EXHIBIT 10.4   2001 EMPLOYEE STOCK PURCHASE PLAN OF THE REGISTRANT


                        ONTRACK DATA INTERNATIONAL, INC.
                        2001 EMPLOYEE STOCK PURCHASE PLAN


         WHEREAS, ONTRACK Data International, Inc. established on August 6,
1996, an employee stock purchase plan in accordance with Section 423 of the
Internal Revenue Code and authorized 250,000 shares of its common stock to be
reserved for issuance under the plan; and

         WHEREAS, the plan encountered a shortfall in available reserved shares
during fourth quarter of 2001 thereby resulting in automatic termination of said
plan; and

         WHEREAS, the Board of Directors, as of September 27, 2001, and subject
to the approval of its shareholders, authorized a new stock purchase plan to be
established to provide employees the opportunity to continue to purchase shares
under such a plan.

                  THEREFORE, ONTRACK Data International, Inc. hereby establishes
         this Plan as set forth herein:

1. ESTABLISHMENT OF PLAN. ONTRACK Data International, Inc. (hereinafter referred
to as the "Company") proposes to grant to certain employees of the Company and
its subsidiaries the opportunity to purchase common stock of the Company. Such
common stock shall be purchased pursuant to the plan herein set forth which
shall be known as the "ONTRACK Data international, Inc. Employee Stock Purchase
Plan" (hereinafter referred to as the "Plan"). The Company intends that the Plan
shall qualify as an "Employee Stock Purchase Plan" under Section 423 of the
Internal Revenue Code of 1986, as amended, and shall be construed in a manner
consistent with the requirements of said Section 423 and the regulations
thereunder.

2. PURPOSE. The Plan is intended to encourage stock ownership by employees of
the Company and any of its Subsidiaries to which the Company and such respective
Subsidiaries by action of their Boards of Directors shall make this Plan
applicable. The Plan is further intended as an incentive to them to remain in
employment, improve operations, increase profits, and contribute more
significantly to the Company's success, and to permit the Company to compete
with other corporations offering similar plans in obtaining and retaining the
services of competent employees.

3. ADMINISTRATION.

                  (a) The Plan shall be administered by a stock purchase
         committee (hereinafter referred to as the "Committee"), consisting of
         two or more directors or employees of the Company, as designated by the
         Board of Directors of the Company (hereinafter referred to as the
         "Board of Directors"). The Board of Directors shall fill all vacancies
         in the Committee and may remove any member of the Committee at any
         time, with or without cause.

                  (b) Unless the Board of Directors limits the authority
         delegated to the Committee in its appointment, the Committee shall be
         vested with full authority to make, administer, and interpret such
         rules and regulations as it deems necessary to administer the Plan. For
         all purposes of this Plan other than this Paragraph 3(b), references to
         the Committee shall also refer to the Board of Directors.


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                  (c) The Committee shall select its own chairman and hold its
         meetings at such times and places as it may determine. All
         determinations of the Committee shall be made by a majority of its
         members. Any decision which is made in writing and signed by a majority
         of the members of the Committee shall be effective as fully as though
         made by a majority vote at a meeting duly called and held.

                  (d) The determinations of the Committee shall be made in
         accordance with its judgment as to the best interests of the Company,
         its employees and its shareholders and in accordance with the purposes
         of the Plan; provided, however, that the provisions of the Plan shall
         be construed in a manner consistent with the requirements of Section
         423 of the Internal Revenue Code, as amended. Such determinations shall
         be binding upon the Company and the participants in the Plan unless
         otherwise determined by the Board of Directors.

                  (e) The Company shall pay all expenses of administering the
         Plan. No member of the Board of Directors or the Committee shall be
         liable for any action or determination made in good faith with respect
         to the Plan or any option granted under it. The Company shall indemnify
         each member of the Committee against any and all claims, loss, damages,
         expenses (including counsel fees approved by the Committee), and
         liability (including any amounts paid in settlement with the
         Committee's approval) arising from any loss or damage or depreciation
         which may result in connection with the execution of his or her duties
         or the exercise of his or her discretion, or from any other action or
         failure to act hereunder, except when the same is judicially determined
         to be due to gross negligence or willful misconduct of such member.

