EX-10.1 2005 Omnibus Equity Plan



 





Exhibit 10.1





DATATRAK INTERNATIONAL, INC.




2005 OMNIBUS EQUITY PLAN




ARTICLE 1




General Purpose of Plan; Definitions



     
1.1     Name and Purposes. The
name of this plan is the DATATRAK International, Inc. 2005
Omnibus Equity Plan. The purpose of this Plan is to enable
DATATRAK International, Inc. and its Affiliates to:
(i) attract and retain skilled and qualified officers,
employees and directors who are expected to contribute to the
Company’s success by providing long-term incentive
compensation opportunities competitive with those made available
by other companies; (ii) motivate participants to achieve
the long-term success and growth of the Company;
(iii) facilitate ownership of shares of the Company; and
(iv) align the interests of the participants with those of
the Company’s Shareholders.



     
1.2     Certain Definitions.
Unless the context otherwise indicates, the following words used
herein shall have the following meanings whenever used in this
instrument:






		
	 	     
    (a) “Affiliate” means any corporation,
    partnership, joint venture or other entity, directly or
    indirectly, through one or more intermediaries, controlling,
    controlled by, or under common control with the Company as
    determined by the Board of Directors in its discretion.
	 
	 	     
    (b) “Award” means any grant under this Plan of a
    Common Share, Stock Option, Stock Appreciation Right, Restricted
    Share, Restricted Share Unit or Performance Share to any Plan
    participant.
	 
	 	     
    (c) “Board of Directors” mean the Board of
    Directors of the Company, as constituted from time to time.
	 
	 	     
    (d) “Code” means the Internal Revenue Code of
    1986, as amended, and any lawful regulations or guidance
    promulgated thereunder. Whenever reference is made to a specific
    Internal Revenue Code section, such reference shall be deemed to
    be a reference to any successor Internal Revenue Code section or
    sections with the same or similar purpose.
	 
	 	     
    (e) “Committee” means the entity administering
    this Plan as provided in Section 2.1.
	 
	 	     
    (f) “Common Shares” mean the common shares,
    without par value, of the Company.
	 
	 	     
    (g) “Company” means DATATRAK International, Inc.,
    a corporation organized under the laws of the State of Ohio and,
    except for purposes of determining whether a Change in Control
    has occurred, any corporation or entity that is a successor to
    DATATRAK International, Inc. or substantially all of the assets
    of DATATRAK International, Inc. and that assumes the obligations
    of DATATRAK International, Inc. under this Plan by operation of
    law or otherwise.
	 
	 	     
    (h) “Date of Grant” means the date on which the
    Committee grants an Award.
	 
	 	     
    (i) “Director” means a member of the Board of
    Directors.
	 
	 	     
    (j) “Disability” means a medically determinable
    physical or mental impairment which can be expected to result in
    death or can be expected to last for a continuous period of not
    less than 12 months which: (i) renders a participant
    unable to engage in any substantial gainful activity; or
    (ii) results in a participant receiving income replacement
    benefits for at least 3 months under an accident and health
    plan sponsored by the Company or an Affiliate.
	 
	 	     
    (k) “Early Retirement” means a participant’s
    retirement from active employment or active directorship with
    the Company or an Affiliate on and after the later of attainment
    of age 62 or the completion of 20 years of service.



 







 






		
	 	     
    (l) “Eligible Director” is defined in
    Article 4.
	 
	 	     
    (m) “Exchange Act” means the Securities Exchange
    Act of 1934, as amended, and any lawful regulations or guidance
    promulgated thereunder.
	 
	 	     
    (n) “Exercise Price” means the purchase price of
    a Share pursuant to a Stock Option.
	 
	 	     
    (o) “Fair Market Value” means the last closing
    price of a Share as reported on The Nasdaq Stock Market, or, if
    applicable, on another national securities exchange on which the
    Common Shares are principally traded, on the date for which the
    determination of Fair Market Value is made, or, if there are no
    sales of Common Shares on such date, then on the most recent
    immediately preceding date on which there were any sales of
    Common Shares. If the Common Shares are not, or cease to be,
    traded on The Nasdaq Stock Market or another national securities
    exchange, the “Fair Market Value” of Common Shares
    shall be determined pursuant to a reasonable valuation method
    prescribed by the Committee. Notwithstanding the foregoing, as
    of any date, the “Fair Market Value” of Common Shares
    shall be determined in a manner consistent with Code
    Section 409A and the guidance then-existing thereunder. In
    addition, “Fair Market Value” with respect to ISOs and
    related SARs shall be determined in accordance with
    Section 6.2(f).
	 
	 	     
    (p) “Incentive Stock Option” and “ISO”
    mean a Stock Option that is identified as such and which meets
    the requirements of Section 422 of the Code.
	 
	 	     
    (q) “Non-Qualified Stock Option” and
    “NQSO” mean a Stock Option that: (i) is governed
    by Section 83 of the Code; and (ii) does not meet the
    requirements of Section 422 of the Code.
	 
	 	     
    (r) “Normal Retirement” means retirement from
    active employment or active directorship with the Company or an
    Affiliate on or after attainment of age 65.
	 
	 	     
    (s) “Outside Director” means a Director who meets
    the definitions of the terms “outside director” set
    forth in Section 162(m) of the Code, “independent
    director” set forth in The Nasdaq Stock Market, Inc. rules,
    and “non-employee director” set forth in
    Rule 16b-3, or any successor definitions adopted by the
    Internal Revenue Service, The Nasdaq Stock Market, Inc. and
    Securities and Exchange Commission, respectively, and similar
    requirements under any other applicable laws and regulations.
	 
	 	     
    (t) “Parent” means any corporation which
    qualifies as a “parent corporation” of the Company
    under Section 424(e) of the Code.
	 
	 	     
    (u) “Performance Shares” is defined in
    Article 9.
	 
	 	     
    (v) “Plan” means this DATATRAK International,
    Inc. 2005 Omnibus Equity Plan, as amended from time to time.
	 
	 	     
    (w) “Restricted Share Units” is defined in
    Article 8.
	 
	 	     
    (x) “Restricted Shares” is defined in
    Article 8.
	 
	 	     
    (y) “Retirement” means Normal Retirement or Early
    Retirement.
	 
	 	     
    (z) “Rule 16b-3” is defined in
    Article 17.
	 
	 	     
    (aa) “Section 16 Person” means a person
    subject to potential liability under Section 16(b) of the
    Exchange Act with respect to transactions involving equity
    securities of the Company.
	 
	 	     
    (bb) “Section 162(m) Person” means, for any
    taxable year, a person who is a “covered employee”
    within the meaning of Section 162(m)(3) of the Code.
	 
	 	     
    (cc) “Share” or “Shares” mean one or
    more of the Common Shares.
	 
	 	     
    (dd) “Shareholder” means an individual or entity
    that owns one or more Shares.
	 
	 	     
    (ee) “Stock Appreciation Rights” and
    “SARs” mean any right pursuant to an Award granted
    under Article 7.



 







 






		
	 	     
    (ff) “Stock Option” means any right to purchase a
    specified number of Shares at a specified price which is granted
    pursuant to Article 5 and may be an Incentive Stock Option
    or a Non-Qualified Stock Option.
	 
	 	     
    (gg) “Stock Power” means a power of attorney
    executed by a participant and delivered to the Company which
    authorizes the Company to transfer ownership of Restricted
    Shares, Performance Shares or Common Shares from the participant
    to the Company or a third party.
	 
	 	     
    (hh) “Subsidiary” means any corporation which
    qualifies as a “subsidiary corporation” of the Company
    under Section 424(f) of the Code.
	 
	 	     
    (ii) “Vested” means, with respect to a Common
    Share, when the Common Share has been awarded; with respect to a
    Stock Option, that the time has been reached when the option to
    purchase Shares first becomes exercisable; with respect to a
    Stock Appreciation Right, when the Stock Appreciation Right
    first becomes exercisable for payment; with respect to
    Restricted Shares, when the Shares are no longer subject to
    forfeiture and restrictions on transferability; with respect to
    Restricted Share Units and Performance Shares, when the units or
    Shares are no longer subject to forfeiture and are convertible
    to Shares. The words “Vest” and “Vesting”
    have meanings correlative to the foregoing.




