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EXHIBIT 4.3
DIGI INTERNATIONAL INC.
NON-OFFICER STOCK OPTION PLAN
1. Purpose of Plan. The purpose of this Digi International Inc. Non-Officer
Stock Option Plan (the "Plan"), is to promote the interests of Digi
International Inc., a Delaware corporation (the "Company"), and its stockholders
by providing key personnel of the Company and its subsidiaries (other than
officers and directors of the Company) with an opportunity to acquire a
proprietary interest in the Company and thereby develop a stronger incentive to
put forth maximum effort for the continued success and growth of the Company and
its subsidiaries. In addition, the opportunity to acquire a proprietary interest
in the Company will aid in attracting and retaining key personnel of outstanding
ability.
2. Administration of Plan. This Plan shall be administered by a committee of two
or more directors (the "Committee") appointed by the Company's board of
directors (the "Board"). A majority of the members of the Committee shall
constitute a quorum for any meeting of the Committee, and the acts of a majority
of the members present at any meeting at which a quorum is present or the acts
unanimously approved in writing by all members of the Committee shall be the
acts of the Committee. Subject to the provisions of this Plan, the Committee may
from time to time adopt such rules for the administration of this Plan as it
deems appropriate. The decision of the Committee on any matter affecting this
Plan or the rights and obligations arising under this Plan or any option granted
hereunder, shall be final, conclusive and binding upon all persons, including
without limitation the Company, stockholders, employees and optionees. To the
full extent permitted by law, (i) no member of the Committee or the CEO Stock
Option Committee (as defined in this paragraph 2) shall be liable for any action
or determination taken or made in good faith with respect to this Plan or any
option granted hereunder and (ii) the members of the Committee and the CEO Stock
Option Committee shall be entitled to indemnification by the Company against and
from any loss incurred by such member or person by reason of any such actions
and determinations. The Committee may delegate all or any part of its authority
under this Plan to a one person committee consisting of the Chief Executive
Officer of the Company as its sole member (the "CEO Stock Option Committee") for
purposes of granting and administering awards.
3. Shares Subject to Plan. The shares that may be made subject to options
granted under this Plan shall be authorized and unissued shares of common stock
(the "Common Shares") of the Company, $.01 par value, or Common Shares held in
treasury, and they shall not exceed 1,250,000 in the aggregate, except that, if
any option lapses or terminates for any reason before such option has been
completely exercised, the Common Shares covered by the unexercised portion of
such option may again be made subject to options granted under this Plan.
Appropriate adjustments in the number of shares and in the purchase price per
share may be made by the Committee in its sole discretion to give effect to
adjustments made in the number of outstanding Common Shares of the Company
through a merger, consolidation, recapitalization, reclassification,
combination, stock dividend,
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stock split or other relevant change, provided that fractional shares shall be
rounded to the nearest whole share.
4. Eligible Participants. Options may be granted under this Plan to any key
employee of the Company or any subsidiary thereof, who is not an officer or
director of the Company, and may also be granted to other individuals or
entities who are not "employees" but who provide services to the Company or a
parent or subsidiary thereof in the capacity of an advisor or consultant.
References herein to "employed," "employment" and similar terms (except
"employee") shall include the providing of services in any such capacity or as a
director. The employees and other individuals and entities to whom options may
be granted pursuant to this paragraph 4 are referred to herein as "Eligible
Participants."
5. Terms and Conditions of Employee Options.
(a) Subject to the terms and conditions of this Plan, the
Committee may, from time to time prior to December 1, 2006, grant to
such Eligible Participants as the Committee may determine options to
purchase such number of Common Shares of the Company on such terms and
conditions as the Committee may determine. In determining the Eligible
Participants to whom options shall be granted and the number of Common
Shares to be covered by each option, the Committee may take into
account the nature of the services rendered by the respective Eligible
Participants, their present and potential contributions to the success
of the Company, and such other factors as the Committee in its sole
discretion shall deem relevant. The date and time of approval by the
Committee of the granting of an option shall be considered the date and
the time of the grant of such option.
(b) The purchase price of each Common Share subject to an
option granted pursuant to this paragraph 5 shall be fixed by the
Committee. Such purchase price may be set at not less that 50% of the
Fair Market Value (as defined below) of a Common Share on the date of
grant.
(c) For purposes of this Plan, the "Fair Market Value" of a
Common Share at a specified date shall, unless otherwise expressly
provided in this Plan, mean the closing sale price of a Common Share on
the date immediately preceding such date or, if no sale of such shares
shall have occurred on that date, on the next preceding day on which a
sale of such shares occurred, on the Composite Tape for New York Stock
Exchange listed shares or, if such shares are not quoted on the
Composite Tape for New York Stock Exchange listed shares, on the
principal United States securities exchange registered under the Act,
on which the shares are listed, or, if such shares are not listed on
any such exchange, on the Nasdaq Stock Market or any similar system
then in use or, if such shares are not included on the Nasdaq Stock
Market or any similar system then in use, the mean between the closing
"bid" and the closing "asked" quotation of such a share on the date
immediately preceding the date as of which such Fair Market Value is
being determined, or, if no closing bid or asked quotation is made on
that date, on the next preceding day on which a quotation is made, on
an NASD System or any similar system then in use, provided that if the
shares
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in question are not quoted on any such system, Fair Market Value shall
be what the Committee determines in good faith to be 100% of the fair
market value of such a share as of the date in question.