4. DURATION AND PHASES OF THE PLAN.

                  (a) The Plan will commence on October 1, 2001 (the "Effective
         Date") and will terminate September 30, 2010, except that any Phase
         commenced prior to such termination shall, if necessary, be allowed to
         continue beyond such termination until completion. Notwithstanding the
         foregoing and except as provided at the end of this sentence, this Plan
         shall be considered of no force or effect and any options granted shall
         be considered null and void unless the holders of a majority of all of
         the issued and outstanding shares of the common stock of the Company
         approve the Plan within twelve (12) months after the date of its
         adoption by the Board of Directors; provided, however, if prior to
         receipt of such shareholder approval the Board of Directors accelerates
         the Termination Date of any Phase pursuant to Section 4(c), shareholder
         approval will not be required and this Plan and all options granted
         hereunder shall remain in full force and effect.. The Plan year shall
         be the same as the Company's fiscal year, ending each December 31.

                  (b) The Plan shall be carried out in one or more Phases, each
         Phase being for a period of three months, or such shorter or longer
         period of time (not to exceed 27 months) as may be determined by the
         Committee prior to the commencement of a Phase. The existence and date
         of commencement of a Phase (the "Commencement Date") shall be
         determined by the Committee and shall terminate on a date (the
         "Termination Date") determined by the Committee consistent with the
         limitation specified above, provided that the commencement of the first
         Phase shall be within twelve months before or after the date of
         approval of the Plan by the shareholders of the Company. In the event


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         all of the stock reserved for grant of options hereunder is issued
         pursuant to the terms hereof prior to the commencement of one or more
         Phases scheduled by the Committee or the number of shares remaining is
         so small, in the opinion of the Committee, as to render administration
         of any succeeding Phase impracticable, such Phase or Phases shall be
         canceled. Phases shall be numbered successively as Phase 1, Phase 2,
         Phase 3, etc.

                  (c) The Board of Directors may elect to accelerate the
         Termination Date of any Phase effective on the date specified by the
         Board of Directors in the event of (i) any consolidation or merger of
         the Company in which the Company is not the continuing or surviving
         corporation or pursuant to which shares would be converted into cash,
         securities or other property, other than a merger of the Company in
         which shareholders immediately prior to the merger have the same
         proportionate ownership of stock in the surviving corporation
         immediately after the merger; or (ii) any sale, lease, exchange or
         other transfer (in one transaction or a series of related transactions)
         of all or substantially all of the assets of the Company. Subject to
         any required action by the shareholders, if the Company shall be
         involved in any merger or consolidation, in which it is not the
         surviving corporation, and if the Board of Directors does not
         accelerate the Termination Date of the Phase, each outstanding option
         shall pertain to and apply to the securities or other rights to which a
         holder of the number of shares subject to the option would have been
         entitled.

                  (d) A dissolution or liquidation of the Company shall cause
         each outstanding option to terminate, provided in such event that,
         immediately prior to such dissolution or liquidation, each Participant
         shall be repaid the payroll deductions credited to his account without
         interest.

5. ELIGIBILITY. All Employees, as defined in Paragraph 18 hereof who are
employed by the Company on the Commencement Date of a Phase and who have
completed at least 30 days of continuous employment service for the Company
prior to the Commencement Date of a Phase shall be eligible to participate in
such Phase ("Eligible Employees"). Any Employee who is a member of the Board of
Directors of the Company who satisfies the above requirements shall be eligible
to participate in the Plan.