ARTICLE 2




Administration



     
2.1.     Authority and Duties of the
Committee.



     
(a) The Plan shall be administered by a Committee of at
least three Directors who are appointed by the Board of
Directors. Unless otherwise determined by the Board of
Directors, the Compensation Committee shall serve as the
Committee, and all of the members of the Committee shall be
Outside Directors. Notwithstanding the requirement that the
Committee consist exclusively of Outside Directors, no action or
determination by the Committee or an individual then considered
to be an Outside Director shall be deemed void because a member
of the Committee or such individual fails to satisfy the
requirements for being an Outside Director, except to the extent
required by applicable law.



     
(b) The Committee has the power and authority to grant
Awards pursuant to the terms of this Plan to officers, employees
and Eligible Directors.



     
(c) The Committee has the sole and exclusive authority,
subject to any limitations specifically set forth in this Plan,
to:






		
	 	     
    (i) select the officers, employees and Eligible Directors
    to whom Awards are granted;
	 
	 	     
    (ii) determine the types of Awards granted and the timing
    of such Awards;
	 
	 	     
    (iii) determine the number of Shares to be covered by each
    Award granted hereunder;
	 
	 	     
    (iv) determine whether an Award is, or is intended to be,
    “performance-based compensation” within the meaning of
    Section 162(m) of the Code;
	 
	 	     
    (v) determine the other terms and conditions, not
    inconsistent with the terms of this Plan and any operative
    employment or other agreement, of any Award granted hereunder;
    such terms and conditions include, but are not limited to, the
    Exercise Price, the time or times when Options or Stock
    Appreciation Rights may be exercised (which may be based on
    performance objectives), any Vesting, acceleration or waiver of
    forfeiture restrictions, any performance criteria (including any
    performance criteria as described in Section 162(m)(4)(C)
    of the Code) applicable to an Award, and any restriction or
    limitation regarding any Option or Stock Appreciation Right or
    the Common Shares relating thereto, based in each case on such
    factors as the Committee, in its sole discretion, shall
    determine;
	 
	 	     
    (vi) determine whether any conditions or objectives related
    to Awards have been met, including any such determination
    required for compliance with Section 162(m) of the Code;



 







 






		
	 	     
    (vii) subsequently modify or waive any terms and conditions
    of Awards, not inconsistent with the terms of this Plan and any
    operative employment or other agreement;
	 
	 	     
    (viii) adopt, alter and repeal such administrative rules,
    guidelines and practices governing this Plan as it deems
    advisable from time to time;
	 
	 	     
    (ix) promulgate such administrative forms as they from time
    to time deem necessary or appropriate for administration of the
    Plan;
	 
	 	     
    (x) construe, interpret, administer and implement the terms
    and provisions of this Plan, any Award and any related
    agreements;
	 
	 	     
    (xi) correct any defect, supply any omission and reconcile
    any inconsistency in or between the Plan, any Award and any
    related agreements;
	 
	 	     
    (xii) prescribe any legends to be affixed to certificates
    representing Shares or other interests granted or issued under
    the Plan; and
	 
	 	     
    (xiii) otherwise supervise the administration of this Plan.



     
(d) The Committee shall confer with the Board of Directors
regarding the Committee’s intentions prior to making grants
under this Plan. Notwithstanding the foregoing, all decisions
made by the Committee pursuant to the provisions of this Plan
are final and binding on all persons, including the Company, its
Shareholders and participants, but may be made by their terms
subject to ratification or approval by, the Board of Directors,
another committee of the Board of Directors or Shareholders.



     
(e) The Company shall furnish the Committee with such
clerical and other assistance as is necessary for the
performance of the Committee’s duties under the Plan.



     
2.2     Delegation of Duties.
The Committee may delegate ministerial duties to any other
person or persons, and it may employ attorneys, consultants,
accountants or other professional advisers for purposes of plan
administration at the expense of the Company.



     
2.3     Limitation of Liability.
Members of the Board of Directors, members of the Committee and
Company employees who are their designees acting under this Plan
shall be fully protected in relying in good faith upon the
advice of counsel and shall incur no liability except for gross
or willful misconduct in the performance of their duties
hereunder.




ARTICLE 3




Stock Subject to Plan



     
3.1     Total Shares Limitation.
Subject to the provisions of this Article, the maximum number of
Shares that may be issued pursuant to Awards granted under this
Plan is 350,000, which may be treasury or authorized but
unissued Shares.



     
3.2     Other Limitations.






		
	 	     
    (a) ISO Limitations. The maximum number of Shares
    available with respect to all Stock Options (whether Incentive
    Stock Options or Non-Qualified Stock Options) granted under this
    Plan is 350,000 Shares.
	 
	 	     
    (b) Participant Limitation. The aggregate number of
    Shares underlying Awards granted under this Plan to any
    participant in any fiscal year (including but not limited to
    Awards of Options and SARs), regardless of whether such Awards
    are thereafter canceled, forfeited or terminated, shall not
    exceed 35,000 Shares. The foregoing annual limitation is
    intended to include the grant of all Awards, including but not
    limited to, Awards representing “performance-based
    compensation” as described in Section 162(m)(4)(C) of
    the Code.



 







 



     
3.3     Awards Not Exercised; Effect
of Receipt of Shares. If any outstanding Award, or portion
thereof, expires, or is terminated, canceled or forfeited, the
Shares that would otherwise be issuable with respect to the
unexercised portion of such expired, terminated, canceled or
forfeited Award shall be available for subsequent Awards under
this Plan. If the Exercise Price of an Award is paid in Shares,
the Shares received by the Company in connection therewith shall
not be added to the maximum aggregate number of Shares which may
be issued under Section 3.1.



     
3.4     Dilution and Other
Adjustments. In the event that the Committee determines that
any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, redesignation,
reclassification, merger, consolidation, liquidation, split-up,
reverse split, spin-off, combination, repurchase or exchange of
Shares or other securities of the Company, issuance of warrants
or other rights to purchase Shares or other securities of the
Company or other similar corporate transaction or event affects
the Shares such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under this Plan, then the Committee may, in such
manner as it deems equitable, adjust any or all of (i) the
number and type of Shares (or other securities or other
property) which thereafter may be made the subject of Awards,
(ii) the number and type of Shares (or other securities or
other property) subject to outstanding Awards, (iii) the
limitations set forth above and (iv) the purchase or
exercise price or any performance objective with respect to any
Award; provided, however, that the number of Shares or
other securities covered by any Award or to which such Award
relates is always a whole number. Notwithstanding the foregoing,
the foregoing adjustments shall be made in compliance with:
(i) Sections 422 and 424 of the Code with respect to
ISOs; (ii) Treasury Department
Regulation Section 1.424-1 (and any successor) with
respect to NQSOs, applied as if the NQSOs were ISOs;
(iii) Section 409A of the Code, to the extent
necessary to avoid its application or avoid adverse tax
consequences thereunder; and (iv) Section 162(m) of
the Code with respect to Awards granted to Section 162(m)
Persons that are intended to be “performance-based
compensation,” unless specifically determined otherwise by
the Committee.




ARTICLE 4




Participants



     
4.1     Eligibility. Officers,
all other active common law employees of the Company or any of
its Affiliates and Directors (each an “Eligible
Director”) who are selected by the Committee in its sole
discretion are eligible to participate in this Plan. (See
Article 14 and Article 18 with respect to the
Shareholder approval requirement.)



     
4.2     Plan Agreements. Awards
are contingent upon the participant’s execution of a
written agreement in a form prescribed by the Committee.
Execution of a plan agreement shall constitute the
participant’s irrevocable agreement to, and acceptance of,
the terms and conditions of the Award set forth in such
agreement and of the terms and conditions of the Plan applicable
to such Award. Plan agreements may differ from time to time and
from participant to participant.




