articles") include a "fair
price" provision that may have the effect of discouraging persons from pursuing
a non-negotiated takeover of the Company and preventing certain changes of
control.
-11-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock sold by the Selling Shareholders. The Company intends to
retain the proceeds received from the exercise of the Options, if any, for the
operation and expansion of its business.
DIVIDEND POLICY
The Company has not paid cash dividends on its Common Stock to date and
does not anticipate doing so in the foreseeable future. In addition, the
Company's current bank line of credit prohibits the payment of cash dividends on
its capital stock without the bank's prior written consent.
-12-
<PAGE>
THE COMPANY
Overland designs, develops, manufactures, markets and supports magnetic
tape data storage systems used by businesses for backup, archival and data
interchange functions. The Company primarily offers three product lines--
LibraryXpress, TapeXpress and TapePro--which are designed to meet the data
storage needs of client/server networks, workstations, minicomputers and
personal computers. Overland believes that it is well positioned to take
advantage of the rapidly increasing demand for storage capacity, particularly
that created by the growth in client/server networks. To address this growing
network storage demand, Overland introduced the LXB in March 1996, the first
product of its LibraryXpress line of automated tape libraries. In August 1996,
BYTE Magazine selected the LXB as the "Best Overall DLT Tape Library." The
Company believes that, with the anticipated delivery of the LXG control unit
during the first quarter of calendar year 1997, LibraryXpress will constitute
the first automated tape library in its capacity class that is truly "scalable"
in that it is designed to allow end-users to reconfigure specific combinations
of drives and cartridges as their storage requirements change without having to
replace their existing Overland equipment. Management believes that
LibraryXpress has significant market potential because it is designed to enable
companies to increase their storage capacity in a cost effective manner as their
businesses grow.
The Company's TapeXpress product line consists of 18/36-track tape drives
and loaders based on an IBM standard and, in October 1996, IBM selected the
Company to be a supplier of 36-track products. With its TapePro product line,
Overland is a leading supplier of 9-track reel-to-reel products used in data
interchange. In addition, the Company distributes a line of DLT-based products
manufactured by Quantum and markets various other products, including controller
cards which connect its tape drives to personal computers, interchange software
developed by the Company, storage management software supplied by third parties,
spare parts and tape media. With the exception of the tape drives in its
LibraryXpress product line, all of the Company's products are designed and
manufactured in-house. The Company's products combine electro-mechanical
robotics, electronic hardware and firmware, which are developed by the Company
with an emphasis on efficiency of design, functionality and reliability.
Overland's principal executive offices are located at 8975 Balboa Avenue,
San Diego, California, 92123-1599. Its telephone number is (619) 571-5555.
-13-
<PAGE>
STOCK AND EMPLOYEE BENEFIT PLANS
1995 STOCK OPTION PLAN. The Company's 1995 Stock Option Plan (the "1995
Plan") was adopted by the Board of Directors in October 1995 to attract, retain
and provide additional incentive to directors, employees and consultants of the
Company. Options granted under the 1995 Plan may be either incentive stock
options as defined in Section 422A of the Internal Revenue Code of 1986, as
amended, or non-statutory stock options. A total of 372,500 shares of Common
Stock have been reserved for issuance under the 1995 Plan.
The 1995 Plan is administered by the Compensation Committee which has the
authority to determine the terms of the options granted. In the event of option
grants or stock purchase rights awarded to directors of the Company, the
administration of such grants or awards must comply with Rule 16 promulgated
under the Exchange Act. Each option has a term specified in its option
agreement; provided, however, that no term can exceed ten years from the date of
grant and options must be exercisable at the rate of at least 20% per year over
five years from the date of grant. In the case of an incentive stock option
granted to an optionee who, at the time the option is granted, owns stock
representing more than 10% of the voting power of all outstanding classes of
stock of the Company or any of its subsidiaries (a "10% Optionee"), the term of
the option cannot exceed five years from the grant date. No option granted
under the 1995 Plan may be transferred by the optionee other than by will or the
laws of descent or distribution and each option may be exercised, during the
lifetime of the optionee, only by such optionee. In the event an optionee's
service terminates for any reason other than death or total disability, any
options held which have not yet vested will expire and become unexercisable.
All of the optionee's options which have vested shall expire and become
unexercisable on the earliest of the expiration date stated in the agreement or
the date 30 days (or six months after total disability) after the termination of
the optionee's service. The number of shares under each option and the price of
any shares under such option may be adjusted in a manner consistent with any
capital adjustment resulting from a stock dividend, stock split,
recapitalization, reorganization, merger, consolidation, liquidation, or a
combination or exchange of shares.
The exercise price of all incentive stock options granted under the 1995
Plan must be no less than 100% of the fair market value per share on the date of
grant. In the case of non-statutory stock options, the per share exercise price
may be no less than 85% of the fair market value per share on the date of grant.
With respect to a 10% Optionee, the exercise price of any option granted must be
no less than 110% of the fair market value per share on the date of grant. Each
option is designated in the written option agreement as either an incentive
stock option or a non-statutory stock option. However, to the extent that the
aggregate fair market value of shares subject to an optionee's incentive stock
options, which become exercisable for the first time during any year, exceeds
$100,000, the excess options shall be treated as non-statutory stock options.
At December 31, 1996, there were outstanding options under the 1995 Plan to
purchase an aggregate of 25,000 shares of Common Stock at an exercise price of
$3.66. The 1995 Plan will expire in 2005 unless terminated at an earlier date
by action of the Board of Directors. At December 31, 1996, there were
outstanding options under other ODI Plans, which were previously terminated by
the Company, to purchase an aggregate of 780,921 shares of Common Stock at a
-14-
<PAGE>
weighted average exercise price of $1.10.
1996 EMPLOYEE STOCK PURCHASE PLAN. In December 1996, the Board of
Directors adopted the 1996 Employee Stock Purchase Plan (the "1996 Plan"), the
purpose of which is to provide an opportunity for the Company's employees to
purchase shares of the Company's Common Stock and thereby have an additional
incentive to contribute to the prosperity of the Company. The 1996 Plan will
allow employees to purchase shares of Common Stock through payroll deductions.
An administrative committee appointed by the Board of Directors (the
"Administrative Committee") will determine periods of up to 27 months (each an
"Option Period"), during which each participant in the 1996 Plan will be granted
an option to purchase that number of shares of Common Stock which may be
purchased with the payroll deductions accumulated on behalf of such participant
during each six-month period within a particular Option Period, as approved by
the Board of Directors. The 1996 Plan provides that (i) no employee shall be
entitled to accrue rights to purchase shares under the 1996 Plan at a rate which
exceeds $25,000 of the fair market value of such stock (determined at the time
the option is granted) for any calendar year in which such option is outstanding
at any time, and (ii) the maximum number of shares subject to any option shall
not exceed 1,500. Employees participating in the 1996 Plan may purchase shares
of Common Stock under each option at a price per share equal to the lower of
(x) 85% of the fair market value of the Common Stock on the date of commencement
of participation in the 1996 Plan offering period or (y) 85% of the fair market
value of a share of Common Stock on the date of purchase. Generally, any
employee, including executive officers, regularly employed on a full-time basis
by the Company or by Overland Data (Europe) Limited, a wholly-owned subsidiary
of the Company, on the first day of each Option Period is eligible to
participate in the 1996 Plan, subject to minimum eligibility periods, if any, as
established by the Administrative Committee. Participants may authorize payroll
deductions of up to 15% of their compensation, including base, overtime and
commissions, for the purchase of shares of Common Stock under the 1996 Plan.
The 1996 Plan authorizes the Company to issue up to 250,000 shares of Common
Stock pursuant to the 1996 Plan. As of the date hereof, no shares of Common
Stock have been purchased under the 1996 Plan. The 1996 Plan will terminate in
January 2007.
-15-
<PAGE>
DILUTION
As of February 21, 1997, the net tangible book value of the Company's
Common Stock was $34,089,185 or $3.43 per share of Common Stock. Net tangible
book value per share is determined by dividing the tangible net worth of the
Company (total assets less intangible assets and total liabilities) by the
number of outstanding shares of Common Stock. The pro forma net tangible book
value at February 21, 1997, after giving effect to the distribution of (i)
the 805,921 shares of Common Stock currently underlying outstanding Options
under the ODI Plans and (ii) the remaining 597,500 shares of Common Stock
reserved for issuance under the 1995 Plan and the 1996 Plan, will increase to
$3.62 per share of Common Stock. Assuming an average exercise or purchase
price of $4.94 per share of Common Stock (which is the weighted average of
(i) $1.18 per share of Common Stock for outstanding Options under the ODI
Plans and (ii) $10.00 per share of Common Stock for shares reserved for
issuance under the 1995 Plan and the 1996 Plan), there will be an immediate
increase in net tangible book value of $0.18 per share to existing
shareholders and an immediate dilution of $1.32 per share to the purchasers
of such shares of Common Stock.
The following table illustrates the dilution per share as described above:
Assumed average exercise or purchase price per share. . . . . . . . . $4.94
Net tangible book value per share at February 21, -----
1997, before the distribution of the shares
hereunder. . . . . . . . . . . . . . . . . . . . . . . $3.43
-----
Increase attributable to purchase of shares of
Common Stock by new purchasers . . . . . . . . . . . . 0.19
-----
Pro forma net tangible book value per share of Common
Stock at February 20, 1997, after the distribution
of the shares hereunder . . . . . . . . . . . . . . . . . . . . . . . 3.62
-----
Dilution per share to new purchasers . . . . . . . . . . . . . . . . $1.32
-----
At December 31, 1996, the Company also had an outstanding warrant to
purchase an aggregate of 17,046 shares of Common Stock at a price of $4.40 per
share. To the extent this warrant is exercised, there will be further dilution
to the purchasers of the shares of Common Stock hereunder.
-16-
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the names of individuals who are known as
of the date of this Prospectus to hold (i) Options issued pursuant to the ODI
Plans of which the Shares Common Stock underlying such Options will be
eligible for resale upon effectiveness of this Registration Statement and
(ii) shares of Common Stock resulting from the previous exercise of Options
issued pursuant to the ODI Plans, which shares will be eligible for resale
upon effectiveness of this Registration Statement. The amounts of Common
Stock listed in the table assumes that all such shares of Common Stock
currently held in the form of Options pursuant to the ODI Plans are exercised
and are subsequently sold regardless of whether any such individuals have a
present intent to sell.