6. PARTICIPATION.

                  (a) Participation in the Plan is voluntary. An Eligible
         Employee may elect to participate in the Plan, and thereby become a
         "Participant" in the Plan, by completing the enrollment form provided
         by the Company and delivering it to the Company or its designated
         representative at least ten days prior to the Commencement Date of that
         Phase. The first Commencement Date shall be October 1, 2001. Payroll
         deductions for a Participant shall commence on the first payday after
         the Commencement Date of the Phase and shall terminate on the last
         payday immediately prior to or coinciding with the Termination Date of
         that Phase unless sooner terminated by the Participant as provided in
         Paragraph 9 hereof. A Participant who ceases to be an eligible
         Employee, although still employed by the Company, thereupon shall be
         deemed to discontinue his or her participation in the Plan and shall
         have the rights provided in Section 9.

                  (b) All Eligible Employees who were participants in the final
         Purchase Period (as defined in the 1996 Plan) of the Company's 1996
         Employee Stock Purchase Plan shall automatically be enrolled in the
         first Phase under this Plan, unless such Participant withdraws from
         participation pursuant to Section 9. Once enrolled in the Plan, a
         Participant will continue to participate in the Plan until he or she
         ceases to be an Eligible Employee, withdraws from the Plan pursuant to


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         Section 9 or reaches the end of the Plan Period. A Participant who
         withdraws from the Plan pursuant to Section 9 may again become a
         Participant, if he or she is then an Eligible Employee, by proceeding
         as provided in Section 6(a) above. A Participant whose payroll
         deductions were discontinued because of Section 8(a)(iv)(A) will
         automatically resume participation at the beginning of the earliest
         Phase of the Plan ending in the next calendar year, if he or she is
         then an Eligible Employee.

7. PAYROLL DEDUCTIONS.

                  (a) Upon enrollment, a Participant shall elect to make
         contributions to the Plan by payroll deductions, in full dollar amounts
         and in amounts calculated to be as uniform as practicable throughout
         the Phase, in the aggregate amount not less than 1% nor in excess of
         10% of such Participant's Pay (as determined in accordance with
         Paragraph 18 hereof) for the term of the Phase or smaller percentage as
         may be determined by the Committee prior to the commencement of a
         Phase).

                  (b) In the event that the Participant's compensation for any
         pay period is terminated or reduced from the compensation rate for such
         a period as of the Commencement Date of the Phase for any reason so
         that the amount actually withheld on behalf of the Participant as of
         the Termination Date of the Phase is less than the amount anticipated
         to be withheld over the Phase as determined on the Commencement Date of
         the Phase, then the extent to which the Participant may exercise his
         option shall be based on the amount actually withheld on his behalf. In
         the event of a change in the pay period of any Participant, such as
         from bi-weekly to monthly, an appropriate adjustment shall be made to
         the deduction in each new pay period so as to ensure the deduction of
         the proper amount authorized by the Participant.

                  (c) A Participant may discontinue his participation in the
         Phase and terminate his payroll deduction authorized at such times as
         determined by the Committee and shall have the rights provided in
         Section 9. No change can be made during a Phase of the Plan which would
         either change the time or increase or decrease the rate of his payroll
         deductions.

                  (d) All payroll deductions made for Participants shall be
         credited to their respective accounts under the Plan. A Participant may
         not make any separate cash payments into such account.

8. Options.

                  (a) Grant of Option.

                           (i) A Participant who is employed by the Company as
                  of the Commencement Date of a Phase shall be granted an option
                  as of such date to purchase a number of shares of Company
                  common stock to be determined by dividing the total amount
                  credited to that Participant's account under Paragraph 7
                  hereof by the option price set forth in Paragraph 8(a)(ii)
                  hereof, subject to the limitations of Paragraph 8(a)(iv) and
                  Paragraph 10 hereof.


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                           (ii) The option price (rounded to the nearest whole
                  cent) for such shares of common stock shall be the lower of:

                                    A. Eighty-five percent (85%) of the Fair
                           Market Value of such shares of common stock on the
                           Commencement Date of the Phase; or

                                    B. Eighty-five percent (85%) of the Fair
                           Market Value of such shares of common stock on the
                           Termination Date of the Phase.