ARTICLE 5




Stock Option Awards



     
5.1     Option Grant. Each Stock
Option granted under this Plan will be evidenced by minutes of a
meeting, or by a unanimous written consent without a meeting, of
the Committee and by a written agreement dated as of the Date of
Grant and executed by the Company and by the appropriate
participant.



     
5.2     Terms and Conditions of
Grants. Stock Options granted under this Plan are subject to
the following terms and conditions and may contain such
additional terms, conditions, restrictions and contingencies
with respect to exercisability and/or with respect to the Shares
acquired upon exercise as may be provided in the relevant
agreement evidencing the Stock Options, so long as such terms
and conditions are not



 







 




inconsistent with the terms of this Plan and any operative
employment or other agreement, as the Committee deems desirable:






		
	 	     
    (a) Exercise Price. Subject to Section 3.4, the
    Exercise Price will never be less than 100% of the Fair Market
    Value of the Shares on the Date of Grant. If a variable Exercise
    Price is specified at the time of grant, the Exercise Price may
    vary pursuant to a formula or other method established by the
    Committee; provided, however, that such formula or method
    will provide for a minimum Exercise Price equal to the Fair
    Market Value of the Shares on the Date of Grant. Except as
    otherwise provided in Section 3.4, no subsequent amendment
    of an outstanding Stock Option may reduce the Exercise Price to
    less than 100% of the Fair Market Value of the Shares on the
    Date of Grant. Nothing in this Section 5.2(a) shall be
    construed as limiting the Committee’s authority to grant
    premium price Stock Options which do not become exercisable
    until the Fair Market Value of the underlying Shares exceeds a
    specified percentage (e.g., 110%) of the Exercise Price;
    provided, however, that such percentage will never be
    less than 100%.
	 
	 	     
    (b) Option Term. Any unexercised portion of a Stock
    Option granted hereunder shall expire at the end of the stated
    term of the Stock Option. The Committee shall determine the term
    of each Stock Option at the time of grant, which term shall not
    exceed 10 years from the Date of Grant. The Committee may
    extend the term of a Stock Option, in its discretion, but not
    beyond the date immediately prior to the tenth anniversary of
    the original Date of Grant. If a definite term is not specified
    by the Committee at the time of grant, then the term is deemed
    to be 10 years. Nothing in this Section 5.2(b) shall
    be construed as limiting the Committee’s authority to grant
    Stock Options with a term shorter than 10 years.
	 
	 	     
    (c) Vesting. Stock Options, or portions thereof, are
    exercisable at such time or times as determined by the Committee
    in its discretion at or after grant. If the Committee provides
    that any Stock Option becomes Vested over a period of time, in
    full or in installments, the Committee may waive or accelerate
    such Vesting provisions at any time.
	 
	 	     
    (d) Method of Exercise. Vested portions of any Stock
    Option may be exercised in whole or in part at any time during
    the option term by giving written notice of exercise to the
    Company specifying the number of Shares to be purchased. The
    notice must be given by or on behalf of a person entitled to
    exercise the Stock Option, accompanied by payment in full of the
    Exercise Price, along with any projected tax withholding
    pursuant to Article 16. Subject to the approval of the
    Committee, the Exercise Price may be paid:






		
	 	     
    (i) in cash in any manner satisfactory to the Committee;
	 
	 	     
    (ii) by tendering (by either actual delivery of Shares or
    by attestation) unrestricted Shares that are owned on the date
    of exercise by the person entitled to exercise the Stock Option
    having an aggregate Fair Market Value on the date of exercise
    equal to the Exercise Price applicable to such Stock Option
    exercise, and, with respect to the exercise of NQSOs, including
    Restricted Shares;
	 
	 	     
    (iii) by a combination of cash and unrestricted Shares that
    are owned on the date of exercise by the person entitled to
    exercise the Stock Option; and
	 
	 	     
    (iv) by another method permitted by law and affirmatively
    approved by the Committee which assures full and immediate
    payment or satisfaction of the Exercise Price.
	 
	 	     
    The Committee may withhold its approval for any method of
    payment for any reason, in its sole discretion, including but
    not limited to concerns that the proposed method of payment will
    result in adverse financial accounting treatment, adverse tax
    treatment for the Company or a participant or a violation of the
    Sarbanes-Oxley Act of 2002, as amended from time to time, and
    related regulations and guidance.
	 
	 	     
    If the Exercise Price of an NQSO is paid by tendering Restricted
    Shares, then the Shares received upon the exercise will contain
    identical restrictions as the Restricted Shares so tendered.



 







 


		
	 	
    Except as otherwise provided by law and in the Committee’s
    sole discretion, projected tax withholding may be paid only by
    cash or through a same day sale transaction.







		
	 	     
    (e) Issuance of Shares. The Company will issue or
    cause to be issued Shares as soon as practicable upon exercise
    of the Option. No Shares will be issued until full payment has
    been made. 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 will exist with respect to the
    Shares, notwithstanding the exercise of the Option.
	 
	 	     
    (f) Limitation on Gain. Nothing in this
    Article 5 shall be construed as prohibiting the Committee
    from granting Stock Options subject to a limit on the gain that
    may be realized upon exercise of such Stock Options. Any such
    limit shall be explicitly provided for in the relevant plan
    agreement.
	 
	 	     
    (g) Form. Unless the grant of a Stock Option is
    designated at the time of grant as an ISO, it is deemed to be an
    NQSO. ISOs are subject to the additional terms and conditions in
    Article 6.
	 
	 	     
    (h) Special Limitations on Stock Option Awards.
    Unless an Award agreement approved by the Committee provides
    otherwise, Stock Options awarded under this Plan are intended to
    meet the requirements for exclusion from coverage under Code
    Section 409A and all Stock Option Awards shall be construed
    and administered accordingly.



     
5.3     Termination of Grants Prior
to Expiration. Unless otherwise provided in an employment or
other agreement entered into between the optionee and the
Company and approved by the Committee, either before or after
the Date of Grant, and subject to Article 6 with respect to
ISOs, the following early termination provisions apply to all
Stock Options:






		
	 	     
    (a) Termination by Death. If an optionee’s
    employment or directorship with the Company or its Affiliates
    terminates by reason of his or her death, all Stock Options held
    by such optionee will immediately become Vested, but thereafter
    may only be exercised (by the legal representative of the
    optionee’s estate, or by the legatee or heir of the
    optionee pursuant to a will or the laws of descent and
    distribution) for a period of one year (or such other period as
    the Committee may specify at or after the time of grant) from
    the date of such death, or until the expiration of the original
    term of the Stock Option, whichever period is shorter.
	 
	 	     
    (b) Termination by Reason of Disability. If an
    optionee’s employment or directorship with the Company or
    its Affiliates terminates by reason of his or her Disability,
    all Stock Options held by such optionee will immediately become
    Vested, but thereafter may only be exercised for a period of one
    year (or such other period as the Committee may specify at or
    after the time of grant) from the date of such termination of
    employment, or until the expiration of the original term of the
    Stock Option, whichever period is shorter. If the optionee dies
    within such one year period (or such other period as
    applicable), any unexercised Stock Option held by such optionee
    will thereafter be exercisable by the legal representative of
    the optionee’s estate, or by the legatee or heir of the
    optionee pursuant to a will or the laws of descent and
    distribution, for the greater of the remainder of the one year
    period (or other period as applicable) or for a period of
    12 months from the date of such death, but in no event
    shall any portion of the Stock Option be exercisable after its
    original stated expiration date.
	 