<TABLE>
<CAPTION>
Number of Number of Number of
Shares of Shares of Shares of
Common Common Common
Relationship Stock Owned % Held Stock Stock Owned % Held
with Prior to the Prior to the to be After the After the
Name Company Offering Offering(1) Sold Offering Offering(1)
- ------------------------- ----------------------- ------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Adams Employee 48,000 * 18,000 30,000 *
Ross Thomas Alexander Employee 8,210 * 5,150 3,060 *
Robert V. Allen Employee 1,880 * 1,880 - *
Richard W. Allen Employee 3,000 * 3,000 - *
Rebecca A. Amroian Employee 15,000 * 10,000 5,000 *
Gail & Paul Anderson Ex-Employee 45,863 * 7,170 38,693 *
Teresa L. Baltao Employee 39,710 * 18,475 21,235 *
Ramon Banuelos Ex-Employee 530 * 530 - *
David Barbour Employee 4,000 * 4,000 - *
Charles F. Barr Employee 3,000 * 3,000 - *
Valerie H. Barr Employee 10,500 * 10,500 - *
Family Trust Barton Ex-Employee 333,414 3.10% 80,200 253,214 2.36%
Kenneth F. Berling Employee 3,690 * 3,690 - *
Romaneth T. Blackwood Employee 4,500 * 4,500 - *
Larry R. Board Employee 3,000 * 3,000 - *
John A. Boyken Employee 54,190 * 15,390 38,800 *
William L. Boyken Employee 9,656 * 3,860 5,796 *
Larry D. Brown Ex-Employee 12,266 * 9,780 2,486 *
Sancta Cantrell Employee 1,000 * 1,000 - *
Souphab Channongphone Employee 210 * 210 - *
Annette Choi Employee 26,000 * 18,500 7,500 *
John F. Cloyd Employee 18,555 * 10,000 8,555 *
Stephen J. Crompton Employee 17,500 * 17,500 - *
George Cummings Ex-Employee 77,100 * 51,400 25,700 *
Daniel M. Davies III Employee 7,000 * 7,000 - *
Timothy R. Dowty Ex-Employee 23,735 * 9,117 14,618 *
Jon Drechny Ex-Employee 3,610 * 3,610 - *
Minh Q. Duong Employee 2,000 * 2,000 - *
Sergio M. Encarnacao Employee 17,000 * 14,500 2,500 *
Charles R. Earnhart Vice President of Operations 109,000 1.02% 52,150 56,850 *
Ronald S. Fenn Employee 5,000 * 5,000 - *
Martha T. Foltyn Employee 23,000 * 18,000 5,000 *
Maurice Fracker Ex-Employee 31,540 * 1,540 30,000 *
Joseph A. Fryberger Employee 28,500 * 19,000 9,500 *
Bela Geczy Ex-Employee 40,800 * 27,200 13,600 *
Kenneth D. Geist Employee 3,000 * 3,000 - *
Martin D.Gray Vice President,
Secretary and Director 1,759,340 16.38% 28,640 1,730,700 16.12%
Peter Groel Ex-Employee 112,500 1.05% 75,000 37,500 *
-17-
<PAGE>
<CAPTION>
Number of Number of Number of
Shares of Shares of Shares of
Common Common Common
Relationship Stock Owned % Held Stock Stock Owned % Held
with Prior to the Prior to the to be After the After the
Name Company Offering Offering(1) Sold Offering Offering(1)
- ------------------------- ----------------------- ------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Nancy D. Gutierrez Ex-Employee 650 * 650 - *
Kenneth Brooks Hinkle Employee 4,800 * 4,800 - *
Quan M. Hong Employee 2,000 * 2,000 - *
Alan Jacques Employee 3,000 * 3,000 - *
Shannon L. Kendall Employee 2,000 * 1,000 1,000 *
Kevin T. Kersey Employee 39,000 * 30,000 9,000 *
Colin Kidd Consultant 2,000 * 2,000 - *
Robert Kingsley Employee 42,620 * 10,620 32,000 *
Frank R. Kirchhoff Vice President of Sales 171,029 1.59% 123,443 47,586 *
Uri Kullman Employee 5,000 * 5,000 - *
Gregg Landers Ex-Employee 600 * 600 - *
Robert E. Lidberg Employee 8,500 * 8,500 - *
Vernon A. LoForti Employee 52,150 * 52,150 - *
Wendy J. MacDonald Employee 2,300 * 2,300 - *
Larry Macree Employee 1,000 * 1,000 - *
Elizabeth Mammini Employee 2,900 * 2,900 - *
Jack Marion Ex-Employee 35,650 * 35,650 - *
Scott McClendon President, Chief Executive
Officer and Director 468,380 4.36% 217,380 251,000 2.34%
Jeffrey S. McGee Employee 1,125 * 1,125 - *
Tony Merdian Ex-Employee 75,901 * 75,901 - *
Charles E. Monts Ex-Employee 3,466 * 800 2,666 *
John F. Murphy Employee 26,080 * 19,500 6,580 *
Nick Nakhonthap Ex-Employee 1,830 * 670 1,160 *
Somnuck (Nuck) Nakhonthap Employee 8,840 * 7,290 1,550 *
Bova Khiane Nakhonthap Employee 3,340 * 2,300 1,040 *
Karl B. Offerman Employee 1,000 * 1,000 - *
James F. Ralph Employee 4,475 * 2,500 1,975 *
David Ricard Employee 5,000 * 5,000 - *
CJ Rigelsky Ex-Employee 24,475 * 15,575 8,900 *
Stephen A. Rodgers Employee 17,460 * 17,460 - *
Gary E. Sadler Employee 13,500 * 13,500 - *
Robert J. Scroop Vice President of Engineering 71,600 * 35,000 36,600 *
Gregory D. Shannon Employee 3,000 * 3,000 - *
Bounkeuth Sisorath Ex-Employee 100 * 100 - *
Charles R. Stead Employee 28,500 * 28,500 - *
Len H. Sweetman Employee 2,000 * 2,000 - *
Dane Tovey Ex-Employee 350 * 350 - *
Jennifer L. Tozer Ex-Employee 650 * 650 - *
Vanessa Tran Employee 910 * 910 - *
Khoai Vuong Employee 1,810 * 1,810 - *
Nancy Weatherford Ex-Employee 380 * 380 - *
Anthony D. Weathers Employee 6,000 * 6,000 - *
William J. West Employee 3,450 * 3,450 - *
Westlake Family Trust Employee 61,368 * 48,568 12,800 *
Edward T. Wilson Ex-Employee 676 * 676 - *
Victor A. Zammit Employee 2,000 * 2,000 - *
Total 4,119,664 38.36% 1,365,500 2,754,164 25.65%
</TABLE>
_________________________
* Indicates ownership of less than one percent.
(1) Percentage calculations based on 10,738,783 shares of Common
Stock which amount includes 805,921 shares of Common Stock underlying
Options currently outstanding.
-18-
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that sales of the shares
of Common Stock registered hereby may be effected from time to time in
transactions (which may include block transactions) in the Nasdaq market, in
negotiated transactions, through the writing of options on the Common Stock, or
a combination of such methods of sale, at fixed prices which may be charged, at
market prices prevailing at the time of sale, or at negotiated prices. The
Selling Shareholders may effect such transactions by selling shares of Common
Stock directly to purchasers or to or through broker-dealers which may act as
agents or principals. Such broker-dealers may receive compensation in the form
of discounts, concessions, or commissions from the Selling Shareholders and/or
the purchasers of Common Stock for whom such broker-dealers may act as agents or
to whom they sell as principal, or both. The Selling Shareholders and any
broker-dealers that act in connection with the sale of the shares of Common
Stock might be deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act and any commission received by them and any profit on the
resale of the Common Stock as principal might be deemed to be underwriting
discounts and commissions under the Securities Act.
Each of the Selling Shareholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the Common
Stock against certain liabilities, including liabilities arising under the
Securities Act.
-19-
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, no par value ("Common Stock"), 9,746,498 of which were
issued and outstanding as of Feb. 21, 1997. Each holder of Common Stock is
entitled to one vote for each share held of record on each matter submitted to a
vote of shareholders. Subject to preferences that may be granted to the holders
of Preferred Stock, each holder of Common Stock is entitled to share ratably in
distributions to shareholders and to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of the liquidation or dissolution of the Company, is entitled to
share ratably in all assets of the Company remaining after payment of
liabilities. Holders of Common Stock have no conversion, preemptive or other
subscription rights, and there are no redemption rights or sinking fund
provisions with respect to the Common Stock. The outstanding Common Stock is
validly issued, fully paid and non-assessable.
Additional shares of Common Stock may be issued from time to time by the
Company. The Articles provide that the Board of Directors has no power to alter
the rights of any outstanding shares of Common Stock. Certain other provisions
of the Articles affect the rights of holders of Common Stock and may have the
effect of delaying, deferring or preventing a change in control of the Company.
PREFERRED STOCK
As of December 31, 1996, 318,397 shares of Series A Preferred Stock,
731,429 shares of Series B Preferred Stock and 1,286,747 shares of Series C
Preferred Stock were issued and outstanding and held of record by 12, six and
one shareholders, respectively. All outstanding shares of Series A, B and C
Preferred Stock were converted into an aggregate of 2,336,573 shares of Common
Stock upon the closing of the Company's initial public offering and such shares
of Preferred Stock are no longer authorized, issued or outstanding.
WARRANT
In connection with the establishment of its bank line of credit in May
1995, the Company issued to Imperial Bank (the "Bank") a warrant (the "Warrant")
exercisable to purchase 17,046 shares of Common Stock at $4.40 per share.
Pursuant to its terms, the Warrant is exercisable at any time on or after
May 15, 1995 and unless exercised, the Warrant will automatically expire on
May 15, 2000.
CALIFORNIA LAW AND CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION
The Articles provide for fair price provisions (the "Fair Price
Provisions"), that require the approval of the holders of two-thirds of the
Voting Stock (as defined therein) and satisfaction of certain minimum price
criteria and procedural conditions as a condition to specified business
-20-
<PAGE>
combinations (each a "Business Combination") with any beneficial owner of shares
possessing 10% or more of the Voting Stock (a "Major Shareholder").
A Business Combination includes, among other transactions, the following:
(i) any merger or consolidation of the Company with or into a Major Shareholder;
(ii) any sale, lease, exchange, transfer or distribution to Shareholders or
other disposition of a substantial part of the assets of the Company; (iii) the
purchase, exchange, lease or other acquisition by the Company of substantially
all of the assets of a Major Shareholder; (iv) the issuance of any securities of
the Company, 80% or more of which are issued to a Major Shareholder, and (v) any
reclassification of the Voting Stock which has the effect of increasing the
proportionate amount of Voting Stock which is owned by a Major Shareholder.
The Fair Price Provisions require, among other things, that the
consideration to be paid to the Company's Shareholders in a Business Combination
be not less than the higher of (i) the highest price per share paid by the Major
Shareholder in acquiring any of the Voting Stock or (ii) an amount which bears
the same or greater percentage relationship to the market price of the Voting
Stock as the highest price per share determined in item (i) bears to the market
price of the Voting Stock prior to the acquisition of the Voting Stock by such
Major Shareholder.
Under Section 710 of the General Corporation Law of California, the Fair
Price Provisions constitute a supermajority vote requirement. Section 710
provides that amendments to the articles of incorporation of a California
corporation that include a supermajority vote requirement cease to be effective
two years after the filing of the most recent filing of the amendment to adopt
or readopt the supermajority vote requirement. However, at any time within one
year before the expiration date, a supermajority vote requirement may be renewed
unless: (i) the Business Combination was approved by the Board of Directors of
the corporation prior to the Major Shareholder involved in the Business
Combination becoming such; (ii) the Major Shareholder involved in the Business
Combination sought and obtained the unanimous prior approval of the Board of
Directors to become a Major Shareholder and the Business Combination was
approved by not less than eighty percent (80%) of the directors of the
corporation; or (iii) the Business Combination was approved by not less than
ninety percent (90%) of the directors of the corporation.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Norwest Bank
Minnesota, N.A. Its telephone number is (800) 767-3330.
-21-
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon for the
Company by Baker & McKenzie, San Diego, California.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE COMMON STOCK
OFFERED BY THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY COMMON STOCK IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED BY REFERENCE HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-22-
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Overland Data, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(i) the Registrant's Registration Statement on Form S-1, filed
December 23, 1996, as amended, Registration Statement No.
333-18583 (the "S-1 Registration Statement"), under the
Securities Act of 1933, as amended (the "Securities Act"),
in which there is set forth the Registrant's audited financial
statements for the fiscal year ended June 30, 1996.
(ii) the Registrant's Form 8-A dated on or about January 29, 1997, and
filed pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California Corporations Code permits a corporation
to indemnify its directors, officers, employees and other agents in terms
sufficiently broad to permit indemnification (including reimbursement for
expenses) under certain circumstances for liabilities arising under the
Securities Act.
The Registrant's Articles of Incorporation (the "Articles") and Bylaws
(the "Bylaws") provide for the indemnification of directors and officers to the
maximum extent permitted by the California Corporations Code and authorize the
indemnification by the Registrant of other officers, employees and other agents
as set forth in the California Corporations Code. The Registrant has entered
into indemnification agreements with its directors and executive officers, in
addition to the indemnification provided for in the Articles and the Bylaws.
The Underwriting Agreement filed as Exhibit 1.1 to the S-1
Registration Statement provides for indemnification by the Underwriters of the
Registrant and its officers and directors for certain liabilities arising under
the Securities Act or otherwise.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 * -- Registrant's Amended and Restated Articles of Incorporation.
4.2 * -- Registrant's Bylaws.
4.3 * -- Specimen Stock Certificate.
5.1 -- Opinion of Baker & McKenzie.
23.1 -- Consent of Price Waterhouse LLP, independent accountants.
23.2 -- Consent of Baker & McKenzie -- Included in Exhibit 5.1.
24.1 -- Power of Attorney -- Reference is made to page II-4 of this
Registration Statement.
99.1 * -- 1996 Employee Stock Purchase Plan adopted December 12, 1996.
99.2 * -- 1995 Stock Option Plan adopted October 10, 1995.
99.3 -- 1993-A Stock Option Plan adopted November 10, 1993.
99.4 -- 1993 Stock Option Plan adopted December 8, 1993.
99.5 -- 1992-A Non-Qualified Stock Option Plan adopted April 22, 1992.
99.6 -- 1991 Non-Qualified Stock Option Plan adopted May 7, 1991.
99.7 -- 1987 Non-Qualified Stock Option Plan adopted October 13, 1988.
99.8 -- Scott McClendon Non-Qualified Stock Option Agreement adopted
October 16, 1991.
- ---------------------
* Incorporated by reference from the Registrant's Form S-1 Registration
Statement (No. 333-18583), filed December 23, 1996, as amended, under
the Securities Act.
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the Securities Act, (ii) to reflect in the prospectus any
facts or events arising after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
this Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, (x) that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference into this Registration Statement; (y) that, for the
purpose of determining any liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and (z) that
the Registrant shall remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold upon the
termination of the Registrant's 1995 Stock Option Plan or the 1996 Employee
Stock Purchase Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing
II-2
<PAGE>
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on this 21st day of
February, 1997.
OVERLAND DATA, INC.