                           (iii) Stock options granted pursuant to the Plan may
                  be evidenced by agreements in such form as the Committee shall
                  approve, provided that all Employees shall have the same
                  rights and privileges and provided further that such options
                  shall comply with and be subject to the terms and conditions
                  set forth herein. The Committee may conclude that agreements
                  are not necessary.

                           (iv) Anything herein to the contrary notwithstanding,
                  no Employee shall be granted an option hereunder:

                                    A. Which permits his rights to purchase
                           stock under all employee stock purchase plans of the
                           Company, its Subsidiaries or its parent, if any, to
                           accrue at a rate which exceeds the lesser of
                           Twenty-Five Thousand Dollars ($25,000) of the Fair
                           Market Value of such stock (determined at the time
                           such option is granted) for each calendar year in
                           which such option is outstanding at any time or
                           20,000 shares per Phase under the Plan; or

                                    B. If immediately after the grant such
                           Employee would own and/or hold outstanding options to
                           purchase stock possessing five percent (5%) or more
                           of the total combined voting power or value of all
                           classes of stock of the Company, its parent, if any,
                           or of any subsidiary of the Company. For purposes of
                           determining stock ownership under this Paragraph, the
                           rules of Section 424(d) of the Internal Revenue Code,
                           as amended, shall apply.

                           (v) The grant of an option pursuant to this Plan
                  shall not affect in any way the right or power of the Company
                  to make adjustments, reclassifications, reorganizations or
                  changes of its capital or business structure or to merge or to
                  consolidate or to dissolve, liquidate or sell, or transfer all
                  or any part of its business or assets.

                  (b) EXERCISE OF OPTION.

                           (i) Unless a Participant gives written notice to the
                  Company pursuant to Paragraph 9 prior to the Termination Date
                  of a Phase, his option for the purchase of shares will be
                  exercised automatically for him as of such Termination Date
                  for the purchase of the number of full shares of Company
                  common stock which the accumulated payroll deductions in his
                  account at that time will purchase at the applicable option
                  price, but in no event shall the number of full shares be
                  greater than the number of full shares to which a Participant
                  would have been eligible to purchase under Section 8(a)(i),
                  and subject to the limitations set forth in Paragraph 10
                  hereof.


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                           (ii) The Company shall, in addition, return to the
                  Participant a cash payment equal to the balance, if any, in
                  his account which was not used for the purchase of common
                  stock, without interest, as promptly as practicable after the
                  Termination Date of any Phase.

                           (iii) The Committee may appoint a registered broker
                  dealer to act as agent for the Company in holding and
                  performing ministerial duties in connection with the Plan,
                  including, but not limited to, maintaining records of stock
                  ownership by Participants and holding stock in its own name
                  for the benefit of the Participants. No trust or escrow
                  arrangement shall be express or implied by the exercise of
                  such duties by the agent. A Participant may, at any time,
                  request of the agent that any shares allocated to the
                  Participant be registered in the name of the Participant or in
                  joint tenancy with the Participant, in which event the agent
                  shall issue a certificate for the whole number of shares in
                  the name of the Participant (and his joint tenant, if any) and
                  shall deliver to the Participant any cash for fractional
                  shares, based on the then Fair Market Value of the shares on
                  the date of issuance.

                  (c) DIVIDEND REINVESTMENT. Unless the Committee designates
         otherwise, and except as provided in this section, dividends on a
         Participant's shares will automatically be reinvested in additional
         shares of stock of the Company. If a Participant desires to receive
         dividends in the form of cash, he must request that a certificate for
         such shares be issued in the name of the Participant by filing an
         appropriate form with the Company. Any shares purchased through the
         reinvestment of dividends may be issued from the shares authorized
         under this Plan or purchased on the open market, as directed by the
         Committee. If the shares are purchased directly from the Company, the
         purchase price shall be the Fair Market Value of a share or the date
         such dividends are paid. Otherwise, the purchase price may be an
         average of shares purchased on the open market with the aggregate
         amount of dividends.