	 	     
    (c) Termination by Reason of Retirement. If an
    optionee’s employment or directorship with the Company or
    its Affiliates terminates by reason of his or her Retirement,
    all Stock Options held by such optionee immediately become
    Vested but thereafter may only be exercised for a period of two
    years (or such other period as the Committee may specify at or
    after the time of grant) from the date of such Retirement, or
    until the expiration of the original term of the Stock Option,
    whichever period is shorter. If the optionee dies within such
    two year period (or such other period as applicable), any
    unexercised Stock Option held by such optionee will thereafter
    be exercisable by the legal representative of the
    optionee’s estate, or by the legatee or heir of the
    optionee pursuant to a will or the laws of descent and
    distribution, for the greater of the remainder of the two year
    period (or such other period as applicable)



 







 


		
	 	
    or for a period of 12 months from the date of such death,
    but in no event shall any portion of the Stock Option be
    exercisable after its original stated expiration date.
	 
	 	     
    (d) Other Terminations. If an optionee’s
    employment or directorship with the Company or its Affiliates is
    terminated for reasons other than his or her death, Disability
    or Retirement, all Stock Options (or portions thereof) which
    have not been exercised, whether Vested or not, are
    automatically forfeited immediately upon termination, except as
    otherwise provided in the relevant agreement evidencing the
    Stock Options.





ARTICLE 6




Special Rules Applicable to Incentive Stock Options



     
6.1     Eligibility.
Notwithstanding any other provision of this Plan to the
contrary, an ISO may only be granted to full or part-time
employees (including officers and Directors who are also
employees) of the Company or of an Affiliate, provided that the
Affiliate is a Parent or Subsidiary.



     
6.2     Special ISO Rules.






		
	 	     
    (a) Term. No ISO may be exercisable on or after the
    tenth anniversary of the Date of Grant, and no ISO may be
    granted under this Plan on or after the tenth anniversary of the
    effective date of this Plan. (See Article 18.)
	 
	 	     
    (b) Ten Percent Shareholder. No grantee may receive
    an ISO under this Plan if such grantee, at the time the Award is
    granted, owns (after application of the rules contained in
    Section 424(d) of the Code) equity securities possessing
    more than 10% of the total combined voting power of all classes
    of equity securities of the Company, its Parent or any
    Subsidiary, unless (i) the option price for such ISO is at
    least 110% of the Fair Market Value of the Shares as of the Date
    of Grant, and (ii) such ISO is not exercisable on or after
    the fifth anniversary of the Date of Grant.
	 
	 	     
    (c) Limitation on Grants. The aggregate Fair Market
    Value (determined with respect to each ISO at the time of grant)
    of the Shares with respect to which ISOs are exercisable for the
    first time by a grantee during any calendar year (under this
    Plan or any other plan adopted by the Company or its Parent or
    its Subsidiary) shall not exceed $100,000. If such aggregate
    Fair Market Value shall exceed $100,000, such number of ISOs as
    shall have an aggregate Fair Market Value equal to the amount in
    excess of $100,000 shall be treated as NQSOs.
	 
	 	     
    (d) Non-Transferability. Notwithstanding any other
    provision herein to the contrary, no ISO granted hereunder (and,
    if applicable, related Stock Appreciation Right) may be
    transferred except by will or by the laws of descent and
    distribution, nor may such ISO (or related Stock Appreciation
    Right) be exercisable during a grantee’s lifetime other
    than by him (or his guardian or legal representative to the
    extent permitted by applicable law).
	 
	 	     
    (e) Termination of Employment. No ISO may be
    exercised more than three months following termination of
    employment for any reason (including retirement) other than
    death or disability, nor more than one year following
    termination of employment for the reason of death or disability
    (as defined in Section 422 of the Code), or such option
    will no longer qualify as an ISO and shall thereafter be, and
    receive the tax treatment applicable to, an NQSO. For this
    purpose, a termination of employment is cessation of employment
    such that no employment relationship exists between the
    participant and the Company, a Parent or a Subsidiary.
	 
	 	     
    (f) Fair Market Value. For purposes of any ISO
    granted hereunder (or, if applicable, related Stock Appreciation
    Right), the Fair Market Value of Shares shall be determined in
    the manner required by Section 422 of the Code.



     
6.3     Subject to Code
Amendments. The foregoing limitations are designed to comply
with the requirements of Section 422 of the Code and shall
be automatically amended or modified to comply with amendments
or modifications to Section 422 of the Code. Any ISO which
fails to comply with Section 422 of



 







 




the Code is automatically treated as an NQSO appropriately
granted under this Plan provided it otherwise meets the
Plan’s requirements for NQSOs.




ARTICLE 7




Stock Appreciation Rights



     
7.1     SAR Grant and Agreement.
Stock Appreciation Rights may be granted under this Plan, either
independently or in conjunction with the grant of a Stock
Option. Each SAR granted under this Plan will be evidenced by
minutes of a meeting, or by a unanimous written consent without
a meeting, of the Committee and by a written agreement dated as
of the Date of Grant and executed by the Company and by the
appropriate participant.



     
7.2     SARs Granted in Conjunction
with Option. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under
this Plan, either at the same time or after the grant of the
Stock Option, and will be subject to the following terms and
conditions:






		
	 	     
    (a) Term. Each Stock Appreciation Right, or
    applicable portion thereof, granted with respect to a given
    Stock Option or portion thereof terminates and is no longer
    exercisable upon the termination or exercise of the related
    Stock Option, or applicable portion thereof.
	 
	 	     
    (b) Exercisability. A Stock Appreciation Right is
    exercisable only at such time or times and to the extent that
    the Stock Option to which it relates is Vested and exercisable
    in accordance with the provisions of Article 5 or otherwise
    as the Committee may determine at or after the time of grant.
	 
	 	     
    (c) Method of Exercise. A Stock Appreciation Right
    may be exercised by the surrender of the applicable portion of
    the related Stock Option. Stock Options which have been so
    surrendered, in whole or in part, are no longer exercisable to
    the extent the related Stock Appreciation Rights have been
    exercised and are deemed to have been exercised for the purpose
    of the limitation set forth in Article 3 on the number of
    Shares to be issued under this Plan, but only to the extent of
    the number of Shares actually issued under the Stock
    Appreciation Right at the time of exercise. Upon the exercise of
    a Stock Appreciation Right, subject to satisfaction of projected
    tax withholding requirements pursuant to Article 16, the
    holder of the Stock Appreciation Right is entitled to receive
    Shares equal in value to the excess of the Fair Market Value of
    a Share on the exercise date over the Exercise Price per Share
    specified in the related Stock Option, multiplied by the number
    of Shares in respect of which the Stock Appreciation Right is
    exercised. At any time the Exercise Price per Share of the
    related Stock Option exceeds the Fair Market Value of
    one Share, the holder of the Stock Appreciation Right shall not
    be permitted to exercise such right.



     
7.3     Independent SARs. Stock
Appreciation Rights may be granted without related Stock
Options, and independent Stock Appreciation Rights will be
subject to the following terms and conditions:






		
	 	     
    (a) Term. Any unexercised portion of an independent
    Stock Appreciation Right granted hereunder shall expire at the
    end of the stated term of the Stock Appreciation Right. The
    Committee shall determine the term of each Stock Appreciation
    Right at the time of grant, which term shall not exceed ten
    years from the Date of Grant. The Committee may extend the term
    of a Stock Appreciation Right, in its discretion, but not beyond
    the date immediately prior to the tenth anniversary of the
    original Date of Grant. If a definite term is not specified by
    the Committee at the time of grant, then the term is deemed to
    be ten years.
	 
	 	     
    (b) Exercisability. A Stock Appreciation Right is
    exercisable, in whole or in part, at such time or times as
    determined by the Committee at or after the time of grant.
	 
	 	     
    (c) Method of Exercise. A Stock Appreciation Right
    may be exercised in whole or in part during the term by giving
    written notice of exercise to the Company specifying the number
    of Shares in respect of which the Stock Appreciation Right is
    being exercised. The notice must be given by or on behalf of a
    person entitled to exercise the Stock Appreciation Right. Upon
    the exercise of a Stock Appreciation



 







 


		
	 	
    Right, subject to satisfaction of projected tax withholding
    requirements pursuant to Article 16, the holder of the
    Stock Appreciation Right is entitled to receive Shares equal in
    value to the excess of the Fair Market Value of a Share on the
    exercise date over the Fair Market Value of a Share on the Date
    of Grant multiplied by the number of Stock Appreciation Rights
    being exercised. At any time the Fair Market Value of a Share on
    a proposed exercise date does not exceed the Fair Market Value
    of a Share on the Date of Grant, the holder of the Stock
    Appreciation Right shall not be permitted to exercise such right.
	 