By: /s/ SCOTT McCLENDON
----------------------------------------
Scott McClendon, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Scott McClendon and Vernon A.
LoForti, and each of them acting individually, as his attorney-in-fact, each
with full power of substitution, for him in any and all capacities, to sign any
and all amendments to this Registration Statement, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming his
signature as it may be signed by said attorney-in-fact to any and all amendments
to this Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 21, 1997.
Signature Title
--------- -----
/s/ SCOTT MCCLENDON President, Chief Executive Officer and Director
- --------------------------
Scott McClendon
/s/ MARTIN D. GRAY Vice President, Secretary and Director
- --------------------------
Martin D. Gray
/s/ VERNON A. LOFORTI Vice President, Chief Financial Officer and
- -------------------------- Assistant Secretary
Vernon A. LoForti
/s/ WILLIAM W. OTTERSON Director
- --------------------------
William W. Otterson
Director
- --------------------------
Joseph D. Rizzi
/s/ JOHN A. SHANE Director
- --------------------------
John A. Shane
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
4.1* -- Registrant's Amended and Restated Articles of Incorporation.
4.2* -- Registrant's Bylaws.
4.3* -- Specimen Stock Certificate.
5.1 -- Opinion of Baker & McKenzie.
23.1 -- Consent of Price Waterhouse LLP, independent accountants.
23.2 -- Consent of Baker & McKenzie -- Included in Exhibit 5.1.
24.1 -- Power of Attorney -- Reference is made to page II-4 of this
Registration Statement.
99.1* -- 1996 Employee Stock Purchase Plan adopted December 12, 1996.
99.2* -- 1995 Stock Option Plan adopted October 10, 1995.
99.3 -- 1993-A Stock Option Plan adopted November 10, 1993.
99.4 -- 1993 Stock Option Plan adopted December 8, 1993.
99.5 -- 1992-A Non-Qualified Stock Option Plan adopted April 22, 1992.
99.6 -- 1991 Non-Qualified Stock Option Plan adopted May 7, 1991.
99.7 -- 1987 Non-Qualified Stock Option Plan adopted October 13, 1988.
99.8 -- Scott McClendon Non-Qualified Stock Option Agreement adopted
October 16, 1991.
- -------------------------
* Incorporated by reference from the Registrant's Form S-1 Registration
Statement (No. 33-18583), filed December 23, 1996, as amended, under
the Securities Act.
II-5
<PAGE>
[LETTERHEAD OF BAKER & McKENZIE]
February 21, 1997
Overland Data, Inc.
8975 Balboa Avenue
San Diego, California 92123-1599
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by you with
the Securities and Exchange Commission on or about February 21, 1997, in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 2,000,000 shares of the Company's Common Stock (the "Shares")
(i) reserved for issuance under the Company's 1995 Stock Option Plan (the "1995
Plan") and 1996 Employee Stock Purchase Plan (the "1996 Plan") and (ii) pursuant
to options granted under the Company's 1993-A Stock Option Plan, 1993 Stock
Option Plan, 1992-A Non-Qualified Stock Option Plan, 1991 Non-Qualified Stock
Option Plan, 1987 Non-Qualfied Stock Option Plan and Scott McClendon Non-
Qualified Stock Option Agreement (together with the 1995 Plan and the 1996 Plan,
hereinafter referred to collectively as the "ODI Plans").
As your legal counsel, we have examined the Company's Articles of Incorporation
and By-laws, the written ODI Plans, records of corporate proceedings with
respect to the ODI Plans and such documents as we have deemed necessary in
connection with the issuance of the Shares.
Based upon the foregoing examinations and upon applicable laws, we are of the
opinion that upon the receipt by the Company of full payment for the Shares in
accordance with the terms and conditions of the ODI Plans, the Shares, when
offered and sold in the manner provided for in the Registration Statement, will
be legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to said Registration
Statement and further consent to the use of our name wherever appearing in said
Registration Statement and amendments thereto.
Very truly yours,
BAKER & McKENZIE
/s/ BAKER & McKENZIE
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated September 30, 1996, which appears on
page F-2 of Overland Data, Inc.'s Registration Statement on Form S-1 (No. 333-
18583).
PRICE WATERHOUSE LLP
San Diego, California
February 18, 1997
<PAGE>
OVERLAND DATA, INC.
1993-A STOCK OPTION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was established in 1993 to offer selected employees, directors,
advisors and consultants an opportunity to acquire a proprietary interest in the
success of Overland Data, Inc., a California corporation (the "Company"), or to
increase such interest, by purchasing Shares of the Company's Common Stock. The
Plan provides for the grant of Options to purchase Shares. Options granted under
the Plan may include Nonstatutory Options as well as ISOs intended to qualify
under section 422 of the Code. The Plan is intended to comply in all respects
with Rule 16b-3 (or its successor) under the Exchange Act.
SECTION 2. DEFINITIONS.
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company, as
constituted from time to time.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 3(a).
(d) "COMPANY" shall mean Overland Data, Inc., a California corporation.
(e) "CONSULTANT" shall mean any individual who is (i) a member of the Board
of Directors but who is not an Employee, (ii) an affiliate of a member of the
Board of Directors, (iii) a member of the board of directors of a Subsidiary or
(iv) an independent contractor who performs services for the Company or a
Subsidiary.
(f) "DISINTERESTED DIRECTOR" shall mean a member of the Board of Directors
who is not, during the one year prior to service as an administrator under this
Plan (as described in Section 3 of this Plan), granted or awarded Stock pursuant
to the terms of this Plan (or any other plan of the Company or a Subsidiary) and
who is not eligible to participate in this Plan.
(g) "EMPLOYEE" shall include every individual performing Service to the
Company or its Subsidiaries if the relationship between such individual and the
Company or its Subsidiaries is the legal relationship of employer and employee.
This definition of "Employee" is qualified in its entirety and is subject to the
definition set forth in Section 3401(c) of the Code and the applicable
regulations thereunder.
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
<PAGE>
(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(j) "FAIR MARKET VALUE" shall mean the market price of Stock, determined by
the Committee as follows:
(i) If Stock was traded over-the-counter on the date in question but
was not classified as a national market issue, then the Fair Market Value
shall be equal to the mean between the last reported representative bid and
asked prices quoted by the NASDAQ system for such date;
(ii) If Stock was traded over-the-counter on the date in question and
was classified as a national market issue, then the Fair Market Value shall
be equal to the last-transaction price quoted by the NASDAQ system for such
date;
(iii) If Stock was traded on a stock exchange on the date in question,
then the Fair Market Value shall be equal to the closing price reported by
the applicable composite-transaction report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such basis
as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall be
conclusive and binding on all persons.
(k) "ISO" shall mean an incentive stock option described in section 422(b) of
the Code.
(l) "NONSTATUTORY OPTION" shall mean a stock option not described in sections
422(b) or 423(b) of the Code.
(m) "OPTION" shall mean an ISO or Nonstatutory Option granted under the Plan
and entitling the holder to purchase Shares.
(n) "OPTIONEE" shall mean an individual who holds an Option.
(o) "PLAN" shall mean this 1993 Stock Option Plan of the Company
(p) "SERVICE" shall mean service as an Employee or Consultant.
(q) "SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(r) "STOCK" shall mean the Common Stock of the Company.
<PAGE>
(s) "STOCK OPTION AGREEMENT" shall mean the agreement between the Company and
an Optionee which contains the terms, conditions and restrictions pertaining to
his or her Option.
(t) "STOCK PURCHASE AGREEMENT" shall mean the Notice of Exercise and Stock
Purchase Agreement to be delivered by an Optionee to the Company upon exercise
of an Option.
(u) "SUBSIDIARY" shall mean any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
(v) "TOTAL AND PERMANENT DISABILITY" shall mean that the Optionee is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than one year.
SECTION 3. ADMINISTRATION.
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the Committee.
The Committee shall consist only of Disinterested Directors of the Company and
shall have at least two members. The Committee shall meet such other
requirements as may be established from time to time by the Securities and
Exchange Commission for plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act.
(b) DISINTERESTED DIRECTORS. A member of the Board of Directors shall be
deemed "disinterested" only if he or she has not received, been granted or
awarded Stock pursuant to the terms of this Plan, during the one year prior to
service as an administrator under this Plan, and satisfies such requirements as
the Securities and Exchange Commission may establish for disinterested
administrators of plans designed to qualify for exemption under Rule 16b-3 (or
its successor) under the Exchange Act.
(c) COMMITTEE PROCEDURES. The Committee shall designate one of its members as
chairman. The Committee may hold meetings at such times and places as it shall
determine. The acts of a majority of the Committee members present at meetings
at which a quorum exists, or acts reduced to or approved in writing by all
Committee members, shall be valid acts of the Committee.
(d) COMMITTEE RESPONSIBILITIES. Subject to the provisions of the Plan, and
without further approval of the Board of Directors, the Committee shall have
full authority and discretion to take the following actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating to
the Plan;
<PAGE>
(iii) To authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each Option;
(vii) To prescribe the terms and conditions of each Option, including,
without limitation, the Exercise Price, to determine whether such Option is to
be classified as an ISO or as a Nonstatutory Option, and to specify the
provisions of the Stock Option Agreement relating to such Option;
(viii) To amend any outstanding Stock Option Agreement, subject to
applicable legal restrictions and to the consent of the Optionee who entered
into such agreement;
(ix) With the consent of the Optionee, to reprice, cancel and regrant, or
otherwise adjust the Exercise Price of an option previously granted by the
Committee;
(x) To prescribe the consideration for the grant of each Option or other
right under the Plan and to determine the sufficiency of such consideration; and
(xi) To take any other actions deemed necessary or advisable for the
administration of the Plan.
All decisions, interpretations and other actions of the Committee shall be final
and binding on all Optionees, and all persons deriving their rights from an
Optionee. No member of the Committee shall be liable for any action that he or
she has taken or has failed to take in good faith with respect to the Plan, any
Option, or any other right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
(a) GENERAL RULE. Employees and Consultants shall be eligible to receive
Options. However, only Employees shall be eligible for the grant of ISOs.
(b) DISINTERESTED DIRECTORS. Disinterested Directors shall not be eligible to
receive Options under this Plan.
(c) TEN-PERCENT STOCKHOLDERS. An Employee who owns more than 10 percent of
the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for the grant of an
option unless (i) the Exercise Price is at least 110 percent of the Fair Market
Value of the shares underlying the Option on the date of grant of the Option and
(ii) if such Option is an ISO, such ISO is not exercisable after the expiration
of five years from the date of grant.
<PAGE>
(d) ATTRIBUTION RULES. For purposes of Subsection (c) above, in determining
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for such Employee's brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall be counted.
(e) OUTSTANDING STOCK. For purposes of Subsection (c) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. Shares subject to Options granted under the Plan shall
be authorized but unissued Shares. The aggregate number of shares which may be
issued under the Plan (upon exercise of Options or other rights to acquire
Shares) shall not exceed 268,443 Shares, subject to adjustment pursuant to
Section 8. The number of Shares which are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
which then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purpose of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the number of
Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than 100 percent of the
Fair Market Value of the Share(s) underlying the Option on the date of grant of
the Option, except as otherwise provided in Section 4(c). The Exercise Price of
a Nonstatutory Option shall not be less than 85 percent of the Fair Market Value
of a Share on the date of grant. Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee at its sole
discretion. The Exercise Price shall be payable in a form described in Section
7.
(d) WITHHOLDING TAXES. The Company's obligation to deliver shares or cash
upon the exercise of Options shall be subject to the satisfaction of all
applicable Federal, State and local income tax and employment tax withholding
requirements.
1. The Committee may, in its discretion and in accordance with the
provisions of this Section 6(d) and such supplemental rules as the Committee may
from time to time adopt, provide any or all Optionees holding Nonstatutory
Options with the right to use Shares in satisfaction of all or part of the
Federal, State and local income tax and employment tax liabilities incurred by
such Optionees in connection with the exercise of their Options (the "Taxes").
The Optionee holding a Nonstatutory Option may be provided with
<PAGE>
the election to have the Company withhold, from the Shares otherwise issuable
upon the exercise of such Nonstatutory Option, a portion of such Shares with an
aggregate Fair Market Value equal to the designated percentage (up to 100% as
specified by the Optionee) of the applicable Taxes. Any such withholding
election shall be subject to the following terms and conditions:
(i) The election must be made on or before the date the amount of the Taxes
incurred by the Optionee in connection with the exercise of the Option is
determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval of the Committee and
none of the Shares for which the Option is exercised shall be withheld in
satisfaction of the Taxes incurred by the Optionee in connection with such
exercise, except to the extent the election is approved by the Committee.
(iv) The Shares withheld pursuant to the election shall be valued at Fair
Market Value on the Tax Determination Date.
(v) In no event may the number of Shares requested to be withheld exceed in
value the dollar amount of Taxes incurred by the Optionee in connection with the
exercise of the Non-statutory Option.