9. WITHDRAWAL OR TERMINATION OF PARTICIPATION.

                  (a) A Participant may, at any time prior to the Termination
         Date of a Phase, withdraw all payroll deductions then credited to his
         account by giving written notice to the Company. Promptly upon receipt
         of such notice of withdrawal, all payroll deductions credited to the
         Participant's account will be paid to him without interest accrued
         thereon and no further payroll deductions will be made during the
         Phase. In such event, the option granted the Participant under that
         Phase of the Plan shall lapse immediately. Partial withdrawals of
         payroll deductions hereunder may not be made.

                  (b) Notwithstanding the provisions of Section 9(a) above, if a
         Participant files reports pursuant to Section 16 of the Securities
         Exchange Act of 1934 (at the Commencement Date of a Phase or becomes
         obligated to file such reports during a Phase) then such a
         Participant's participation, including the ability to make changes and
         withdrawals, in a Phase and in the Plan shall be in accordance with
         Section 10b5-1 promulgated under the Securities Exchange Act of 1934.

                  (c) In the event of the death of a Participant, the person or
         persons specified in Paragraph 14 may give notice to the Company within
         sixty (60) days of the death of the Participant electing to purchase
         the number of full shares which the accumulated payroll deductions in


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         the account of such deceased Participant will purchase at the option
         price specified in Paragraph 8(a)(ii) and have the balance in the
         account distributed in cash without interest accrued thereon to the
         person or persons specified in Paragraph 14. If no such notice is
         received by the Company within said sixty (60) days, the accumulated
         payroll deductions will be distributed in full in cash without interest
         accrued thereon to the person or persons specified in Paragraph 14.

                  (d) Upon termination of Participant's employment for any
         reason other than death of the Participant, the payroll deductions
         credited to his account, without interest, shall be returned to him.

                  (e) The Committee shall be entitled to make such rules,
         regulations and determination as it deems appropriate under the Plan in
         respect of any leave of absence taken by or disability of any
         Participant. Without limiting the generality of the foregoing, the
         Committee shall be entitled to determine:

                           (i) whether or not any such leave of absence shall
                  constitute a termination of employment for purposes of the
                  Plan; and

                           (ii) the impact, of any, of any such leave of absence
                  on options under the Plan theretofore granted to any
                  Participant who takes such leave of absence.

                  (f) A Participant who discontinues his participation during a
         Phase shall not be permitted to recommence participation until the next
         Commencement Date. A Participant's withdrawal will not have any effect
         upon his eligibility to participate in any succeeding Phase of the Plan
         that commences after the next Commencement Date or in any similar plan
         which may hereafter be adopted by the Company.

10. STOCK RESERVED FOR OPTIONS.

                  (a) The maximum number of shares of the Company's common stock
         to be issued upon the exercise of options to be granted under the Plan
         shall be Two Hundred Fifty Thousand (250,000). Such shares may, at the
         election of the Board of Directors, be either shares authorized but not
         issued or shares acquired in the open market by the Company. Shares
         subject to the unexercised portion of any lapsed or expired option may
         again be subject to option under the Plan.

                  (b) If the total number of shares of the Company common stock
         for which options are to be granted for a given Phase as specified in
         Paragraph 8 exceeds the number of shares then remaining available under
         the Plan (after deduction of all shares for which options have been
         exercised or are then outstanding) and if the Committee does not elect
         to cancel such Phase pursuant to Paragraph 4, the Committee shall make
         a pro rata allocation of the shares remaining available in as uniform
         and equitable a manner as it shall consider practicable. In such event,
         the options to be granted and the payroll deductions to be made
         pursuant to the Plan which would otherwise be effected may, in the
         discretion of the Committee, be reduced accordingly. The Committee
         shall give written notice of such reduction to each Participant
         affected.