Notwithstanding anything stated in this paragraph, if the applicable
securities exchange or system has closed for the day by the time the
determination is being made, all references in this paragraph to the
date immediately preceding the date in question shall be deemed to be
references to the date in question.
(d) Each option agreement provided for in paragraph 13 hereof
shall specify when each option granted under this Plan shall become
exercisable.
(e) Each option granted pursuant to this paragraph 5 and all
rights to purchase shares thereunder shall cease on the earliest of:
(i) ten years after the date such option is granted
or on such date prior thereto as may be fixed by the Committee
on or before the date such option is granted;
(ii) the expiration of the period after the
termination of the optionee's employment within which the
option is exercisable as specified in paragraph 7(b) or 7(c),
whichever is applicable; or
(iii) the date, if any, fixed for cancellation
pursuant to paragraph 7 of this Plan.
In no event shall any option be exercisable at any time after its original
expiration date. When an option is no longer exercisable, it shall be deemed to
have lapsed or terminated and will no longer be outstanding.
6. Manner of Exercising Options. A person entitled to exercise an option granted
under this Plan may, subject to its terms and conditions and the terms and
conditions of this Plan, exercise it in whole at any time, or in part from time
to time, by delivery to the Company at its principal executive office, to the
attention of its President, of written notice of exercise, specifying the number
of shares with respect to which the option is being exercised, accompanied by
payment in full of the purchase price of the shares to be purchased at the time.
The purchase price of each share on the exercise of any option shall be paid in
full in cash (including check, bank draft or money order) at the time of
exercise or, at the discretion of the holder of the option, by delivery to the
Company of unencumbered Common Shares having an aggregate Fair Market Value on
the date of exercise equal to the purchase price, or by a combination of cash
and such unencumbered Common Shares. Provided, however, that a person exercising
a stock option shall not be permitted to pay any portion of the purchase price
with stock if, in the opinion of the Committee, payment in such manner could
have adverse financial accounting consequences for the Company. No shares shall
be issued until full payment therefor has been made, and the granting of an
option to an individual shall give such individual no rights as a stockholder
except as to shares issued to such individual.
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7. Transferability and Termination of Options.
(a) During the lifetime of an optionee, only such optionee or
his or her guardian or legal representative may exercise options
granted under this Plan, and no option granted under this Plan shall be
assignable or transferable by the optionee otherwise than by will or
the laws of descent and distribution or pursuant to a domestic
relations order as defined in the Internal Revenue Code of 1986, as
amended, or any amendment thereto (the "Code") or Title I of the
Employee Retirement Income Security Act ("ERISA"), or the rules
thereunder; provided, however, that any optionee may transfer a stock
option granted under this Plan to a member or members of his or her
immediate family (i.e., his or her children, grandchildren and spouse)
or to one or more trusts for the benefit of such family members or
partnerships in which such family members are the only partners, if (i)
the option agreement with respect to such options, which must be
approved by the Committee, expressly so provides either at the time of
initial grant or by amendment to an outstanding option agreement and
(ii) the optionee does not receive any consideration for the transfer.
Any options held by any such transferee shall continue to be subject to
the same terms and conditions that were applicable to such options
immediately prior to their transfer and may be exercised by such
transferee as and to the extent that such option has become exercisable
and has not terminated in accordance with the provisions of the Plan
and the applicable option agreement. For purposes of any provision of
this Plan relating to notice to an optionee or to vesting or
termination of an option upon the death, disability or termination of
employment of an optionee, the references to "optionee" shall mean the
original grantee of an option and not any transferee.
(b) During the lifetime of an optionee, an option may be
exercised only while the optionee is employed by the Company or a
parent or subsidiary thereof, and only if such optionee has been
continuously so employed since the date the option was granted, except
that:
(i) unless otherwise provided in a stock option
agreement, an option granted to an optionee shall continue to
be exercisable for three months after termination of such
optionee's employment but only to the extent that the option
was exercisable immediately prior to such optionee's
termination of employment;
(ii) in the case of an optionee who is disabled
(within the meaning of Section 22(e)(3) of the Code) while
employed, the option granted to such optionee may be exercised
within one year after termination of such optionee's
employment; and
(iii) as to any optionee whose termination occurs
following a declaration pursuant to paragraph 7 of this Plan,
the option granted to such optionee may be exercised at any
time permitted by such declaration.
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(c) An option may be exercised after the death of the
optionee, but only within one year after the death of such optionee.
(d) In the event of the disability (within the meaning of
Section 22(e)(3) of the Code) or death of an optionee, any option
granted to such optionee that was not previously exercisable shall
become immediately exercisable in full if the disabled or deceased
optionee shall have been continuously employed by the Company or a
parent or subsidiary thereof between the date such option was granted
and the date of such disability, or, in the event of death, a date not
more than three months prior to such death.