(vi) If the withholding election is to be made by an Optionee who is at the
time an officer or director of the Company subject to the short-swing profit
restrictions of Section 16(b) of the Exchange Act, then the following
limitations, in addition to the preceding provisions of this Section 6(d), shall
also be applicable:
(A) The election shall not become effective at any time prior to the
expiration of the six month period measured from the LATER of the grant date of
the non-statutory Option to which such election pertains or the actual grant
date of the withholding election, and no Shares shall accordingly be withheld in
connection with any Tax Determination Date which occurs before the expiration of
such six month period.
(B) The election must be effected in accordance with either of the
following guidelines: (1) the election must be made six months or more prior to
the Tax Determination Date, and (2) the exercise of such election and the
exercise of the non-statutory Option to which such election relates must occur
concurrently within a quarterly "window" period. Quarterly window periods shall
begin on the third business day following the date of public release of each
quarterly or annual summary statement of the Company's sales and earning and end
on the EARLIER of the 12th business day following such release date or the Tax
Determination Date.
(C) The six-month period specified in clauses (A) and (B) shall not be
applicable in the event of the Optionee's death or disability.
2. The Committee may also in its discretion and applying relevant law in
accordance with the provisions of this Section 6(d) and such supplemental rules
as the committee may from time to time adopt, require as a condition of delivery
of the Shares upon exercise of Options, that the Optionee remit to the Company
an amount in cash or check sufficient to satisfy the Company's and the
Optionee's Taxes.
(e) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify the
date when all or any installment of the Option is to become exercisable. The
vesting of any Option shall be determined by the Committee in its sole
discretion. A Stock Option Agreement may provide for accelerated exercisability
in the event of the Optionee's death, Total and Permanent Disability or
retirement, or a change in control of the Company as described in Section 8(b)
of this Plan, or other events determined from time-to-time by the Committee. The
Stock Option Agreement shall also specify the term of the Option. The term shall
not exceed 10 years from the date of grant, except as otherwise provided in
Section 4(c). Subject to the preceding sentence, the Committee at its sole
discretion shall determine when an Option is to expire. An
<PAGE>
Option shall be deemed exercised when the Company receives from the Optionee an
executed Stock Purchase Agreement in accordance with the terms of the Option by
the person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full
payment may, as authorized by the Committee, consist of any consideration and
method of payment allowable under Section 7 of this Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Shares, notwithstanding the exercise
of the Option. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 8 of this Plan. With respect to any ISOs granted
under this Plan, the aggregate Fair Market Value (determined as of the
respective date or dates of grant) of the Shares for which one or more options
granted to any Employee under this Plan (or any other option plan of the Company
or its parent or subsidiary corporations) may for the first time become
exercisable as ISOs during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars ($100,000). To the extent the Employee holds two or
more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability thereof as ISOs
shall be applied on the basis of the order in which such options are granted. To
the extent such dollar limitation is exceeded in any one calendar year the
Option shall nevertheless be exercisable for the excess number of Shares as a
non-statutory Option.
<PAGE>
(f) NONTRANSFERABILITY. During an Optionee's lifetime, such Optionee's
Option(s) shall be exercisable only by him or her and shall not be transferable.
In the event of an Optionee's death, such Optionee's Option(s) shall not be
transferable other than by will or by the laws of descent and distribution.
(g) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee's Service
terminates for any reason other than the Optionee's death, then such Optionee's
Option(s) shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (e) above;
(ii) The date thirty (30) days after the termination of the Optionee's
Service for any reason other than Total and Permanent Disability; or
(iii) The date six months after the termination of the Optionee's Service
by reason of Total and Permanent Disability.
The Optionee may exercise all or part of his or her Option(s) at any time before
the expiration of such Option(s) under the preceding sentence, but only to the
extent that such Option(s) had become exercisable before the Optionee's Service
terminated or became exercisable as a result of the termination. The balance of
such Option(s) shall lapse when the Optionee's Service terminates. In the event
that the Optionee dies after the termination of the Optionee's Service but
before the expiration of the Optionee's Option(s), all or part of such Option(s)
may be exercised (prior to expiration) by the executors or administrators of the
Optionee's estate or by any person who has acquired such Option(s) directly from
the Optionee by bequest or inheritance, but only to the extent that such
Option(s) had become exercisable before the Optionee's Service terminated or
became exercisable as a result of the termination. For purposes of the foregoing
provisions of this Section 6(g), the Optionee shall be deemed to be providing
Service to the Company for so long as the Optionee renders Service on a periodic
basis to the Company or a Subsidiary in the capacity of an Employee or
Consultant. The Optionee shall be considered to be an Employee for so long as
the Optionee remains in the employ of the Company or a Subsidiary.
(h) LEAVES OF ABSENCE. For purposes of Subsection (g) above, Service shall be
deemed to continue while the Optionee is on military leave, sick leave or other
bona fide leave of absence (as determined by the Committee.) The foregoing
notwithstanding, in the case of an ISO granted under the Plan, Service shall not
be deemed to continue beyond the first 90 days of such leave, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
(i) DEATH OF OPTIONEE. If an Optionee dies while he or she is providing
Service to the Company, then such Optionee's Option(s) shall expire on the
earlier of the following dates:
(i) The expiration date determined pursuant to Subsection (e) above; or
(ii) The date six months after the Optionee's death.
All or part of the Optionee's Option(s) may be exercised at any time before the
expiration of such Option(s) under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Option(s) directly from the Optionee by bequest or inheritance, but only to the
extent that such Option(s) had become exercisable before the Optionee's death or
became exercisable as a result of the Optionee's death. The balance of such
Option(s) shall lapse when the Optionee dies.
(j) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an Optionee,
shall have no rights as a stockholder with respect to any Shares covered by his
or her Option until the date of the issuance of a stock certificate for such
Shares. No adjustments shall be made, except as provided in Section 8.
<PAGE>
(k) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the limitations of
the Plan, the Committee may modify, extend or renew outstanding Options or may
accept the cancellation of outstanding Options (to the extent not previously
exercised) in return for the grant of new Options at the same or a different
price. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, impair such Optionee's rights or increase
his or her obligations under such Option.
(l) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise of an
Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first offer and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
(m) RULE 16b-3. Options granted to persons who are subject to Section 16 of
the Exchange Act must comply with the applicable provisions of Rule 16b-3
promulgated therein and shall contain such additional conditions or restrictions
as may be required thereunder to qualify for the maximum exemption from Section
16 of the Exchange Act with respect to Plan transactions.
SECTION 7. PAYMENT FOR SHARES.
(a) GENERAL RULE. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America at the time
when such Shares are purchased, except as follows:
(i) In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock Option
Agreement. However, the Committee (at its sole discretion) may specify in the
Stock Option Agreement that payment may be made pursuant to Subsections (b),
(c) or (d) below.
(ii) In the case of a Nonstatutory Option granted under the Plan, the
Committee (at its sole discretion) may accept payment pursuant to Subsections
(b), (c) or (d) below.
(b) SURRENDER OF STOCK. To the extent that this Subsection (b) is applicable,
payment may be made all or in part with Shares which have already been owned by
the Optionee or his or her representative for more than 12 months and which are
surrendered to the Company in good form for transfer. Such Shares shall be
valued at their Fair Market Value on the date when the new Shares are purchased
under the Plan.
(c) EXERCISE/SALE. To the extent that this Subsection (c) is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.
(d) EXERCISE/PLEDGE. To the extent that this Subsection (d) is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.
SECTION 8. ADJUSTMENT OF SHARES.
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Stock in an amount that has a material effect on the value
of Stock, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall make
appropriate adjustments in one or more of (i) the number of Shares available for
future grants under Section 5, (ii) the number of Shares covered by each
outstanding Option or (iii) the Exercise Price under each outstanding Option.
<PAGE>
(b) CHANGE IN CONTROL. Notwithstanding the provisions of this Section 8, upon
the dissolution of the Company, or upon any merger or consolidation of the
Company where the Company is not the surviving corporation and the surviving
corporation does not agree to exchange its options for options granted under the
Plan, all options granted under the Plan shall terminate and thereupon become
null and void; but the Optionee shall have the right immediately prior to such
dissolution, merger or consolidation, to exercise any such Option without regard
to any otherwise applicable restriction as to time of exercise, other than
expiration of the Option.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 8, an Optionee
shall have no other rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to
an Option. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassification,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. SECURITIES LAWS.
Shares shall not be issued under the Plan unless the issuance and delivery of
such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee or Consultant or in any way to amend, modify, waive or
terminate the Company's (or its Subsidiary's) right to terminate any person's
Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS.
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become effective
November 10, 1993, the date the Board of Directors adopted the Plan.
Notwithstanding the foregoing, no Option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the
shareholders of the Company. The Plan shall terminate automatically 10 years
after its initial adoption by the Board of Directors on November 10, 2003, and
may be terminated on any earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may amend,
suspend or terminate the Plan at any time and for any reason; provided, however,
that any amendment of the Plan which: (i) materially increases the number of
Shares available for issuance under the Plan (except as provided in Section 8);
(ii) materially changes the class of persons who are eligible for the grant of
ISOs; or (iii) if required by Rule 16b-3 (or any successor) under the Exchange
Act, would materially increase the benefits accruing to participants under the
Plan or would materially modify the requirements as to eligibility for
participation in the Plan, shall be subject to the approval of the Company's
stockholders by the affirmative vote of the holders of a majority of the
securities of the Company present, or represented and entitled to vote at a duly
held stockholders' meeting. Stockholder approval shall not be required for any
other amendment of the Plan.
<PAGE>
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 12. INFORMATION TO EMPLOYEES AND CONSULTANTS.
During such times as options remain outstanding hereunder, the Company shall
deliver to the Optionees on an annual basis, financial and other information
regarding the Company in accordance with Rule 260.140.46 of Title 10, Chapter 3
of the California Code of Regulations.
SECTION 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors on November 10,
1993, the Company has caused its authorized officer to execute the same.
OVERLAND DATA, INC.,
a California corporation
By: /s/ Scott McClendon
- --------------------------
Scott McClendon, President
<PAGE>
OVERLAND DATA. INC.
1993 STOCK OPTION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was established in 1993 to offer selected employees, directors,
advisors and consultants an opportunity to acquire a proprietary interest in the
success of Overland Data, Inc., a California corporation (the "Company"), or to
increase such interest, by purchasing Shares of the Company's Common Stock. The
Plan provides for the grant of Options to purchase Shares. Options granted under
the Plan may include Nonstatutory Options as well as ISOs intended to qualify
under section 422 of the Code. The Plan is intended to comply in all respects
with Rule 16b-3 (or its successor) under the Exchange Act.
SECTION 2. DEFINITIONS.
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 3(a).
(d) "COMPANY" shall mean Overland Data, Inc., a California corporation.
(e) "CONSULTANT" shall mean any individual who is (i) a member of the
Board of Directors but who is not an Employee, (ii) an affiliate of a member of
the Board of Directors, (iii) a member of the board of directors of a Subsidiary
or (iv) an independent contractor who performs services for the Company or a
Subsidiary.
(f) "DISINTERESTED DIRECTOR" shall mean a member of the Board of
Directors who is not, during the one year prior to service as an administrator
under this Plan (as described in Section 3 of this Plan), granted or awarded
Stock pursuant to the terms of this Plan (or any other plan of the Company or a
Subsidiary) and who is not eligible to participate in this Plan.
(g) "EMPLOYEE" shall include every individual performing Service to the
Company or its Subsidiaries if the relationship between such individual and the
Company or its Subsidiaries is the legal relationship of employer and employee.
This definition of "Employee" is qualified in its entirety and is subject to the
definition set forth in Section 3401(c) of the Code and the applicable
regulations thereunder.
<PAGE>
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(j) "FAIR MARKET VALUE" shall mean the market price of Stock, determined
by the Committee as follows:
(i) If Stock was traded over-the-counter on the date in
question but was not classified as a national market issue, then the Fair Market
Value shall be equal to the mean between the last reported representative bid
and asked prices quoted by the NASDAQ system for such date;
(ii) If Stock was traded over-the-counter on the date in question
and was classified as a national market issue, then the Fair Market Value shall
be equal to the last-transaction price quoted by the NASDAQ system for such
date;
(iii) If Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite-transaction report for such date; and
(iv) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall be
conclusive and binding on all persons.
(k) "ISO" shall mean an incentive stock option described in section
422(b) of the Code.
(1) "NONSTATUTORY OPTION" shall mean a stock option not described in
sections 422(b) or 423(b) of the Code.
(m) "OPTION" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "OPTIONEE" shall mean an individual who holds an Option.
(o) "Plan" shall mean this 1993 Stock Option Plan of the Company
<PAGE>
(p) "SERVICE" shall mean service as an Employee or Consultant.
(q) "SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(r) "STOCK" shall mean the Common Stock of the Company.