	 	     
    (d) Early Termination Prior to Expiration. Unless
    otherwise provided in an employment or other agreement entered
    into between the holder of the Stock Appreciation Right and the
    Company and approved by the Committee, either before or after
    the Date of Grant, the early termination provisions set forth in
    Section 5.3 as applied to Non-Qualified Stock Options will
    apply to independent Stock Appreciation Rights.




     
7.4     Other Terms and Conditions
of SAR Grants. Stock Appreciation Rights are subject to such
other terms and conditions, not inconsistent with the provisions
of this Plan and any operative employment or other agreement, as
are determined from time to time by the Committee.



     
7.5     Special Limitations on SAR
Awards. Unless an Award agreement approved by the Committee
provides otherwise, Stock Appreciation Rights awarded under this
Plan are intended to meet the requirements for exclusion from
coverage under Code Section 409A and all Stock Appreciation
Rights Awards shall be construed and administered accordingly.




ARTICLE 8




Restricted Share and Restricted Share Unit Awards



     
8.1     Restricted Share Grants and
Agreements. Restricted Share Awards consist of Shares which
are issued by the Company to a participant at no cost or at a
purchase price determined by the Committee which may be below
their Fair Market Value but which are subject to forfeiture and
restrictions on their sale or other transfer by the participant.
Each Restricted Share Award granted under this Plan will be
evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by a written
agreement dated as of the Date of Grant and executed by the
Company and by the participant. The timing of Restricted Share
Awards and the number of Shares to be issued (subject to
Section 3.2) are to be determined by the Committee in its
discretion. By accepting a grant of Restricted Shares, the
participant consents to any projected tax withholding as
provided in Article 16.



     
8.2     Terms and Conditions of
Restricted Share Grants. Restricted Shares granted under
this Plan are subject to the following terms and conditions,
which, except as otherwise provided herein, need not be the same
for each participant, and may contain such additional terms,
conditions, restrictions and contingencies not inconsistent with
the terms of this Plan and any operative employment or other
agreement, as the Committee deems desirable:






		
	 	     
    (a) Purchase Price. The Committee shall determine
    the prices, if any, at which Restricted Shares are to be issued
    to a participant, which may vary from time to time and from
    participant to participant and which may be below the Fair
    Market Value of such Restricted Shares at the Date of Grant.
	 
	 	     
    (b) Restrictions. All Restricted Shares issued under
    this Plan will be subject to such restrictions as the Committee
    may determine, which may include, without limitation, the
    following:






		
	 	     
    (i) a prohibition against the sale, transfer, pledge or
    other encumbrance of the Restricted Shares, such prohibition to
    lapse at such time or times as the Committee determines (whether
    in installments, at the time of the death, Disability or
    Retirement of the holder of such shares, or otherwise, but
    subject to the Change in Control provisions in Article 12);
	 
	 	     
    (ii) a requirement that the participant forfeit such
    Restricted Shares in the event of termination of the
    participant’s employment or directorship with the Company
    or its Affiliates prior to Vesting;



 







 






		
	 	     
    (iii) a prohibition against employment or retention of the
    participant by any competitor of the Company or its Affiliates,
    or against dissemination by the participant of any secret or
    confidential information belonging to the Company or an
    Affiliate;
	 
	 	     
    (iv) any applicable requirements arising under the
    Securities Act of 1933, as amended, other securities laws, the
    rules and regulations of The Nasdaq Stock Market or any other
    stock exchange or transaction reporting system upon which such
    Restricted Shares are then listed or quoted and any state laws,
    rules and regulations, including “blue sky”
    laws; and
	 
	 	     
    (v) such additional restrictions as are required to avoid
    adverse tax consequences under Code Section 409A.




The Committee may at any time waive such restrictions or
accelerate the date or dates on which the restrictions will
lapse. However, if the Committee determines that restrictions
lapse upon the attainment of specified performance objectives,
then the provisions of Sections 9.2 and 9.3 will apply. If
the written agreement governing an Award to a
Section 162(m) Person provides that such Award is intended
to be “performance-based compensation,” the provisions
of Section 9.4(d) will also apply.






		
	 	     
    (c) Delivery of Shares. Restricted Shares will be
    registered in the name of the participant and deposited,
    together with a Stock Power, with the Company. Each such
    certificate will bear a legend in substantially the following
    form:






		
	 	
    “The transferability of this certificate and the Common
    Shares represented by it are subject to the terms and conditions
    (including conditions of forfeiture) contained in the DATATRAK
    International, Inc. 2005 Omnibus Equity Plan and an agreement
    entered into between the registered owner and the Company. A
    copy of this Plan and agreement are on file in the office of the
    Secretary of the Company.”
	 
	 	
    At the end of any time period during which the Restricted Shares
    are subject to forfeiture and restrictions on transfer, and
    after any projected tax withholding, such Shares will be
    delivered free of all restrictions (except for any pursuant to
    Section 15.2) to the participant or other appropriate
    person and with the foregoing legend removed.






		
	 	     
    (d) Forfeiture of Shares. If a participant who holds
    Restricted Shares fails to satisfy the restrictions, Vesting
    requirements and other conditions relating to the Restricted
    Shares prior to the lapse, satisfaction or waiver of such
    restrictions and conditions, except as may otherwise be
    determined by the Committee, the participant shall forfeit the
    Shares and transfer them back to the Company in exchange for a
    refund of any consideration paid by the participant or such
    other amount which may be specifically set forth in the Award
    agreement. A participant shall execute and deliver to the
    Company one or more Stock Powers with respect to Restricted
    Shares granted to such participant.
	 
	 	     
    (e) Voting and Other Rights. Except as otherwise
    required for compliance with Section 162(m) of the Code and
    the terms of the applicable Restricted Share Agreement, during
    any period in which Restricted Shares are subject to forfeiture
    and restrictions on transfer, the participant holding such
    Restricted Shares shall have all the rights of a Shareholder
    with respect to such Shares, including, without limitation, the
    right to vote such Shares and the right to receive any dividends
    paid with respect to such Shares.



     
8.3     Restricted Share Unit Awards
and Agreements. Restricted Share Unit Awards consist of
Shares that will be issued to a participant at a future time or
times at no cost or at a purchase price determined by the
Committee which may be below their Fair Market Value if
continued employment, continued directorship and/or other terms
and conditions specified by the Committee are satisfied. Each
Restricted Share Unit Award granted under this Plan will be
evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by a written
agreement dated as of the Date of Grant and executed by the
Company and the Plan participant. The timing of Restricted Share
Unit Awards and the number of Restricted Share Units to be
awarded (subject to Section 3.2) are to be determined by
the Committee in its



 







 




sole discretion. By accepting a Restricted Share Unit Award, the
participant agrees to remit to the Company when due any
projected tax withholding as provided in Article 16.



     
8.4     Terms and Conditions of
Restricted Share Unit Awards. Restricted Share Unit Awards
are subject to the following terms and conditions, which, except
as otherwise provided herein, need not be the same for each
participant, and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms
of this Plan and any operative employment or other agreement, as
the Committee deems desirable:






		
	 	     
    (a) Purchase Price. The Committee shall determine
    the prices, if any, at which Shares are to be issued to a
    participant after Vesting of Restricted Share Units, which may
    vary from time to time and among participants and which may be
    below the Fair Market Value of Shares at the Date of Grant.
	 
