RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT is entered into and effective as of this 7th day of
December, 1998 (the "Date of Grant"), by and between Tricord Systems, Inc. (the
"Company") and Xx. Xxx X. Flower (the "Grantee").
A. The Company has adopted the 1998 Stock Incentive Plan (the "Plan)
authorizing the Board of Directors of the Company, or a committee as
provided for in the Plan (the Board or such a committee to be referred to
as the "Committee"), to grant restricted stock awards to employees and
non-employee consultants and independent contractors of the Company and its
Subsidiaries (as defined in the Plan).
B. The Company desires to give the Grantee a proprietary interest in
the Company and an added incentive to advance the interests of the Company
by granting to the Grantee a restricted award of shares of common stock of
the Company pursuant to the Plan.
Accordingly, the parties agree as follows:
1. GRANT OF AWARD
The Company hereby grants to the Grantee a restricted stock award (the
"Award") consisting of 57,143 Shares (the "Award Shares") of the Company's
common stock, $.01 par value (the "Common Stock"), according to the terms
and subject to the restrictions and conditions hereinafter set forth and as
set forth in the Plan. Reference to the Award Shares in this Agreement will
be deemed to include the Dividend Proceeds (as defined in Section 3.3 of
this Agreement) with respect to such Award Shares that are retained and
held by the Committee as provided in Section 3.3 of this Agreement.
2. GRANT RESTRICTION
2.1 RESTRICTION AND FORFEITURE. The Grantee's right to retain the
Award Shares will be subject to the Grantee remaining in the
continuous employ of the Company or any Subsidiary for a period of two
(2) years (the "Restriction Period") following the Date of Grant;
provided, however, that such employment period restrictions (the
"Restrictions") will lapse and terminate prior to end of the
Restriction Period with respect to installments of Award Shares to the
extent and on such dates as follows:
Date of Number of Award Shares for
Restriction Lapse Which Restrictions Lapse
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December 7, 1999 28,572
December 7, 2000 28,571
2.2 TERMINATION OF EMPLOYMENT
(a) TERMINATION DUE TO DEATH OR DISABILITY. In the event
that the Grantee's employment with the Company and all
Subsidiaries is terminated by reason of the Grantee's death or
Disability (as such term is defined in the Plan), the Restrictions
applicable to the Award Shares will immediately lapse and
terminate.
(b) VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. In the
event the Grantee's employment with the Company and all
Subsidiaries is terminated voluntarily by the Grantee or is
terminated by the Company for Cause (as such term is defined in
the Plan), all rights of the Grantee under the Plan and this
Agreement will terminate immediately without notice of any kind,
and this Award will be terminated and all Award Shares with
respect to which the Restrictions have not lapsed will be
forfeited.
(c) (c) TERMINATION WITHOUT CAUSE. In the event the
Grantee's employment with the Company and all Subsidiaries is
terminated by the Company without Cause, the Restrictions
applicable to the Award Shares will immediately lapse and
terminate.
2.3 CHANGE IN CONTROL
(a) IMPACT OF CHANGE IN CONTROL. If any events constituting
a Change in Control (as defined in the Plan) of the Company occur,
the Restrictions will immediately lapse and terminate with respect
to all Award Shares that have been held for at least six months
from the Date of Grant.
(b) LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in this Section 2.3 to the contrary, if, with respect
to the Grantee, acceleration of the vesting of the Award
Shares as provided above (which acceleration could be deemed
a "payment" within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code")), together
with any other payments which the Grantee has the right to receive
from the Company or any corporation which is a member of an
"affiliated group" (as defined in Section 1504(a) of the Code
without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), the payments to the
Grantee as set forth herein will be reduced to the largest amount
as will result in no portion of such payments being subject to the
excise tax imposed by Section 4999 of the Code; provided, however,
that if the Grantee is subject to a separate agreement with the
Company or a Subsidiary that specifically provides that payments
to the Grantee will not be reduced even if such payments would
constitute excess parachute payments or provides that the Grantee
will have the discretion to determine which payments will be
reduced in order to avoid excess parachute payments (regardless of
whether such separate agreement specifically
references Award Shares under this Agreement), then the
limitations of this Section 2.3(b) will, to that extent, not
apply.
3. ISSUANCE OF AWARD SHARES
3.1 PRIVILEGES OF A SHAREHOLDER: TRANSFERABILITY. As soon
as practicable after the execution and delivery of this Agreement
and the satisfaction of any conditions to the effective issuance
of such Award Shares (including, without limitation, the
conditions set forth in Section 3 of this Agreement and Section 15
of the Plan), the Grantee will be recorded on the books of the
Company as the owner of the Award Shares, and the Company will
issue one or more duly issued and executed stock certificates
evidencing the Award Shares. The Grantee will have all voting,
dividend, liquidation and other rights with respect to the Award
Shares in accordance with their terms upon becoming the holder of
record of such Award Shares; provided, however, that, prior to the
lapse or other termination of the Restrictions applicable to Award
Shares, such Award Shares will not be assignable or transferable
by the Grantee, either voluntarily or involuntarily, and may not
be subjected to any lien, directly or indirectly, by operation of
law or otherwise. Any attempt to transfer, assign or encumber the
Award Shares other than in accordance with this Agreement and the
Plan will be null and void and will void the Award, and all Award
Shares for which the Restrictions have not lapsed will be
forfeited and immediately returned to the Company.