8. Dissolution, Liquidation, Merger. In the event of (a) a proposed merger or
consolidation of the Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, unless appropriate provision
shall have been made for the protection of the outstanding options granted under
this Plan by the substitution, in lieu of such options, of options to purchase
appropriate voting common stock (the "Survivor's Stock") of the corporation
surviving any such merger or consolidation or, if appropriate, the parent
corporation of the Company or such surviving corporation, or, alternatively, by
the delivery of a number of shares of the Survivor's Stock which has a Fair
Market Value as of the effective date of such merger or consolidation equal to
the product of (i) the excess of (x) the Event Proceeds per Common Share (as
hereinafter defined) covered by the option as of such effective date, over (y)
the option price per Common Share, times (ii) the number of Common Shares
covered by such option, or (b) the proposed dissolution or liquidation of the
Company (such merger, consolidation, dissolution or liquidation being herein
called an "Event"), the Committee shall declare, at least ten days prior to the
actual effective date of an Event, and provide written notice to each optionee
of the declaration, that each outstanding option, whether or not then
exercisable, shall be cancelled at the time of, or immediately prior to the
occurrence of, the Event (unless it shall have been exercised prior to the
occurrence of the Event) in exchange for payment to the holder of each cancelled
option, within ten days after the Event, of cash equal to the amount (if any),
for each Common Share covered by the cancelled option, by which the Event
Proceeds per Common Share (as hereinafter defined) exceeds the exercise price
per Common Share covered by such option. At the time of the declaration provided
for in the immediately preceding sentence, each option shall immediately become
exercisable in full and each holder of an option shall have the right, during
the period preceding the time of cancellation of the option, to exercise his or
her option as to all or any part of the Common Shares covered thereby. Each
outstanding option granted pursuant to this Plan that shall not have been
exercised prior to the Event shall be cancelled at the time of, or immediately
prior to, the Event, as provided in the declaration, and this Plan shall
terminate at the time of such cancellation, subject to the payment obligations
of the Company provided in this paragraph 8. For purposes of this paragraph,
"Event Proceeds per Common Share" shall mean the cash plus the fair market
value, as determined in good faith by the Committee, of the non-cash
consideration to be received per Common Share by the stockholders of the Company
upon the occurrence of the Event.
9. Substitution Options. Options may be granted under this Plan from time to
time in substitution for stock options held by employees of other corporations
who are about to become employees of the Company or a subsidiary of the Company,
or whose employer is about to become a subsidiary
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of the Company, as the result of a merger or consolidation of the Company or a
subsidiary of the Company with another corporation, the acquisition by the
Company or a subsidiary of the Company of all or substantially all the assets of
another corporation or the acquisition by the Company or a subsidiary of the
Company of at least 50% of the issued and outstanding stock of another
corporation. The terms and conditions of the substitute options so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Board at the time of the grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock options in substitution for which they are
granted.
10. Tax Withholding. Delivery of Common Shares upon exercise of any nonstatutory
stock option granted under this Plan shall be subject to any required
withholding taxes. A person exercising such an option may, as a condition
precedent to receiving the Common Shares, be required to pay the Company a cash
amount equal to the amount of any required withholdings. In lieu of all or any
part of such a cash payment, the Committee may, but shall not be required to,
permit the optionee to elect to cover all or any part of the required
withholdings, and to cover any additional withholdings up to the amount needed
to cover such optionee's full FICA and federal, state and local income tax
liability with respect to income arising from the exercise of the option,
through a reduction of the number of Common Shares delivered to the person
exercising the option or through a subsequent return to the Company of shares
delivered to the person exercising the option.
11. Termination of Employment. Neither the transfer of employment of an optionee
between any combination of the Company, a parent corporation or a subsidiary
thereof, nor a leave of absence granted to such optionee and approved by the
Committee, shall be deemed a termination of employment for purposes of this
Plan. The terms "parent" or "parent corporation" and "subsidiary" as used in
this Plan shall have the meaning ascribed to "parent corporation" and
"subsidiary corporation", respectively, in Sections 424(e) and (f) of the Code.
12. Other Terms and Conditions. The Committee shall have the power, subject to
the other limitations contained herein, to fix any other terms and conditions
for the grant or exercise of any option under this Plan. Nothing contained in
this Plan, or in any option granted pursuant to this Plan, shall confer upon any
optionee any right to continued employment by the Company or any parent or
subsidiary of the Company or limit in any way the right of the Company or any
such parent or subsidiary to terminate an optionee's employment at any time.
13. Option Agreements. All options granted under this Plan shall be evidenced by
a written agreement in such form or forms as the Committee may from time to time
determine.
14. Amendment and Discontinuance of Plan. The Board may at any time amend,
suspend or discontinue this Plan. No amendment to this Plan shall, without the
consent of the holder of an option previously granted under this Plan, shall
alter or impair any option.
15. Effective Date. This Plan shall be effective April 2, 1998.
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