(s) "STOCK OPTION AGREEMENT" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(t) "STOCK PURCHASE AGREEMENT" shall mean the Notice of Exercise and
Stock Purchase Agreement to be delivered by an Optionee to the Company upon
exercise of an Option.
(u) "SUBSIDIARY" shall mean any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
(v) "TOTAL AND PERMANENT DISABILITY" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than one year.
SECTION 3. ADMINISTRATION.
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Committee. The Committee shall consist only of Disinterested Directors of the
Company and shall have at least two members. The Committee shall meet such other
requirements as may be established from time to time by the Securities and
Exchange Commission for plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act.
(b) DISINTERESTED DIRECTORS. A member of the Board of Directors shall be
deemed "disinterested" only if he or she has not received, been granted or
awarded Stock pursuant to the terms of this Plan, during the one year prior to
service as an administrator under this Plan, and satisfies such requirements as
the Securities and Exchange Commission may establish for disinterested
administrators of plans designed to qualify for exemption under Rule 16b-3 (or
its successor) under the Exchange Act.
<PAGE>
(c) COMMITTEE PROCEDURES. The Committee shall designate one of its
members as chairman. The Committee may hold meetings at such times and places as
it shall determine. The acts of a majority of the Committee members present at
meetings at which a quorum exists, or acts reduced to or approved in writing by
all Committee members, shall be valid acts of the Committee.
(d) COMMITTEE RESPONSIBILITIES. Subject to the provisions of the Plan,
and without further approval of the Board of Directors, the Committee shall have
full authority and discretion to take the following actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option,
including, without limitation, the Exercise Price, to determine whether such
Option is to be classified as an ISO or as a Nonstatutory Option, and to specify
the provisions of the Stock Option Agreement relating to such Option;
(viii) To amend any outstanding Stock Option Agreement, subject to
applicable legal restrictions and to the consent of the Optionee who entered
into such agreement;
(ix) With the consent of the Optionee, to reprice, cancel and
regrant, or otherwise adjust the Exercise Price of an option previously granted
by the Committee;
(x) To prescribe the consideration for the grant of each Option
or other right under the Plan and to determine the sufficiency of such
consideration; and
(xi) To take any other actions deemed necessary or advisable for
the administration of the Plan.
<PAGE>
All decisions, interpretations and other actions of the Committee shall be final
and binding on all Optionees, and all persons deriving their rights from an
Optionee. No member of the Committee shall be liable for any action that he or
she has taken or has failed to take in good faith with respect to the Plan, any
Option, or any other right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
(a) GENERAL RULE. Employees and Consultants shall be eligible to receive
Options. However, only Employees shall be eligible for the grant of ISOs.
(b) DISINTERESTED DIRECTORS. Disinterested Directors shall not be
eligible to receive Options under this Plan.
(c) TEN-PERCENT STOCKHOLDERS. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for the grant of an
option unless (i) the Exercise Price is at least 110 percent of the Fair Market
Value of the shares underlying the Option on the date of grant of the Option and
(ii) if such Option is an ISO, such ISO is not exercisable after the expiration
of five years from the date of grant.
(d) ATTRIBUTION RULES. For purposes of Subsection (c) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for such Employee's brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or for
a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall be counted.
(e) OUTSTANDING STOCK. For purposes of Subsection (c) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
<PAGE>
SECTION 5. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. Shares subject to Options granted under the Plan
shall be authorized but unissued Shares. The aggregate number of shares which
may be issued under the Plan (upon exercise of Options or other rights to
acquire Shares) shall not exceed 231,557 Shares, subject to adjustment pursuant
to Section 8. The number of Shares which are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
which then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purpose of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100 percent
of the Fair Market Value of the Share(s) underlying the Option on the date of
grant of the Option, except as otherwise provided in Section 4(c). The Exercise
Price of a Nonstatutory Option shall not be less than 85 percent of the Fair
Market Value of a Share on the date of grant. Subject to the preceding two
sentences, the Exercise Price under any Option shall be determined by the
Committee at its sole discretion. The Exercise Price shall be payable in a form
described in Section 7.
<PAGE>
(d) WITHHOLDING TAXES. The Company's obligation to deliver shares or cash
upon the exercise of Options shall be subject to the satisfaction of all
applicable Federal, State and local income tax and employment tax withholding
requirements.
1. The Committee may, in its discretion and in accordance with the
provisions of this Section 6(d) and such supplemental rules as the Committee
may from time to time adopt, provide any or all Optionees holding
Nonstatutory Options with the right to use Shares in satisfaction of all or
part of the Federal, State and local income tax and employment tax
liabilities incurred by such Optionees in connection with the exercise of
their Options (the "Taxes"). The Optionee holding a Nonstatutory Option may
be provided with the election to have the Company withhold, from the Shares
otherwise issuable upon the exercise of such Nonstatutory Option, a portion
of such Shares with an aggregate Fair Market Value equal to the designated
percentage (up to 100% as specified by the Optionee) of the applicable Taxes.
Any such withholding election shall be subject to the following terms and
conditions:
(i) The election must be made on or before the date the amount
of the Taxes incurred by the Optionee in connection with the exercise of the
Option is determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval of the
Committee and none of the Shares for which the Option is exercised shall be
withheld in satisfaction of the Taxes incurred by the Optionee in connection
with such exercise, except to the extent the election is approved by the
Committee.
(iv) The Shares withheld pursuant to the election shall be valued
at Fair Market Value on the Tax Determination Date.
(v) In no event may the number of Shares requested to be
withheld exceed in value the dollar amount of Taxes incurred by the Optionee in
connection with the exercise of the Non-statutory Option.
(vi) If the withholding election is to be made by an Optionee who
is at the time an officer or director of the Company subject to the short-swing
profit restrictions of Section 16(b) of the Exchange Act, then the following
limitations, in addition to the preceding provisions of this Section 6(d), shall
also be applicable:
<PAGE>
(A) The election shall not become effective at any time prior to
the expiration of the six month period measured from the LATER of the grant date
of the Non-statutory Option to which such election pertains or the actual grant
date of the withholding election, and no Shares shall accordingly be withheld in
connection with any Tax Determination Date which occurs before the expiration of
such six month period.
(B) The election must be effected in accordance with either of
the following guidelines: (1) the election must be made six months or more prior
to the Tax Determination Date, and (2) the exercise of such election and the
exercise of the Non-statutory Option to which such election relates must occur
concurrently within a quarterly "window" period. Quarterly window periods shall
begin on the third business day following the date of public release of each
quarterly or annual summary statement of the Company's sales and earning and end
on the EARLIER of the 12th business day following such release date or the Tax
Determination Date.
(C) The six-month period specified in clauses (A) and (B) shall
not be applicable in the event of the Optionee's death or disability.
2. The Committee may also in its discretion and applying relevant law in
accordance with the provisions of this Section 6(d) and such supplemental rules
as the committee may from time to time adopt, require as a condition of delivery
of the Shares upon exercise of Options, that the Optionee remit to the Company
an amount in cash or check sufficient to satisfy the Company's and the
Optionee's Taxes.
(e) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable.
The vesting of any Option shall be determined by the Committee in its sole
discretion. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, Total and Permanent
Disability or retirement or other events determined from time-to-time by the
Committee. The Stock Option Agreement shall also specify the term of the
Option. The term shall not exceed 10 years from the date of grant, except as
otherwise provided in Section 4(c). Subject to the preceding sentence, the
Committee at its sole discretion shall determine when an Option is to expire.
An Option shall be deemed exercised when the Company receives from the
Optionee an executed Stock Purchase Agreement in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Committee,
<PAGE>
consist of any consideration and method of payment allowable under Section 7 of
this Plan. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 8 of this Plan. With
respect to any ISOs granted under this Plan, the aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the Shares for which
one or more options granted to any Employee under this Plan (or any other option
plan of the Company or its parent or subsidiary corporations) may for the first
time become exercisable as ISOs during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two or more such options which become exercisable for the first time in
the same calendar year, the foregoing limitation on the exercisability thereof
as ISOs shall be applied on the basis of the order in which such options are
granted. To the extent such dollar limitation is exceeded in any one calendar
year the Option shall nevertheless be exercisable for the excess number of
Shares as a Non-statutory Option.
(f) NONTRANSFERABILITY. During an Optionee's lifetime, such Optionee's
Option(s) shall be exercisable only by him or her and shall not be transferable.
In the event of an Optionee's death, such Optionee's Option(s) shall not be
transferable other than by will or by the laws of descent and distribution.
(g) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee's Service
terminates for any reason other than the Optionee's death, then such Optionee's
Option(s) shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (e)
above;
(ii) The date thirty (30) days after the termination of the
Optionee's Service for any reason other than Total and Permanent Disability; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Total and Permanent Disability.
<PAGE>
The Optionee may exercise all or part of his or her Option(s) at any
time before the expiration of such Option(s) under the preceding sentence, but
only to the extent that such Option(s) had become exercisable before the
Optionee's Service terminated or became exercisable as a result of the
termination. The balance of such Option(s) shall lapse when the Optionee's
Service terminates. In the event that the Optionee dies after the termination of
the Optionee's Service but before the expiration of the Optionee's Option(s),
all or part of such Option(s) may be exercised (prior to expiration) by the
executors or administrators of the Optionee's estate or by any person who has
acquired such Option(s) directly from the Optionee by bequest or inheritance,
but only to the extent that such Option(s) had become exercisable before the
Optionee's Service terminated or became exercisable as a result of the
termination. For purposes of the foregoing provisions of this Section 6(g), the
Optionee shall be deemed to be providing Service to the Company for so long as
the Optionee renders Service on a periodic basis to the Company or a Subsidiary
in the capacity of an Employee or Consultant. The Optionee shall be considered
to be an Employee for so long as the Optionee remains in the employ of the
Company or a Subsidiary.
(h) LEAVES OF ABSENCE. For purposes of Subsection (g) above, Service shall
be deemed to continue while the Optionee is on military leave, sick leave or
other bona fide leave of absence (as determined by the Committee.) The foregoing
notwithstanding, in the case of an ISO granted under the Plan, Service shall not
be deemed to continue beyond the first 90 days of such leave, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
(i) DEATH OF OPTIONEE. If an Optionee dies while he or she is providing
Service to the Company, then such Optionee's Option(s) shall expire on the
earlier of the following dates:
(i) The expiration date determined pursuant to Subsection (e)
above; or
(ii) The date six months after the Optionee's death.
All or part of the Optionee's Option(s) may be exercised at any time before the
expiration of such Option(s) under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Option(s) directly from the Optionee by bequest or inheritance, but only to the
extent that such Option(s) had become exercisable before the Optionee's death or
became exercisable as a result of the Optionee's death. The balance of such
Option(s) shall lapse when the Optionee dies.
<PAGE>
(j) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate of such Shares. No adjustments shall be made, except as provided in
Section 8.
(k) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options or may accept the cancellation of outstanding Options (to the extent
not previously exercised) in return for the grant of new Options at the same
or a different price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair such Optionee's
rights or increase his or her obligations under such Option.
(l) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise
of an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first offer and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
(m) RULE 16b-3. Options granted to persons who are subject to Section 16
of the Exchange Act must comply with the applicable provisions of Rule 16b-3
promulgated therein and shall contain such additional conditions or restrictions
as may be required thereunder to qualify for the maximum exemption from Section
16 of the Exchange Act with respect to Plan transactions.
SECTION 7. PAYMENT FOR SHARES.
(a) GENERAL RULE. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America at the time
when such Shares are purchased, except as follows:
(i) In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock Option
Agreement. However, the Committee (at its sole discretion) may specify in the
Stock Option Agreement that payment may be made pursuant to Subsections (b), (c)
or (d) below.
(ii) In the case of a Nonstatutory Option granted under the Plan,
the Committee (at its sole discretion) may accept payment pursuant to
Subsections (b), (c) or (d) below.
<PAGE>
(b) SURRENDER OF STOCK. To the extent that this Subsection (b) is
applicable, payment may be made all or in part with Shares which have already
been owned by the Optionee or his or her representative for more than 12 months
and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are
purchased under the Plan.
(c) EXERCISE/SALE. To the extent that this Subsection (c) is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.
(d) EXERCISE/PLEDGE. To the extent that this Subsection (d) is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.
SECTION 8. ADJUSTMENT OF SHARES.
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Stock in an amount that has a material effect on the value
of Stock, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall make
appropriate adjustments in one or more of (i) the number of Shares available for
future grants under Section 5, (ii) the number of Shares covered by each
outstanding Option or (iii) the Exercise Price under each outstanding Option.
(b) RESERVATION OF RIGHTS. Except as provided in this Section 8, an
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to
an Option. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to
<PAGE>
make adjustments, reclassification, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
SECTION 9. SECURITIES LAWS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
SECTION 10.NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee or Consultant or in any way to amend, modify, waive or
terminate the Company's (or its Subsidiary's) right to terminate any person's
Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS.