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                  (c) The Participant (or a joint tenant named pursuant to
         Paragraph 10(d) hereof) shall have no rights as a shareholder with
         respect to any shares subject to the Participant's option until the
         date of the issuance of a stock certificate evidencing such shares. No
         adjustment shall be made for dividends (ordinary or extraordinary,
         whether in cash, securities or other property), distributions or other
         rights for which the record date is prior to the date such stock
         certificate is actually issued, except as otherwise provided in
         Paragraph 12 hereof.

                  (d) The shares of the Company common stock to be delivered to
         a Participant pursuant to the exercise of an option under the Plan will
         be registered in the name of the Participant or, if the Participant so
         directs by written notice to the Committee prior to the Termination
         Date of that Phase of the Plan, in the names of the Participant and one
         other person the Participant may designate as his joint tenant with
         rights of survivorship, to the extent permitted by law.

11. AcCOUNTING AND USE OF FUNDS. Payroll deductions for each Participant shall
be credited to an account established for him under the Plan. Such account shall
be solely for bookkeeping purposes and no separate fund or trust shall be
established hereunder and the Company shall not be obligated to segregate such
funds. All funds from payroll deductions received or held by the Company under
the Plan may be used, without limitation, for any corporate purpose by the
Company.

12. ADJUSTMENT PROVISION.

                  (a) Subject to any required action by the shareholders of the
         Company, the number of shares covered by each outstanding option, and
         the price per share thereof in each such option, shall be
         proportionately adjusted for any increase or decrease in the number of
         issued shares of the Company common stock resulting from a subdivision
         or consolidation of shares or the payment of a share dividend (but only
         on the shares) or any other increase or decrease in the number of such
         shares effected without receipt of consideration by the Company.

                  (b) In the event of a change in the shares of the Company as
         presently constituted, which is limited to a change of all its
         authorized shares with par value into the same number of shares with a
         different par value or without par value, the shares resulting from any
         such change shall be deemed to be the shares within the meaning of this
         Plan.

                  (c) To the extent that the foregoing adjustments relate to
         shares or securities of the Company, such adjustments shall be made by
         the Committee, and its determination in that respect shall be final,
         binding and conclusive, provided that each option granted pursuant to
         this Plan shall not be adjusted in a manner that causes the option to
         fail to continue to qualify as an option issued pursuant to an
         "employee stock purchase plan" within the meaning of Section 423 of the
         Code.

                  (d) Except as hereinbefore expressly provided in this
         Paragraph 12, the optionee shall have no right by reason of any
         subdivision or consolidation of shares of any class or the payment of
         any stock dividend or any other increase or decrease in the number of
         shares of any class or by reason of any dissolution, liquidation,
         merger, or consolidation or spin-off of assets or stock of another
         corporation, and any issue by the Company of shares of any class, or
         securities convertible into shares of any class, shall not affect, and
         no adjustment by reason thereof shall be made with respect to, the
         number or price of shares subject to the option.


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13. NON-TRANSFERABILITY OF OPTIONS.

                  (a) Options granted under any Phase of the Plan shall not be
         transferable except under the laws of descent and distribution and
         shall be exercisable only by the Participant during his lifetime and
         after his death only by his beneficiary of the representative of his
         estate as provided in Paragraph 9(c) hereof.

                  (b) Neither payroll deductions credited to a Participant's
         account, nor any rights with regard to the exercise of an option or to
         receive common stock under any Phase of the Plan may be assigned,
         transferred, pledged or otherwise disposed of in any way by the
         Participant. Any such attempted assignment, transfer, pledge or other
         disposition shall be null and void and without effect, except that the
         Company may, at its option, treat such act as an election to withdraw
         funds in accordance with Paragraph 9.

14. DESIGNATION OF BENEFICIARY. A Participant may file a written designation of
a beneficiary who is to receive any cash to the Participant's credit without
interest thereon under any Phase of the Plan in the event of such Participant's
death prior to exercise of his option pursuant to Paragraph 9(b) hereof, or to
exercise his option and become entitled to any stock and/or cash upon such
exercise in the event of the Participant's death prior to exercise of the option
pursuant to Paragraph 9(b) hereof. The beneficiary designation may be changed by
the Participant at any time upon receipt of a written notice by the Company.