	 	     
    (b) Restrictions. All Restricted Share Units awarded
    under this Plan will be subject to such restrictions as the
    Committee may determine, which may include, without limitation,
    the following:






		
	 	     
    (i) a prohibition against the sale, transfer, pledge or
    other encumbrance of the Restricted Share Unit;
	 
	 	     
    (ii) a requirement that the participant forfeit such
    Restricted Share Unit in the event of termination of the
    participant’s employment or directorship with the Company
    or its Affiliates prior to Vesting;
	 
	 	     
    (iii) a prohibition against employment of the participant
    by, or provision of services by the participant to, any
    competitor of the Company or its Affiliates, or against
    dissemination by the participant of any secret or confidential
    information belonging to the Company or an Affiliate;
	 
	 	     
    (iv) any applicable requirements arising under the
    Securities Act of 1933, as amended, other securities laws, the
    rules and regulations of The Nasdaq Stock Market or any other
    stock exchange or transaction reporting system upon which the
    Common Shares are then listed or quoted and any state laws,
    rules and interpretations, including “blue sky”
    laws; and
	 
	 	     
    (v) such additional restrictions as are required to avoid
    adverse tax consequences under Code Section 409A.






		
	 	
    The Committee may at any time waive such restrictions or
    accelerate the date or dates on which the restrictions will
    lapse.






		
	 	     
    (c) Performance-Based Restrictions. The Committee
    may, in its sole discretion, provide restrictions that lapse
    upon the attainment of specified performance objectives. In such
    case, the provisions of Sections 9.2 and 9.3 will apply
    (including, but not limited to, the enumerated performance
    objectives). If the written agreement governing an Award to a
    Section 162(m) Person provides that such Award is intended
    to be “performance-based compensation,” the provisions
    of Section 9.4(d) will also apply.
	 
	 	     
    (d) Voting and Other Rights. A participant holding
    Restricted Share Units shall not be deemed to be a Shareholder
    solely because of such units. Such participant shall have no
    rights of a Shareholder with respect to such units; provided,
    however, that an Award agreement may provide for payment of
    an amount of money (or Shares with a Fair Market Value
    equivalent to such amount) equal to the dividends paid from time
    to time on the number of Common Shares that would become payable
    upon vesting of a Restricted Share Unit Award.
	 
	 	     
    (e) Lapse of Restrictions. If a participant who
    holds Restricted Share Units satisfies the restrictions and
    other conditions relating to the Restricted Share Units prior to
    the lapse or waiver of such restrictions and conditions, the
    Restricted Share Units shall be converted to, or replaced with,
    Shares which are free of all restrictions except for any
    restrictions pursuant to Section 15.2.
	 
	 	     
    (f) Forfeiture of Restricted Share Units. If a
    participant who holds Restricted Share Units fails to satisfy
    the restrictions, Vesting requirements and other conditions
    relating to the Restricted Share Units



 







 


		
	 	
    prior to the lapse, satisfaction or waiver of such restrictions
    and conditions, except as may otherwise be determined by the
    Committee, the participant shall forfeit the Restricted Share
    Units.
	 
	 	     
    (g) Termination. A Restricted Share Unit Award or
    unearned portion thereof will terminate without the issuance of
    Shares on the termination date specified on the Date of Grant or
    upon the termination of employment or directorship of the
    participant during the time period or periods specified by the
    Committee during which any performance objectives must be met
    (the “Performance Period”). If a participant’s
    employment or directorship with the Company or its Affiliates
    terminates by reason of his or her death, Disability or
    Retirement, the Committee in its discretion at or after the Date
    of Grant may determine that the participant (or the heir,
    legatee or legal representative of the participant’s
    estate) will receive a distribution of Shares in an amount which
    is not more than the number of Shares which would have been
    earned by the participant if 100% of the performance objectives
    for the current Performance Period had been achieved prorated
    based on the ratio of the number of months of active employment
    in the Performance Period to the total number of months in the
    Performance Period. However, with respect to Awards intended to
    be performance-based compensation (as described in
    Section 9.4(d)), distribution of the Shares shall not be
    made prior to attainment of the relevant performance objectives.
	 
	 	     
    (h) Special Limitations on Restricted Share Unit
    Awards. Unless an Award agreement approved by the Committee
    provides otherwise, Restricted Share Units awarded under this
    Plan are intended to meet the requirements for exclusion from
    coverage under Code Section 409A and all Restricted Share
    Unit Awards shall be construed and administered accordingly.




     
8.5     Time Vesting of Restricted
Share and Restricted Share Unit Awards. Restricted Shares or
Restricted Share Units, or portions thereof, are exercisable at
such time or times as determined by the Committee in its
discretion at or after grant, subject to the restrictions on
time Vesting set forth in this Section. If the Committee
provides that any Restricted Shares or Restricted Share Unit
Awards become Vested over time (with or without a performance
component), the Committee may waive or accelerate such Vesting
provisions at any time, subject to the restrictions on time
Vesting set forth in this Section.




ARTICLE 9




Performance Share Awards



     
9.1     Performance Share Awards and
Agreements. A Performance Share Award is a right to receive
Shares in the future conditioned upon the attainment of
specified performance objectives and such other conditions,
restrictions and contingencies as the Committee may determine.
Each Performance Share Award granted under this Plan will be
evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by a written
agreement dated as of the Date of Grant and executed by the
Company and by the Plan participant. The timing of Performance
Share Awards and the number of Shares covered by each Award
(subject to Section 3.2) are to be determined by the
Committee in its discretion. By accepting a grant of Performance
Shares, the participant agrees to remit to the Company when due
any projected tax withholding as provided in Article 16.



     
9.2     Performance Objectives.
At the time of grant of a Performance Share Award, the Committee
will specify the performance objectives which, depending on the
extent to which they are met, will determine the number of
Shares that will be distributed to the participant. The
Committee will also specify the time period or periods (the
“Performance Period”) during which the performance
objectives must be met. With respect to awards to
Section 162(m) Persons intended to be “performance
based compensation,” the Committee may use performance
objectives based on one or more of the following: stock price,
market share, sales, earnings per share, return on equity,
costs, earnings, capital adjusted pre-tax earnings (economic
profit), net income, operating income, performance profit
(operating income minus an allocated charge approximating the
Company’s cost of capital, before or after tax), gross
margin, revenue, working capital, total assets, net assets,
stockholders’ equity and cash flow. The Committee may
designate a single goal criterion or multiple goal criteria for
performance measurement purposes. Performance measurement may be
based on absolute Company, business unit or divisional
performance and/or on performance as compared with that of other



 







 




publicly-traded companies. The performance objectives and
periods need not be the same for each participant nor for each
Award.



     
9.3     Adjustment of Performance
Objectives. The Committee may modify, amend or otherwise
adjust the performance objectives specified for outstanding
Performance Share Awards if it determines that an adjustment
would be consistent with the objectives of this Plan and taking
into account the interests of the participants and the public
Shareholders of the Company and such adjustment complies with
the requirements of Section 162(m) of the Code for
Section 162(m) Persons, to the extent applicable, unless
the Committee indicates a contrary intention. The types of
events which could cause an adjustment in the performance
objectives include, without limitation, accounting changes which
substantially affect the determination of performance
objectives, changes in applicable laws or regulations which
affect the performance objectives, and divisive corporate
reorganizations, including spin-offs and other distributions of
property or stock.



     
9.4     Other Terms and
Conditions. Performance Share Awards granted under this Plan
are subject to the following terms and conditions and may
contain such additional terms, conditions, restrictions and
contingencies not inconsistent with the terms of this Plan and
any operative employment or other agreement as the Committee
deems desirable:






		
	 	     
    (a) Delivery of Shares. As soon as practicable after
    the applicable Performance Period has ended, the participant
    will receive a distribution of the number of Shares earned
    during the Performance Period, depending upon the extent to
    which the applicable performance objectives were achieved. Such
    Shares will be registered in the name of the participant and
    will be free of all restrictions except for any restrictions
    pursuant to Section 15.2.
	 