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become effective
December 8, 1993, the date the Board of Directors adopted the Plan.
Notwithstanding the foregoing, no Option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the
shareholders of the Company. The Plan shall terminate automatically 10 years
after its initial adoption by the Board of Directors on December 8, 2003, and
may be terminated on any earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may amend,
suspend or terminate the Plan at any time and for any reason; provided, however,
that any amendment of the Plan which: (i) materially increases the number of
Shares available for issuance under the Plan (except as provided in Section 8);
(ii) materially changes the class of persons who are eligible for the grant of
ISOs; or (iii) if required by Rule 16b-3 (or any successor) under the Exchange
Act, would materially increase the benefits accruing to participants under the
Plan, or would materially modify the requirements as to eligibility for
participation in the Plan, shall be subject to the approval of the Company's
stockholders by the affirmative vote of the holders of a majority of the
<PAGE>
securities of the Company present, or represented and entitled to vote at a duly
held stockholders' meeting. Stockholder approval shall not be required for any
other amendment of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 12. INFORMATION TO EMPLOYEES AND CONSULTANTS.
During such times as options remain outstanding hereunder, the Company
shall deliver to the Optionees on an annual basis, financial and other
information regarding the Company in accordance with Rule 260.140.46 of Title
10, Chapter 3 of the California Code of Regulations.
SECTION 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors on December 8,
1993, the Company has caused its authorized officer to execute the same.
OVERLAND DATA, INC.,
a California corporation
By: /S/ Scott Mcclendon
-------------------
Scott McClendon, President
<PAGE>
OVERLAND DATA, INC.
1992-A NON-QUALIFIED STOCK OPTION PLAN
1. ESTABLISHMENT AND PURPOSE OF PLAN.
Overland Data, Inc. (hereinafter referred to as the "Company") proposes to
grant to former employees of Mountain Engineering ("ME") Company options to
purchase shares of the Company's Common Stock ("Common Stock"), for the purpose
of attracting and retaining former employees of ME with ability and experience.
Such options will be granted pursuant to the plan herein set forth which shall
be known as the "Overland Data, Inc. 1992-A Non-Qualified Stock Option Plan"
(the "Plan").
2. MAXIMUM NUMBER OF SHARES SUBJECT TO OPTIONS.
A maximum of 332,000 shares of Common Stock (subject to adjustment in
accordance with Section 6 below), may be issued upon exercise of the options
granted under the Plan. Shares covered by the unexercised portion of any option
which has terminated by its terms or which was canceled pursuant to Section 14
hereof may be subject to a subsequent option granted under the Plan.
3. ADMINISTRATION OF THE PLAN.
The authority to grant options under the Plan shall be vested in the Board
of Directors of the Company (hereinafter referred to as the "Board") or in such
committee as may be appointed from time to time for that purpose by the Board
(which committee is hereinafter referred to as the "Committee"). Subject to the
provisions of the Plan, the Board or the Committee, from time to time on the
recommendation of the chief executive officer of the Company, shall determine
the directors, officers and employees to whom, and the time or times at which,
options shall be granted; the number of shares to be subject to each option; the
period of each option; the price of options shares; and other terms and
provisions of each option. Options need not be identical. The Board may also
interpret the Plan; prescribe, amend and rescind rules and regulations relating
to the Plan; amend the Plan from time to time (subject to the limitations set
forth in Section 11); and make all other determinations necessary or advisable
for the administration of the Plan.
4. ELIGIBILITY.
a. Options may be granted under this Plan only to former employees of ME
who are employees of the Company.
<PAGE>
b. Any employee who has been granted an option under this or any stock
option plan of the Company may be granted an additional option or options
directly or under this or any other such plan; subject, however, to any
restrictions that may be contained in any other such plan or established by the
Board.
5. EXERCISE PRICE.
The price to be paid for shares covered by each option shall not be less
than twenty-five (25%) percent of the fair market value of such shares, as
determined by the Board or the Committee on the date the option is granted (the
"Date of Grant"), subject to adjustment as provided in Section 6. In determining
the fair market value of such shares, the Board or the Committee shall take into
consideration the net book value of such shares, the net income per share,
liquidation value and if the Company's stock is publicly traded, the bid and
agreed prices of the Company's stock as reflected on an automated quotations
system or if the Company's shares are listed, the prices as quoted on a national
securities exchange. The price of any shares purchased under exercise of an
option shall be paid in full at the time of each such exercise.
6. ADJUSTMENTS.
In the event of any change in the Common Stock of the Company through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, or other change in the corporate or capital structure (not including the
issuance of additional shares of any class of the Company's stock for adequate
consideration received by the Company), appropriate adjustment shall be made by
the Board in the number of shares and the price per share subject to outstanding
options, and in the number of shares and the par value thereof of the aggregate
number of shares available for such options as set forth in Section 2 hereof.
Such adjustment shall be made so that the Plan and options theretofore or
thereafter to be issued thereunder shall remain substantially the same as before
such change, and so that the benefits receivable under any outstanding option
shall not be increased or decreased from those which the optionee had before
such change. The determination of any such adjustment by the Board shall be
final, binding and conclusive. Anything herein contained to the contrary
notwithstanding, upon the dissolution of the Company, or upon any merger or
consolidation of the Company where the Company is not the surviving corporation
and the surviving corporation does not agree to exchange its options for options
granted under the Plan, all options granted under the Plan shall terminate and
thereupon become null and void; but the optionee shall have the right
immediately prior to such dissolution, merger or consolidation, to exercise any
such option without regard to any otherwise applicable restriction as to time of
exercise, other than expiration of the Option Period.
<PAGE>
7. OPTION PERIOD AND LIMITATION OF EXERCISE.
Options shall be exercisable at such times and for such period (the "Option
Period") as may be fixed by the Board or the Committee at the Date of Grant;
provided, however, that no option shall be exercisable after the expiration of
ten years from the date of grant.
8. EFFECT OF TERMINATION OF EMPLOYEE.
a. If an optionee resigns as an employee of the Company any reason
("Voluntary Termination") except because the Company has required the optionee
to relocate outside Boulder County, Colorado (a "Relocation Termination") all
unvested options shall be cancelled.
b. If an optionee ceases to be an employee of the Company, for any reason
other than by reason of Voluntary Termination, death, permanent disability, or
termination for cause, such optionee may exercise his vested options and
sixty-six and two-thirds (66-2/3%) percent of unvested options in accordance
with the terms thereof.
c. If an optionee becomes permanently disabled and ceases by reason thereof
to be an employee of the Company or if an optionee dies while an employee of the
Company, any vested options and fifty (50%) percent of any unvested options held
by such permanently disabled or deceased optionee will continue in effect and
may be exercised in accordance with their terms by the optionee in the case of
permanent disability, or, in the case of death, by the executor or administrator
of such optionee's estate, or in the event there is no such executor or
administrator, by the person or persons to who the optionee's rights under the
option shall pass by will or the laws of descent and distribution. An optionee
will be deemed to be permanently disabled if the optionee is, by reason of any
medically determined physical or mental impairment expected to result in death
or to be of continuous duration of not less than six months, unable to engage in
substantial gainful employment.
d. If the termination of an optionee's position as an employee of the
Company is for cause (including, but not limited to, any act of dishonesty,
unethical conduct, willful misconduct, fraud or embezzlement, or any
unauthorized disclosure of confidential information or trade secrets, any of
which occurs in connection with the optionee's position as an employee of the
Company), the unvested options held by the optionee shall thereupon be canceled
and such optionee shall have no right to exercise any part of such unvested
options after such
<PAGE>
termination. Notwithstanding the foregoing, vested options held by an optionee
shall not be subject to termination and shall continue in full force and effect
in accordance with the terms thereof.
e. Options shall not be affected by authorized leaves of absence so long as
the optionee continues to be an employee of the Company.
<PAGE>
9. NONTRANSFERABILITY OF OPTIONS.
During the lifetime of an optionee, options granted hereunder shall be
exercisable only by the optionee (or his or her duly appointed and acting
guardian or conservator) and shall not be assignable or transferable. In the
event of the death of an optionee, options granted hereunder shall not be
transferable other than by will or by the laws of descent and distribution.
Options may, however, be surrendered to the Company for cancellation for such
consideration and upon such terms as may be mutually agreed upon by the Company
and the holder of such options.
10. EFFECTIVE DATE AND EXPIRATION OF THE PLAN.
The Plan becomes effective upon its adoption by the Board of Directors.
Unless sooner terminated, the Plan shall expire on the tenth (10th) anniversary
of the date of adoption of the Plan by the Board of Directors of the Company.
11. AMENDMENT AND TERMINATION OF PLAN PRIOR TO EXPIRATION OF DATE.
At any time prior to the expiration of the Plan, the Board may terminate,
suspend, modify or amend the Plan, provided that in no event shall any
termination, suspension, modification or amendment of the Plan alter or impair,
without the consent of the respective optionee, any rights or obligations under
options theretofore granted under the Plan, subject only to cancellation as
provided in Section 6 and in the following Section 12.
12. COMPLIANCE WITH APPLICABLE LAW.
This Plan, options granted hereunder, and the issuance of Common Stock upon
exercise of such options are or may be subject to compliance with various laws
and the rules, regulations and policies of various regulatory bodies and
agencies, including the Securities and Exchange Commission and the California
Department of Corporations, as now in effect or as may hereafter be adopted or
amended. The grant of options under the Plan and the issuance of Common Stock
upon the exercise thereof are each expressly conditioned upon compliance with
all such laws, rules, regulations and policies.
13. DELIVERY OF FINANCIAL INFORMATION.
During such time as options remain outstanding hereunder, the Company shall
deliver to the optionees financial and other information regarding the Company
in accordance with Rule
<PAGE>
260.140.41.2 of Title 10, Chapter 3 of the California Code of Regulations.
<PAGE>
14. CANCELLATION OF OPTIONS.
At any time prior to the expiration of the Plan, the Board may, with the
written consent of the optionee, cancel all options, or any portion thereof
previously granted to such optionee.
Note: The foregoing 1992-A Non-Qualified Stock Option Plan was adopted by the
Board of Directors on April 22, 1992.
Martin D. Gray, Secretary
<PAGE>
OVERLAND DATA, INC.
1991 NON-QUALIFIED STOCK OPTION PLAN
As Amended on April 22, 1992
1. Establishment and Purpose of Plan.
Overland Data, Inc. (hereinafter referred to as the "Company") proposes to
grant to employees, officers and directors, options to purchase shares of the
Company's Common Stock ("Common Stock"), for the purpose of attracting and
retaining them as employees, officers and directors of the Company. Such options
will be granted pursuant to the plan herein set forth which shall be known as
the "Overland Data, Inc. 1991 Non-Qualified Stock Option Plan" (the "Plan"). In
no event shall options under the Plan be treated as Incentive Stock Options
under Section 422A of the Internal Revenue Code of 1986, as amended.
2. Maximum Number of Shares Subject to Options.
A maximum of 30,000 shares of Common Stock (subject to adjustment in
accordance with Section 6 below), may be issued upon exercise of the options
granted under the Plan. Shares covered by the unexercised portion of any option
which has terminated by its terms of which was canceled pursuant to Section 14
hereof may be subject to a subsequent option granted under the Plan.
3. Administration of the Plan.
The authority to grant options under the Plan shall be vested in the Board of
Directors of the Company (hereinafter referred to as the "Board") or in such
committee as may be appointed from time to time for that purpose by the Board
(which committee is hereinafter referred to as the "Committee"). Subject to the
provisions of the Plan, the Board or the Committee, from time to time on the
recommendation of the chief executive officer of the Company, shall determine
the directors, officers and employees to whom, and the time or times at which,
options shall be granted; the number of shares to be subject to each option; the
period of each option; the price of options shares; and other terms and
provisions of each option. Notwithstanding the foregoing, in no event shall
options be granted to more than thirty five individuals under the Plan. Options
need not be identical. The Board may also interpret the Plan; prescribe, amend
and rescind rules and regulations relating to the Plan; amend the Plan from time
to time (subject to the limitations set forth in Section 11); and make all other
determinations necessary or advisable for the administration of the Plan.
4. Eligibility.
a. Options may be granted under this Plan only to directors, officers or
employees of the Company.
b. A director, officer or employee of the Company who owns more than ten
(10%) percent of the total combined voting power of all classes of outstanding
stock of the Company shall not be eligible to receive an option unless the price
to be paid for shares covered by each option is at least one hundred ten (110%)
percent of the fair market value of such shares, as determined by the Board or
the Committee on the date the option is granted. In determining stock ownership,
a director, officer or employee shall be deemed to own the stock owned directly
or indirectly, by or for his or her brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries (stock
with respect to which such director, officer or employee holds an option shall
not be counted). For purposes of this Section 4.b., "outstanding stock" shall
include all stock actually issued and outstanding immediately after the grant of
the option, but shall not include reacquired shares or shares authorized for
issuance under outstanding options.