         Upon the death of a Participant and upon receipt by the Company of
proof deemed adequate by it of the identity and existence at the Participant's
death of a beneficiary validly designated under the Plan, the Company shall in
the event of the Participant's death, allow such beneficiary to exercise the
Participant's option pursuant to Paragraph 9(c) if such beneficiary is living on
the Termination Date of the Phase and deliver to such beneficiary the
appropriate stock and/or cash after exercise of the option. In the event there
is not validly designated beneficiary under the Plan who is living at the time
of the Participant's death or in the event the option lapses, the Company shall
deliver the cash credited to the account of the Participant without interest to
the executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed to the knowledge of the Company, it
may, in its discretion, deliver such cash to the spouse (or, if no surviving
spouse, to any one or more children of the Participant), or if no spouse or
child is known to the Company, then to such relatives of the Participant known
to the Company as would be entitled to such amounts, under the laws of intestacy
in the deceased Participant's domicile as though named as the designated
beneficiary hereunder. The Company will not be responsible for or be required to
give effect to the disposition of any cash or stock or the exercise of any
option in accordance with any will or other testamentary disposition made by
such Participant or in accordance with the provision of any law concerning
intestacy, or otherwise. No designated beneficiary shall, prior to the death of
a Participant by whom he has been designated, acquire any interest in any stock
or in any option or in the cash credited to the Participant under any Phase of
the Plan.

15. AMENDMENT AND TERMINATION. The Plan may be terminated at any time by the
Board of Directors provided that, except as permitted in Paragraph 4(c) with
respect to an acceleration of the Termination Date of any Phase, no such
termination will take effect with respect to any options then outstanding. Also,
the Board may, from time to time, amend the Plan as it may deem proper and in
the best interests of the Company or as may be necessary to comply with Section
423 of the Internal Revenue Code of 1986, as amended, or other applicable laws
or regulations; provided, however, that no such amendment shall, without prior


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approval of the shareholders of the Company (1) increase the total number of
shares for which options may be granted under the Plan (except as provided in
Paragraph 12 herein), (2) permit aggregate payroll deductions in excess of ten
percent (10%) of a Participant's compensation as of the Commencement Date of a
Phase, or (3) impair any outstanding option.

16. NOTICES. All notices or other communications in connection with the Plan or
any Phase thereof shall be in the form specified by the Committee and shall be
deemed to have been duly given when received by the Participant or his
designated personal representative or beneficiary or by the Company or its
designated representative, as the case may be.

17. PARTICIPATION OF SUBSIDIARIES. The Employees of any Subsidiary of the
Company, shall be entitled to participate in the Plan on the same basis as
Employees of the Company, unless the Board of Directors determines otherwise.
Effective as of the date of coverage of any Subsidiary, any references herein to
the "Company" shall be interpreted as referring to such Subsidiary as well as to
ONTRACK Data International, Inc.

         In the event that any Subsidiary which is covered under the Plan ceases
to be a Subsidiary of the Company, the employees of such Subsidiary shall be
considered to have terminated their employment for purposes of Paragraph 9
hereof as of the date such Subsidiary ceases to be such a Subsidiary.

18. DEFINITIONS.

                  (a) "Subsidiary" shall include any domestic corporation
         defined as a subsidiary of the Company in Section 424(f) of the
         Internal Revenue Code of 1986, as amended.

                  (b) "Employee" shall mean any employee, including an officer,
         of the Company who as of the day immediately preceding the Commencement
         Date of a Phase is customarily employed by the Company for more than
         twenty (20) hours per week and more than five (5) months in a calendar
         year.