	 	     
    (b) Termination. A Performance Share Award or
    unearned portion thereof will terminate without the issuance of
    Shares on the termination date specified at the time of grant or
    upon the termination of employment or directorship of the
    participant during the Performance Period. If a
    participant’s employment or directorship with the Company
    or its Affiliates terminates by reason of his or her death,
    Disability or Retirement (except with respect to
    Section 162(m) Persons), the Committee in its discretion at
    or after the time of grant may determine, notwithstanding any
    Vesting requirements under Section 9.4(a), that the
    participant (or the heir, legatee or legal representative of the
    participant’s estate) will receive a distribution of a
    portion of the participant’s then-outstanding Performance
    Share Awards in an amount which is not more than the number of
    shares which would have been earned by the participant if 100%
    of the performance objectives for the current Performance Period
    had been achieved prorated based on the ratio of the number of
    months of active employment in the Performance Period to the
    total number of months in the Performance Period. However, with
    respect to Awards intended to be “performance-based
    compensation” (as described in Section 9.4(e)),
    distribution of the Shares shall not be made prior to attainment
    of the relevant performance objective.
	 
	 	     
    (c) Voting and Other Rights. Awards of Performance
    Shares do not provide the participant with voting rights or
    rights to dividends prior to the participant becoming the holder
    of record of Shares issued pursuant to an Award; provided,
    however, that an Award agreement may provide for payment of
    an amount of money (or Shares with a Fair Market Value
    equivalent to such amount) equal to the dividends paid from time
    to time on the number of Common Shares that would become payable
    upon vesting of a Performance Share Award. Prior to the issuance
    of Shares, Performance Share Awards may not be sold,
    transferred, pledged, assigned or otherwise encumbered.
	 
	 	     
    (d) Performance-Based Compensation. The Committee
    may designate Performance Share Awards as being
    “remuneration payable solely on account of the attainment
    of one or more performance goals” as described in
    Section 162(m)(4)(C) of the Code. Such Awards shall be
    automatically amended or modified to comply with amendments to
    Section 162 of the Code to the extent applicable, unless
    the Committee indicates a contrary intention.



     
9.5     Time Vesting of Performance
Share Awards. Performance Share Awards, or portions thereof,
are exercisable at such time or times as determined by the
Committee in its discretion at or after grant, subject to



 







 




the restrictions on time Vesting set forth in this Section. If
the Committee provides that any Performance Shares become Vested
over time (accelerated by a performance component), the
Committee may waive or accelerate such Vesting provisions at any
time, subject to the restrictions on time Vesting set forth in
this Section.



     
9.6     Special Limitations on
Performance Share Awards. Unless an Award agreement approved
by the Committee provides otherwise, Performance Shares awarded
under this Plan are intended to meet the requirements for
exclusion from coverage under Code Section 409A and all
Performance Share Awards shall be construed and administered
accordingly.




ARTICLE 10




Common Share Awards



     
10.1     Eligibility.
Notwithstanding any other provision of this Plan to the
contrary, a Common Share may only be granted to an Eligible
Director.



     
10.2     Terms and Conditions of
Common Share Awards.






		
	 	     
    (a) Purpose. Common Shares may be granted in
    consideration of services rendered to the Company by Eligible
    Directors in their capacity as Directors.
	 
	 	     
    (b) Vesting. Common Shares shall be fully-vested.




ARTICLE 11




Transfers and Leaves of Absence



     
11.1     Transfer of
Participant. For purposes of this Plan, the transfer of a
participant among the Company and its Affiliates is deemed not
to be a termination of employment.



     
11.2     Effect of Leaves of
Absence. For purposes of this Plan, the following leaves of
absence are deemed not to be a termination of employment:






		
	 	     
    (a) a leave of absence, approved in writing by the Company,
    for military service, sickness or any other purpose approved by
    the Company, if the period of such leave does not exceed
    90 days;
	 
	 	     
    (b) a leave of absence in excess of 90 days, approved
    in writing by the Company, but only if the employee’s right
    to reemployment is guaranteed either by a statute or by
    contract, and provided that, in the case of any such leave of
    absence, the employee returns to work within 30 days after
    the end of such leave; and
	 
	 	     
    (c) any other absence determined by the Committee in its
    discretion not to constitute a termination of employment.




ARTICLE 12




Effect of Change in Control



     
12.1     Change in Control
Defined. “Change in Control” means the occurrence
of any of the following: (i) the receipt by the Company of
a Schedule 13D or other advice indicating that a person, or
any member of a “group,” is the “beneficial
owner” (as those terms are defined in Rule 13d-3 under
the Exchange Act) of twenty percent (20%) or more of the voting
power of the Company; (ii) the first purchase of shares
pursuant to a tender offer or exchange (other than a tender
offer of exchange by the Company or its Affiliates) for all or
any amount of Common Shares or any class or any securities
convertible into such Common Shares, the results of which would
make the offeror and/or its affiliates the beneficial owners of
twenty percent (20%) or more of the voting power of the Company;
(iii) the date of the approval by Shareholders of an
agreement providing for any consolidation or merger of the
Company in which the Company will not be the continuing or



 







 




surviving corporation or pursuant to which shares of capital
stock of any class, or any securities convertible into such
capital stock, of the Company would be converted into cash,
securities, or other property, other than a merger or
consolidation of the Company with an Affiliate or in which the
holders of all of the Shares of all classes of the
Company’s capital stock immediately prior to the merger or
consolidation would own at least a majority of the voting power
of the surviving corporation (or the direct or indirect parent
company of the surviving corporation) immediately after the
merger or consolidation; (iv) the date of the approval by
Shareholders of any sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all or
substantially all the assets of the Company; (v) the
adoption of any plan or proposal for the liquidation (but not a
partial liquidation) or dissolution of the Company; or
(vi) such other event as the Committee shall, in its sole
and absolute discretion, deem to be a “Change in
Control.”



     
12.2     Acceleration of Award.
Except as otherwise provided in this Plan or an Award agreement,
immediately upon the occurrence of a Change in Control:






		
	 	     
    (a) all outstanding Stock Options automatically become
    fully exercisable;
	 
	 	     
    (b) all Restricted Share Awards automatically become fully
    Vested;
	 
	 	     
    (c) all Restricted Share Unit Awards automatically become
    fully Vested (or, if such Restricted Share Unit Awards are
    subject to performance-based restrictions, shall become Vested
    on a pro-rated basis as described in Section 12.2(d)) and,
    to the extent Vested, convertible to Shares at the election of
    the holder;
	 
	 	     
    (d) all participants holding Performance Share Awards
    become entitled to receive a partial payout in an amount which
    is the number of Shares which would have been earned by the
    participant if 100% of the performance objectives for the
    current Performance Period had been achieved pro-rated based on
    the ratio of the number of months of active employment in the
    Performance Period to the total number of months in the
    Performance Period; and
	 
	 	     
    (e) Stock Appreciation Rights automatically become fully
    Vested and fully exercisable.




ARTICLE 13




Transferability of Awards



     
13.1     Awards Are
Non-Transferable. Except as provided in Sections 13.2
and 13.3, Awards are non-transferable and any attempts to
assign, pledge, hypothecate or otherwise alienate or encumber
(whether by operation of law or otherwise) any Award shall be
null and void.



     
13.2     Inter-Vivos Exercise of
Awards. During a participant’s lifetime, Awards are
exercisable only by the participant or, as permitted by
applicable law and notwithstanding Section 13.1 to the
contrary, the participant’s guardian or other legal
representative.



     
13.3     Limited Transferability of
Certain Awards. Notwithstanding Section 13.1 to the
contrary, Awards may be transferred by will and by the laws of
descent and distribution. Moreover, the Committee, in its
discretion, may allow at or after the time of grant the
transferability of Awards which are Vested, provided that the
permitted transfer is made (a) if the Award is an Incentive
Stock Option, the transfer is consistent with Section 422
of the Code; (b) to the Company (for example in the case of
forfeiture of Restricted Shares), an Affiliate or a person
acting as the agent of the foregoing or which is otherwise
determined by the Committee to be in the interests of the
Company; or (c) by the participant for no consideration to
Immediate Family Members or to a bona fide trust, partnership or
other entity controlled by and for the benefit of one or more
Immediate Family Members. “Immediate Family Members”
means the participant’s spouse, children, stepchildren,
parents, stepparents, siblings (including half brothers and
sisters), in-laws and other individuals who have a relationship
to the participant arising because of a legal adoption. No
transfer may be made to the extent that transferability would
cause Form S-8 or any successor form thereto not to be
available to register Shares related to an Award. The Committee
in its discretion may impose additional terms and conditions
upon transferability.