<PAGE>
c. Any director, officer or employee who has been granted an option under
this or any stock option plan of the Company may be granted an additional option
or options directly or under this or any other such plan; subject, however, to
any restrictions that my be contained in any other such plan or established by
the Board.
5. Exercise Price.
The price to be paid for shares covered by each option shall not be less than
one hundred (100%) percent of the fair market value of such shares, as
determined by the Board or the Committee on the date the option is granted (the
"Date of Grant"), subject to adjustment as provided in Section 6. In determining
the fair market value of such shares, the Board or the Committee shall take into
consideration the net book value of such shares, the net income per share,
liquidation value and if the Company's stock is publicly traded, the bid and
agreed prices of the Company's stock as reflected on an automated quotations
system or if the Company's shares are listed, the prices as quoted on a national
securities exchange. The price of any shares purchased under exercise of an
option shall be paid in full at the time of each such exercise.
6. Adjustments.
In the event of any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split, or
other change in the corporate or capital structure (not including the issuance
of additional shares of any class of the Company's stock for adequate
consideration received by the Company), appropriate adjustment shall be made by
the Board in the number of shares and the price per share subject to outstanding
options, and in the number of shares and the par value thereof of the aggregate
number of shares available for such options as set forth in Section 2 hereof.
Such adjustment shall be made so that the Plan and options theretofore or
thereafter to be issued thereunder shall remain substantially the same as before
such change, and so that the benefits receivable under any outstanding option
shall not be increased or decreased from those which the optionee had before
such change. The determination of any such adjustment by the Board shall be
final, binding and conclusive. Anything herein contained to the contrary
notwithstanding, upon the dissolution of the Company, or upon any merger or
consolidation of the Company where the Company is not the surviving corporation
and the surviving corporation does not agree to exchange its options for options
granted under the Plan, all options granted under the Plan shall terminate and
thereupon become null and void; but the optionee shall have the right
immediately prior to such dissolution, merger or consolidation, to exercise any
such option without regard to any otherwise applicable restriction as to time of
exercise, other than expiration of the Option Period.
7. Option Period and Limitation of Exercise.
Options shall be exercisable at such times and for such period (the "Option
Period") as may be fixed by the Board or the Committee at the Date of Grant;
provided, however, that no option shall be exercisable after the expiration of
ten years from the date of grant. Further, vesting of options shall occur at a
rate of at least 20% per year over five years from the date of grant.
8. Effect of Termination of Director or Officer or Employee
a. If an optionee ceases to be a director, officer or employee of the
Company, for any reason other than by reason of death, permanent disability, or
termination for cause, such optionee may exercise his options in accordance with
their terms only for a period of thirty (30) days after such cessation (but not
beyond the Option Period). Any exercise of options after such cessation may be
only to the extent of the full number of shares the optionee was entitled to
purchase under the option on the date of such cessation, plus a portion of the
additional number of shares, if any, he would have become entitled to purchase
on the next anniversary date of the Date of the Grant of the option following
such cessation, such portion to be determined by multiplying such additional
number of shares by a fraction, the numerator of which shall be
<PAGE>
the number of days from the anniversary date of the Date of Grant preceding such
cessation to the date of such cessation and the denominator of which shall be
365. Such portion shall be rounded, if necessary to the nearest whole share.
b. If an optionee becomes permanently disabled and ceases by reason thereof
to be a director, officer or employee of the Company or if an optionee dies
while a director, officer or employee of the Company, any options held by such
permanently disabled or deceased optionee will continue in effect and may be
exercised in accordance with their terms for a period of six (6) months from the
date of the optionee's permanent disability or death (but not beyond the Option
Period) by the optionee in the case of permanent disability, or, in the case of
death, by the executor or administrator of such optionee's estate, or in the
event there is no such executor or administrator, by the person or persons to
who the optionee's rights under the option shall pass by will or the laws of
descent and distribution. An optionee will be deemed to be permanently disabled
if the optionee is, by reason or any medically determined physical or mental
impairment expected to result in death or to be of continuous duration of not
less than one year, unable to engage in substantial gainful employment.
c. If the termination of an optionee's position as a director, officer or
employee of the Company is for cause (including, but not limited to, any act of
dishonesty, unethical conduct, willful misconduct, fraud or embezzlement, or any
unauthorized disclosure of confidential information or trade secrets, any of
which occurs in connection with the optionee's position as a director, officer
or employee of the Company), the unvested options held by the optionee shall
thereupon be canceled and such optionee shall have no right to exercise any part
of such unvested options after such termination. Notwithstanding the foregoing,
vested options held by an optionee shall not be subject to termination and shall
continue in full force and effect in accordance with the terms thereof.
d. Options shall not be affected by authorized leaves of absence so long as
the optionee continues to be a director, officer or employee of the Company.
9. Nontransferability of Options.
During the lifetime of an optionee, options granted hereunder shall be
exercisable only by the optionee (or his or her duly appointed and acting
guardian or conservator) and shall not be assignable or transferable. In the
event of the death of an optionee, options granted hereunder shall not be
transferable other than by will or by the laws of descent and distribution.
Options may, however, be surrendered to the Company for cancellation for such
consideration and upon such terms as may be mutually agreed upon by the Company
and the holder of such options.
10. Effective Date and Expiration of the Plan.
The Plan becomes effective upon its adoption by the Board of Directors.
Unless sooner terminated, the Plan shall expire on the tenth (10th) anniversary
of the date of adoption of the Plan by the Board of Directors of the Company.
11. Amendment and Termination of Plan Prior to Expiration of Date.
At any time prior to the expiration of the Plan, the Board may terminate,
suspend, modify or amend the Plan, provided that in no event shall any
termination, suspension, modification or amendment of the Plan alter or impair,
without the consent of the respective optionee, any rights or obligations under
options theretofore granted under the Plan, subject only to cancellation as
provided in Section 6 and in the following Section 12.
<PAGE>
12. Compliance with Applicable Law.
This Plan, options granted hereunder, and the issuance of Common Stock upon
exercise of such options are or may be subject to compliance with various laws
and the rules, regulations and policies of various regulatory bodies and
agencies, including the Securities and Exchange Commission and the California
Department of Corporations, as now in effect or as may hereafter be adopted or
amended. The grant of options under the Plan and the issuance of Common Stock
upon the exercise thereof are each expressly conditioned upon compliance with
all such laws, rules, regulations and policies.
13. Delivery of Financial Information
During such time as options remain outstanding hereunder, the Company shall
deliver to the optionees financial and other information regarding the Company
in accordance with Rule 260.140.46 of Title 10, Chapter 3 of the California Code
of Regulations.
14. Cancellation of Options.
At any time prior to the expiration of the Plan, the Board may, with the
written consent of the optionee, cancel all options, or any portion thereof
previously granted to such optionee.
15. No Rights as Shareholder.
An Optionee hereunder shall have no rights as a shareholder with respect to
any shares of Common Stock covered by options granted hereunder until the date
of issuance of a stock certificate to such optionee. Except as may be provided
under Section 6 of the Plan, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.
16. Limitation of Rights; Employment Relationship.
Neither the establishment of the Plan or any modifications thereof, nor the
grant of any options hereunder, shall be construed as giving to any optionee or
any other person any legal or equitable right against the Company except as
specifically provided herein; and, in no event, shall the terms of employment of
any employee be modified or in any way be affected hereby.
Note: The foregoing 1991 Non-Qualified Stock Option Plan was adopted by the
Board of Directors on May 7, 1991 and amended on April 22, 1992.
/s/ Martin D. Gray
- -------------------------
Martin D. Gray, Secretary
<PAGE>
OVERLAND DATA, INC.
1987 NON-QUALIFIED STOCK OPTION PLAN
As Amended on January 11, 1990,
March 23, 1990 and June 1, 1990
1. ESTABLISHMENT AND PURPOSE OF PLAN.
Overland Data, Inc. (hereinafter referred to as the "Company") proposes to
grant to directors, officers and employees of the Company options to purchase
shares of the Company's Common Stock ("Common Stock"), for the purpose of
attracting and retaining directors, officers and employees of ability and
experience. Such options will be granted pursuant to the plan herein set forth
which shall be known as the "Overland Data, Inc. 1987 Non-Qualified Stock Option
Plan" (the "Plan").
2. MAXIMUM NUMBER OF SHARES SUBJECT TO OPTIONS.
A Maximum of 30,000 shares of Common Stock (subject to adjustment in
accordance with Section 6 below), may be issued upon exercise of the options
granted under the Plan. Shares covered by the unexercised portion of any option
which has terminated by its terms of which was canceled pursuant to Section 14
hereof may be subject to a subsequent option granted under the Plan.
3. ADMINISTRATION OF THE PLAN.
The authority to grant options under the Plan shall be vested in the Board of
Directors of the Company (hereinafter referred to as the "Board") or in such
committee as may be appointed from time to time for that purpose by the Board
(which committee is hereinafter referred to as the "Committee"). Subject to the
provisions of the Plan, the Board or the Committee, from time to time on the
recommendation of the chief executive officer of the Company, shall determine
the directors, officers and employees to whom, and the time or times at which,
options shall be granted; the number of shares to be subject to each option; the
period of each option; the price of options shares; and other terms and
provisions of each option. Options need not be identical. The Board may also
interpret the Plan; prescribe, amend and rescind rules and regulations relating
to the Plan; amend the Plan from time to time (subject to the limitations set
forth in Section 11); and make all other determinations necessary or advisable
for the administration of the Plan.
4. ELIGIBILITY.
a. Options may be granted under this Plan only to directors, officers or
employees of the Company.
b. A director, officer or employee of the Company who owns more than ten
(10%) percent of the total combined voting power of all classes of outstanding
stock of the Company shall not be eligible to receive an option unless the price
to be paid for shares covered by each option is at least one hundred ten (110%)
percent of the fair market value of such shares, as determined by the Board or
the Committee on the date the option is granted. In determining stock ownership,
a director, officer or employee shall be deemed to own the stock owned directly
or indirectly, by or for his or her brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries (stock
with respect to which such director, officer or employee holds an option shall
not be counted). For purposes of this Section 4.b., "outstanding stock" shall
include all stock actually issued and outstanding immediately after the grant of
the option, but shall not include reacquired shares or shares authorized for
issuance under outstanding options.
c. Any director, officer or employee who has been granted an option under
this or any stock option plan of the Company may be granted an additional option
or options directly or under this or any other such plan; subject, however, to
any restrictions that may be contained in any other such plan or established by
the Board.
<PAGE>
5. EXERCISE PRICE.
The price to be paid for shares covered by each option shall not be less than
one hundred (100%) percent of the fair market value of such shares, as
determined by the Board or the Committee on the date the option is granted (the
"Date of Grant"), subject to adjustment as provided in Section 6. In determining
the fair market value of such shares, the Board or the Committee shall take into
consideration the net book value of such shares, the net income per share,
liquidation value and if the Company's stock is publicly traded, the bid and
agreed prices of the Company's stock as reflected on an automated quotations
system or if the Company's shares are listed, the prices as quoted on a national
securities exchange. The price of any shares purchased under exercise of an
option shall be paid in full at the time of each such exercise.
6. ADJUSTMENTS.
In the event of any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split, or
other change in the corporate or capital structure (not including the issuance
of additional shares of any class of the Company's stock for adequate
consideration received by the Company), appropriate adjustment shall be made by
the Board in the number of shares and the price per share subject to outstanding
options, and in the number of shares and the par value thereof of the aggregate
number of shares available for such options as set forth in Section 2 hereof.
Such adjustment shall be made so that the Plan and options theretofore or
thereafter to be issued thereunder shall remain substantially the same as before
such change, and so that the benefits receivable under any outstanding option
shall not be increased or decreased from those which the optionee had before
such change. The determination of any such adjustment by the Board shall be
final, binding and conclusive. Anything herein contained to the contrary
notwithstanding, upon the dissolution of the Company, or upon any merger or
consolidation of the Company where the Company is not the surviving corporation
and the surviving corporation does not agree to exchange its options for options
granted under the Plan, all options granted under the Plan shall terminate and
thereupon become null and void; but the optionee shall have the right
immediately prior to such dissolution, merger or consolidation, to exercise any
such option without regard to any otherwise applicable restriction as to time of
exercise, other than expiration of the Option Period.
7. OPTION PERIOD AND LIMITATION OF EXERCISE.
Options shall be exercisable at such times and for such period (the "Option
Period") as may be fixed by the Board or the Committee at the Date of Grant;
provided, however, that no option shall be exercisable after the expiration of
ten years from the date of grant.