                  (c) "Fair Market Value" of a share of stock of the Company
         shall be the last sale price, or if unavailable, the average of the
         closing bid and asked prices, of the stock on the applicable date or
         the nearest prior business day on which trading occurred on the
         exchange on which the stock is traded or on the Nasdaq Stock Market. If
         the common stock is not traded on any exchange or listed on the Nasdaq
         Stock Market, the Fair Market Value of a share of common stock of the
         Company shall be determined by the Committee for each valuation date in
         a manner acceptable under Section 423 of the Internal Revenue Code of
         1986, as amended.

                  (d) "Pay" is the regular pay for employment for each employee
         as annualized for a twelve (12) month period, including salary
         reduction contributions by the Participant under any plan of the
         Employer pursuant to Code ss.ss. 401(k) or 125, including overtime,
         commissions, bonuses, and vacation pay, to which has been added (a) any
         elective deferral amounts by which the Employee has had his or her
         current remuneration reduced for the purposes of funding a contribution
         to any plan sponsored by the Company and satisfying the requirements of
         section 401(k) of the Code and (b) any amounts by which the Employee's
         compensation has been reduced pursuant to a compensation reduction
         agreement between the Employee and the Company for the purpose of
         funding benefits through any cafeteria plan sponsored by the Company
         meeting the requirements of section 125 of the Code, determined during
         the applicable period of reference. There shall be excluded from "Pay"
         for the purposes of the Plan, whether or not reportable as income by


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         the Employee, expense reimbursements of all types, payments in lieu of
         expenses, the Company contributions to any qualified retirement plan or
         other program of deferred compensation (except as provided above), the
         Company contributions to Social Security or worker's compensation, the
         costs paid by the Company in connection with fringe benefits and
         relocation, including gross-ups, and any amounts accrued for the
         benefit of Employee, but not paid, during the period of reference.

19. MISCELLANEOUS.

                  (a) No Employment Rights. The Plan shall not, directly or
         indirectly, create any right for the benefit of any Employee or class
         of Employees to purchase any shares under the Plan, or create in any
         Employee or class of Employees any right with respect to continuation
         of employment by the Company, and it shall not be deemed to interfere
         in any way with the Company's right to terminate, or otherwise modify,
         an Employee's employment at any time.

                  (b) Effect of Plan. The provisions of the Plan shall, in
         accordance with its terms, be binding upon, and inure to the benefit
         of, all successors of each Employee participating in the Plan,
         including, without limitation, such Employee's estate and the
         executors, administrators or trustees thereof, heirs and legatees, and
         any receiver, trustee in bankruptcy, or representative of creditors of
         such Employee.

                  (c) Governing Law. The law of the State of Minnesota will
         govern all matters relating to this Plan except to the extent it is
         superseded by the laws of the United States.

                  (d) Registration and Qualification of Shares. The offering of
         the shares hereunder shall be subject to the effecting by the Company
         of any registration or qualification of the shares under any federal or
         state law or the obtaining of the consent or approval of any
         governmental regulatory body which the Company shall determine, in its
         sole discretion, is necessary or desirable as a condition to or in
         connection with, the offering or the issue or purchase of the shares
         covered thereby. The Company shall make every reasonable effort to
         effect such registration or qualification or to obtain such consent or
         approval.

                  (e) Plan Preconditions. Except as provided in Section 4(a),
         this Plan is expressly made subject to (i) the approval by shareholders
         of the Company, and (ii) at its election, the receipt by the Company
         from the Internal Revenue Service of a determination letter or ruling,
         in scope and content satisfactory to counsel, respecting the
         qualification of the Plan within the meaning of Section 423 of the
         Code. If the Plan is not so approved by the shareholders and if, at the
         election of the Company, the aforesaid determination letter or ruling
         from the Internal Revenue Service is not received on or before one year
         after this Plan's adoption by the Board of Directors, this Plan shall
         not come into effect. In such case, the accumulated payroll deductions
         credited to the account of each Participant shall forthwith be repaid
         to him without interest.

Approved by Board of Directors: September 27, 2001
Amended by Board of Directors: October 22, 2001
Approved by Stockholders: May __, 2002


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