3.2 ENFORCEMENT OF RESTRICTIONS. To enforce the Restrictions
imposed by this Agreement and the Plan, the Committee may
place a legend on the stock certificates referring to the
Restrictions and may require the Grantee, until the Restrictions
have lapsed with respect to Award Shares, to keep the stock
certificates evidencing such Award Shares, together with duly
endorsed stock powers, in the custody of the Company or its
transfer agent or to maintain evidence of stock ownership of such
Award Shares, together with duly endorsed stock powers, in a
certificateless book-entry stock account with the Company's
transfer agent.
3.3 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless the Committee
determines otherwise in its sole discretion, the Grantee will have
no right to receive dividends or distributions with respect to
Award Shares, including cash dividends, stock dividends or
dividends in kind, the proceeds of any stock split or the proceeds
resulting from any changes or exchanges described in Section 6 of
this Agreement (all of which will collectively be referred to as
"Dividend Proceeds"). The Committee may, in its sole discretion,
distribute such Dividend Proceeds to the Grantee or it may retain
and hold such Dividend Proceeds subject to the Restrictions and
the other terms and conditions of this Agreement. In addition, the
Committee may, in its sole discretion, cause such Dividend
Proceeds to be paid to the Company pursuant to Section 5 of this
Agreement in order to satisfy any federal, state or local
withholding or other employment-related tax requirements
attributable to such dividends or distributions or to the
Grantee's receipt of the Award or the lapse or termination of the
Restrictions applicable to Award Shares.
4. RIGHTS OF GRANTEE
4.1 EMPLOYMENT. Nothing in this Agreement will interfere with or
limit in any way the right of the Company or any Subsidiary to
terminate the employment of the Grantee at any time, nor confer
upon the Grantee any right to continue in the employ of the
Company or any Subsidiary at any particular position or rate of
pay or for any particular period of time.
4.2 RIGHTS AS A SHAREHOLDER. The Grantee will have no rights as a
shareholder until the Grantee becomes the holder of record of such
Award Shares, and no adjustment will be made for dividends or
distributions with respect to the Award Shares as to which there
is a record date proceeding the date the Grantee becomes the
holder of record of the Award Shares, except as may otherwise be
provided in the Plan or determined by the Committee in its sole
discretion.
5. WITHHOLDING TAXES
The Company is entitled to (a) withhold and deduct from future wages of
the Grantee (or from other amounts that may be due and owing to the
Grantee from the Company), or cause to be paid to the Company out of
Dividend Proceeds, or make other arrangements for the collection of, all
legally required amounts necessary to satisfy any federal, state or local
withholding and employment-related tax requirements attributable to the
receipt of the Award, the receipt of dividends or distributions on Award
Shares, or the lapse or termination of the Restrictions applicable to
Award Shares, or (b) require the Grantee promptly to remit the amount of
such withholding to the Company. In the event that the Company is unable
to withhold such amounts, for whatever reason, the Grantee agrees to pay
to the Company an amount equal to the amount the Company would otherwise
be required to withhold under federal, state or local law.
6. ADJUSTMENTS
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock
split, combination of shares, rights offering or divestiture (including a
spin-off) or any other change in the corporate structure or shares of the
Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the
surviving corporation), in order to prevent dilution or enlargement of
the rights of the Grantee, will make appropriate adjustment (which
determination will be conclusive) as to the number and kind of securities
subject to this Award.
7. SUBJECT TO PLAN
The Award and the Award Shares granted pursuant to this Agreement have
been granted under, and are subject to the terms of, the Plan. Terms of
the Plan are incorporated by reference in this Agreement in their
entirety, and the Grantee, by execution hereof, acknowledges having
received a copy of the Plan. The provisions of this Agreement will be
interpreted as to be consistent with the Plan, and any ambiguities in
this Agreement will be interpreted by reference to the Plan. In the event
that any provision of this Agreement in
inconsistent with the terms of the Plan, as amended or modified from time
to time, the terms of the Plan will prevail.
8. MISCELLANEOUS
8.1 BINDING EFFECT. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this
Agreement.
8.2 GOVERNING LAW. This Agreement and all rights and obligations
under this Agreement will be construed in accordance with the Plan
and governed by the laws of the State of Delaware, without regard
to conflicts of laws provisions. Any legal proceeding related to
this Agreement will be brought in an appropriate Delaware court,
and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.
8.3 ENTIRE AGREEMENT. This Agreement and the Plan set forth the
entire agreement and understanding of the parties to this
Agreement with respect to the grant and vesting of this Award and
the administration of the Plan and supersede all prior agreements,
arrangements, plans and understandings relating to the grant and
vesting of this Award and the administration of the Plan.
8.4 AMENDMENT AND WAIVER. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a
written instrument executed by the parties to this Agreement or,
in the case of a waiver, by the party waiving compliance.
The parties hereto have executed this Agreement effective the day and year first
above written.
TRICORD SYSTEMS, INC.
By /s/ Xxxx X. Xxxxxxx
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Its Chairman/CEO
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By execution of this Agreement, GRANTEE
The Grantee acknowledges having
Received a copy of the Plan /s/ Xxx X. Flower
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(Signature)
Xxx X. Flower
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(Name and Address)
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