8. EFFECT OF TERMINATION OF DIRECTOR OR OFFICER OR EMPLOYEE.
a. If an optionee ceases to be a director, officer or employee of the
Company, for any reason other than by reason of death, permanent disability, or
termination for cause, such optionee may exercise his options in accordance with
their terms only for a period of thirty (30) days after such cessation (but not
beyond the Option Period). Any exercise of options after such cessation may be
only to the extent of the full number of shares the optionee was entitled to
purchase under the option on the date of such cessation, plus a portion of the
additional number of shares, if any, he would have become entitled to purchase
on the next anniversary date of the Date of the Grant of the option following
such cessation, such portion to be determined by multiplying such additional
number of shares by a fraction, the numerator of which shall be the number of
days from the anniversary date of the Date of Grant preceding such cessation to
the date of such cessation and the denominator of which shall be 365. Such
portion shall be rounded, if necessary to the nearest whole share.
<PAGE>
b. If an optionee becomes permanently disabled and ceases by reason thereof
to be a director, officer or employee of the Company or if an optionee dies
while a director, officer or employee of the Company, any options held by such
permanently disabled or deceased optionee will continue in effect and may be
exercised in accordance with their terms for a period of six (6) months from the
date of the optionee's permanent disability or death (but not beyond the Option
Period) by the optionee in the case of permanent disability, or, in the case of
death, by the executor or administrator of such optionee's estate, or in the
event there is no such executor or administrator, by the person or persons to
who the optionee's rights under the option shall pass by will or the laws of
descent and distribution. An optionee will be deemed to be permanently disabled
if the optionee is, by reason or any medically determined physical or mental
impairment expected to result in death or to be of continuous duration of not
less than one year, unable to engage in substantial gainful employment.
c. If the termination of an optionee's position as a director, officer or
employee of the Company is for cause (including, but not limited to, any act of
dishonesty, unethical conduct, willful misconduct, fraud or embezzlement, or any
unauthorized disclosure of confidential information or trade secrets, any of
which occurs in connection with the optionee's position as a director, officer
or employee of the Company), the unvested options held by the optionee shall
thereupon be canceled and such optionee shall have no right to exercise any part
of such unvested options after such termination. Notwithstanding the foregoing,
vested options held by an optionee shall not be subject to termination and shall
continue in full force and effect in accordance with the terms thereof.
d. Options shall not be affected by authorized leaves of absence so long as
the optionee continues to be a director, officer or employee of the Company.
9. NONTRANSFERABILITY OF OPTIONS.
During the lifetime of an optionee, options granted hereunder shall be
exercisable only by the optionee (or his or her duly appointed and acting
guardian or conservator) and shall not be assignable or transferable. In the
event of the death of an optionee, options granted hereunder shall not be
transferable other than by will or by the laws of descent and distribution.
Options may, however, be surrendered to the Company for cancellation for such
consideration and upon such terms as may be mutually agreed upon by the Company
and the holder of such options.
10. EFFECTIVE DATE AND EXPIRATION OF THE PLAN.
The Plan becomes effective upon its adoption by the Board of Directors.
Unless sooner terminated, the Plan shall expire on the tenth (10th) anniversary
of the date of adoption of the Plan by the Board of Directors of the Company.
11. AMENDMENT AND TERMINATION OF PLAN PRIOR TO EXPIRATION OF DATE.
At any time prior to the expiration of the Plan, the Board may terminate,
suspend, modify or amend the Plan, provided that in no event shall any
termination, suspension, modification or amendment of the Plan alter or impair,
without the consent of the respective optionee, any rights or obligations under
options theretofore granted under the Plan, subject only to cancellation as
provided in Section 6 and in the following Section 12.
12. COMPLIANCE WITH APPLICABLE LAW.
This Plan, options granted hereunder, and the issuance of Common Stock upon
exercise of such options are or may be subject to compliance with various laws
and the rules, regulations and policies of various regulatory bodies and
agencies, including the Securities and Exchange Commission and the California
Department of Corporations, as now in effect or as may hereafter be adopted or
amended. The
<PAGE>
grant of options under the Plan and the issuance of Common Stock upon the
exercise thereof are each expressly conditioned upon compliance with all such
laws, rules, regulations and policies.
13. DELIVERY OF FINANCIAL INFORMATION.
During such time as options remain outstanding hereunder, the Company shall
deliver to the optionees financial and other information regarding the Company
in accordance with Rule 260.140.41.2 of Title 10, Chapter 3 of the California
Code of Regulations.
14. CANCELLATION OF OPTIONS.
At any time prior to the expiration of the Plan, the Board may, with the
written consent of the optionee, cancel all options, or any portion thereof
previously granted to such optionee.
Note: The foregoing 1987 Non-Qualified Stock Option Plan was adopted by the
Board of Directors on October 13, 1988 and amended on January 11, 1990, March
23, 1990 and June 1, 1990.
Martin D. Gray, Secretary
<PAGE>
OVERLAND DATA, INC.
SCOTT McCLENDON NON-QUALIFIED STOCK OPTION AGREEMENT
October 16, 1991
Overland Data, Inc., a California corporation (the "Company"), hereby grants
to SCOTT McCLENDON, (the "Optionee"), an option to purchase 202,380 shares of
the Company's common stock at $.80 per share, subject to the terms and
conditions hereinafter set forth. In no event shall options under the Plan be
treated as Incentive Stock Options under Section 422A of the Internal Revenue
Code of 1986, as amended.
Terms and Conditions
1. Option Period and Limitation of Exercise.
Subject to the provisions of Section 5 below, this option may be exercised as
follows:
40,476 shares on October 1992
An additional 3,373 shares on the first day of each month thereafter
for 48 months (through September 1996;
provided, however, that no option shall be exercisable after the expiration
of ten years from the date of grant.
2. Method of Exercise.
This option may be exercised in whole or in part and from time to time by
delivery to the Company of written notice of exercise, directed to the attention
of the Treasurer, Secretary or Assistant Secretary, from the Optionee or his
personal representative, devisee or heir, as the case may be, accompanied by
this Stock Option Agreement and payment in full of the amount equal to the total
purchase price of the shares purchased; provided, however, that the Company
shall not be required to issue shares under this option when exercised by any
person other than the Optionee until it has received satisfactory evidence of
the legal right of such other person to exercise the Option. In the event of
partial exercise of this option, the Company shall endorse hereon the number of
shares purchased and the number of shares remaining and shall return this
Agreement to the appropriate holder.
3. Issuance of Shares.
As soon as practicable after receipt of notice of exercise of this option and
payment for the shares being purchased, the Company shall, without expense to
the person making such exercise, deliver to Optionee or other person entitled
thereto, a certificate or certificates for the shares being purchased; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
applicable requirements under any law or regulation applicable to the issuance
of transfer of such shares. If any such requirements prevent, directly or
indirectly, the issuance or transfer of such shares after diligent effort by the
Company to comply therewith, the Company shall have no further obligation, in
damages or otherwise, to the Optionee or his successor hereunder.
<PAGE>
4. Adjustments. In the event of any change in the Common Stock of the Company
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split, or other change in the corporate or capital structure (not
including the issuance of additional shares of any class of the Company's stock
for adequate consideration received by the Company), appropriate adjustment
shall be made by the Board in the number of shares and the price per share
subject to outstanding options, and in the number of shares and the par value
thereof of the aggregate number of shares available for such options as set
forth in Section 2 hereof. Such adjustment shall be made so that the Plan and
options theretofore or thereafter to be issued thereunder shall remain
substantially the same as before such change, and so that the benefits
receivable under any outstanding option shall not be increased or decreased from
those which the optionee had before such change. The determination of any such
adjustment by the Board shall be final, binding and conclusive. Anything herein
contained to the contrary notwithstanding, upon the dissolution of the Company,
or upon any merger or consolidation of the Company where the Company is not the
surviving corporation and the surviving corporation does not agree to exchange
its options for options granted under the Plan, all options granted under the
Plan shall terminate and thereupon become null and void; but the optionee shall
have the right immediately prior to such dissolution, merger or consolidation,
to exercise any such option without regard to any otherwise applicable
restriction as to time of exercise, other than expiration of the Option Period.
5. Effect of Termination of Optionee
a. If Optionee ceases to be a director, officer or employee of the Company,
for any reason other than by reason of death, permanent disability, or
termination for cause, Optionee may exercise his options in accordance with
their terms only for a period of thirty (30) days after such cessation (but not
beyond the Option Period). Any exercise of options after such cessation may be
only to the extent of the full number of shares the Optionee was entitled to
purchase under the option on the date of such cessation, plus a portion of the
additional number of shares, if any, he would have become entitled to purchase
on the next anniversary date of the Date of the Grant of the option following
such cessation, such portion to be determined by multiplying such additional
number of shares by a fraction, the numerator of which shall be the number of
days from the anniversary date of the Date of Grant preceding such cessation to
the date of such cessation and the denominator of which shall be 365. Such
portion shall be rounded, if necessary to the nearest whole share.
b. If Optionee becomes permanently disabled and ceases by reason thereof
to be a director, officer or employee of the Company or if Optionee dies
while a director, officer or employee of the Company, any options held by
such permanently disabled or deceased Optionee will continue in effect and
may be exercised in accordance with their terms for a period of six (6)
months from the date of the Optionee's permanent disability or death (but not
beyond the Option Period) by Optionee in the case of permanent disability,
or, in the case of death, by the executor or administrator of Optionee's
estate, or in the event there is no such executor or administrator, by the
person or persons to who Optionee's rights under the option shall pass by
will or the laws of descent and distribution. Optionee will be deemed to be
permanently disabled if Optionee is, by reason or any medically determined
physical or mental impairment expected to result in death or to be of
continuous duration of not less than one year, unable to engage in
substantial gainful employment.
c. If the termination of Optionee's position as a director, officer or
employee of the Company is for cause (including, but not limited to, any act of
dishonesty, unethical conduct, willful misconduct, fraud or embezzlement, or any
unauthorized disclosure of confidential information or trade secrets, any of
which occurs in connection with the optionee's position as a director, officer
or employee of the Company), the unvested options held by Optionee shall
thereupon be canceled and Optionee shall have no right to exercise any part of
such unvested options after such termination. Notwithstanding the foregoing,
vested options held by Optionee shall not be subject to termination and shall
continue in full force and effect in accordance with the terms thereof.
<PAGE>
d. Options shall not be affected by authorized leaves of absence so long as
Optionee continues to be a director, officer or employee of the Company.
6. Nontransferability of Options.
During the lifetime of Optionee, options granted hereunder shall be
exercisable only by Optionee (or his or her duly appointed and acting guardian
or conservator) and shall not be assignable or transferable. In the event of the
death of an optionee, options granted hereunder shall not be transferable other
than by will or by the laws of descent and distribution. Options may, however,
be surrendered to the Company for cancellation for such consideration and upon
such terms as may be mutually agreed upon by the Company and the holder of such
options.
7. Effective Date and Expiration of the Plan.
The Plan becomes effective upon its adoption by the Board of Directors.
Unless sooner terminated, the Plan shall expire on October 1, 2001.
8. Amendment and Termination of Plan Prior to Expiration of Date.
At any time prior to the expiration of the Plan, the Board my terminate,
suspend, modify or amend the Plan, provided that in no event shall any
termination, suspension, modification or amendment of the Plan alter or impair,
without the consent of the respective Optionee, any rights or obligations under
options theretofore granted under the Plan, subject only to cancellation as
provided in Section 6 and in the following Section 12.
9. Compliance with Applicable Law.
This Plan, options granted hereunder, and the issuance of Common Stock upon
exercise of such options are or may be subject to compliance with various laws
and the rules, regulations and policies of various regulatory bodies and
agencies, including the Securities and Exchange Commission and the California
Department of Corporations, as now in effect or as may hereafter be adopted or
amended. The grant of options under the Plan and the issuance of Common Stock
upon the exercise thereof are each expressly conditioned upon compliance with
all such laws, rules, regulations and policies.
10. Delivery of Financial Information
During such time as options remain outstanding hereunder, the Company shall
deliver to the optionees financial and other information regarding the Company
in accordance with Rule 260.140.46 of Title 10, Chapter 3 of the California Code
of Regulations.
11. Cancellation of Options.
At any time prior to the expiration of the Plan, the Board may, with the
written consent of the optionee, cancel all options, or any portion thereof
previously granted to such optionee.
12. No Rights as Shareholder.
An Optionee hereunder shall have no rights as a shareholder with respect to
any shares of Common Stock covered by options granted hereunder until the date
of issuance of a stock certificate to such optionee. Except as may be provided
under Section 6 of the Plan, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.
<PAGE>
13. Limitation of Rights; Employment Relationship.
Neither the establishment of the Plan or any modifications thereof, nor the
grant of any options hereunder, shall be construed as giving to any optionee or
any other person any legal or equitable right against the Company except as
specifically provided herein; and, in no event, shall the terms of employment of
any employee be modified or in any way be affected hereby.
Note: The foregoing Scott McClendon Non-Qualified Stock Option Agreement was
adopted by the Board of Directors on October 16, 1991.
OVERLAND DATA, INC.
/s/ Martin D. Gray
- --------------------
BY: Martin D. Gray
Secretary