 







 




ARTICLE 14




Amendment and Discontinuation



     
14.1     Amendment or
Discontinuation of this Plan. The Board of Directors may
amend, alter, or discontinue this Plan at any time, provided
that no amendment, alteration, or discontinuance may be made:






		
	 	     
    (a) which would materially and adversely affect the rights
    of a participant under any Award granted prior to the date such
    action is adopted by the Board of Directors without the
    participant’s written consent thereto; and
	 
	 	     
    (b) without Shareholder approval, if Shareholder approval
    is required under applicable laws, regulations or exchange
    requirements (including Section 422 of the Code with
    respect to ISOs, and for the purpose of qualification as
    “performance-based compensation” under
    Section 162(m) of the Code).




Notwithstanding the foregoing, this Plan may be amended without
affecting participants’ consent to: (i) comply with
any law; (ii) preserve any intended favorable tax effects
for the Company, the Plan or participants; or (iii) avoid
any unintended unfavorable tax effects for the Company, the Plan
or participants.



     
14.2     Amendment of Grants.
The Committee may amend, prospectively or retroactively, the
terms of any outstanding Award, provided that no such amendment
may be inconsistent with the terms of this Plan (specifically
including the prohibition on granting Stock Options with an
Exercise Price less than 100% of the Fair Market Value of the
Common Shares on the Date of Grant) or would materially and
adversely affect the rights of any holder without his or her
written consent.




ARTICLE 15




Share Certificates



     
15.1     Delivery of Share
Certificates. The Company is not required to issue or
deliver any certificates for Shares issuable with respect to
Awards under this Plan prior to the fulfillment of all of the
following conditions:






		
	 	     
    (a) payment in full for the Shares and for any projected
    tax withholding (See Article 16);
	 
	 	     
    (b) completion of any registration or other qualification
    of such Shares under any Federal or state laws or under the
    rulings or regulations of the Securities and Exchange Commission
    or any other regulating body which the Committee in its
    discretion deems necessary or advisable;
	 
	 	     
    (c) admission of such Shares to listing on The Nasdaq Stock
    Market or any stock exchange on which the Shares are listed;
	 
	 	     
    (d) in the event the Shares are not registered under the
    Securities Act of 1933, qualification as a private placement
    under said Act;
	 
	 	     
    (e) obtaining of any approval or other clearance from any
    Federal or state governmental agency which the Committee in its
    discretion determines to be necessary or advisable; and
	 
	 	     
    (f) the Committee is fully satisfied that the issuance and
    delivery of Shares under this Plan is in compliance with
    applicable Federal, state or local law, rule, regulation or
    ordinance or any rule or regulation of any other regulating
    body, for which the Committee may seek approval of counsel for
    the Company.



     
15.2     Applicable Restrictions on
Shares. Shares issued with respect to Awards may be subject
to such stock transfer orders and other restrictions as the
Committee may determine necessary or advisable under any
applicable Federal or state securities law rules, regulations
and other requirements, the rules, regulations and other
requirements of The Nasdaq Stock Market or any stock exchange
upon which the Shares are then-listed, and any other applicable
Federal or state law and will include any restrictive legends
the Committee may deem appropriate to include.



 







 



     
15.3     Book Entry. In lieu of
the issuance of stock certificates evidencing Shares, the
Company may use a “book entry” system in which a
computerized or manual entry is made in the records of the
Company to evidence the issuance of such Shares. Such Company
records are, absent manifest error, binding on all parties.




ARTICLE 16




Satisfaction of Projected Tax Liabilities



     
16.1     In General. The
Committee shall cause the Company to withhold any taxes which it
determines it is required by law or required by the terms of
this Plan to withhold in connection with any payments incident
to this Plan. The participant or other recipient shall provide
the Committee with such Stock Powers and additional information
or documentation as may be necessary for the Committee to
discharge its obligations under this Section.



     
16.2     Withholding from Share
Distributions. With respect to a distribution in Shares
pursuant to Restricted Share, Restricted Share Unit and
Performance Share Awards under the Plan, the Committee shall
cause the Company to sell the fewest number of such Shares for
the proceeds of such sale to equal (or exceed by not more than
that actual sale price of a single Share) the participant’s
or other recipient’s projected tax liability resulting from
such distribution. The Committee shall withhold the proceeds of
such sale for purposes of satisfying such projected tax
liability.



     
16.3     Delivery of Withholding
Proceeds. The Committee shall cause the Company to deliver
withholding proceeds to the Internal Revenue Service and/or
other taxing authority in satisfaction of a participant’s
or other recipient’s tax liability arising from a payment.



     
16.4     Projected Tax
Liability. For purposes of this Article 16, the term
“projected tax liability” means the product of:
(i) the aggregate maximum marginal federal and applicable
state and local income tax rates on the date of a payment
pursuant to the Plan; and (ii) the Fair Market Value of the
Shares distributable to the participant or other recipient
determined as of the date of payment.




ARTICLE 17




General Provisions



     
17.1     No Implied Rights to
Awards, Employment or Directorship. No potential participant
has any claim or right to be granted an Award under this Plan,
and there is no obligation of uniformity of treatment of
participants under this Plan. Neither this Plan nor any Award
thereunder shall be construed as giving any individual any right
to continued employment or continued directorship with the
Company or any Affiliate. The Plan does not constitute a
contract of employment, and the Company and each Affiliate
expressly reserve the right at any time to terminate employees
free from liability, or any claim, under this Plan, except as
may be specifically provided in this Plan or in an Award
agreement.



     
17.2     Other Compensation
Plans. Nothing contained in this Plan prevents the Board of
Directors from adopting other or additional compensation
arrangements, subject to Shareholder approval if such approval
is required, and such arrangements may be either generally
applicable or applicable only in specific cases.



     
17.3     Rule 16b-3
Compliance. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 of the Exchange Act, as
such rule may be amended from time to time
(“Rule 16b-3”). All transactions involving any
participant subject to Section 16(a) shall be subject to
the conditions set forth in Rule 16b-3, regardless of
whether such conditions are expressly set forth in this Plan.
Any provision of this Plan that is contrary to Rule 16b-3
does not apply to such participants.



     
17.4     Code Section 162(m)
Compliance. The Plan is intended to comply with all
applicable requirements of Section 162(m) of the Code with
respect to “performance-based compensation” for
Section 162(m) Persons. Unless the Committee expressly
determines otherwise, any provision of this Plan that is
contrary to such requirements does not apply to such
“performance-based compensation.”



 







 



     
17.5     Successors. All
obligations of the Company with respect to Awards granted under
this Plan are binding on any successor to the Company, whether
as a result of a direct or indirect purchase, merger,
consolidation or otherwise of all or substantially all of the
business and/or assets of the Company.



     
17.6     Severability. In the
event any provision of this Plan, or the application thereof to
any person or circumstances, is held illegal or invalid for any
reason, the illegality or invalidity shall not affect the
remaining parts of this Plan, or other applications, and this
Plan is to be construed and enforced as if the illegal or
invalid provision had not been included.



     
17.7     Governing Law. To the
extent not preempted by Federal law, this Plan and all Award
agreements pursuant thereto are construed in accordance with and
governed by the laws of the State of Ohio. This Plan is not
intended to be governed by the Employee Retirement Income
Security Act and shall be so construed and administered.




ARTICLE 18




Effective Date



     
18.1     Effective Date. The
effective date of this DATATRAK International, Inc. 2005 Omnibus
Equity Plan is the date on which the shareholders of the Company
approve it at a duly held stockholders’ meeting.