EXHIBIT 10(g)
DIGI INTERNATIONAL INC.
2000 OMNIBUS STOCK PLAN
AS AMENDED AND RESTATED AS OF
JANUARY 22, 2003
(EFFECTIVE AS OF NOVEMBER 6, 2000)
1. Purpose. The purpose of the Digi International Inc. 2000 Omnibus
Stock Plan (the "Plan") is to promote the interests of the Company and its
stockholders by providing key personnel of the Company and its Affiliates with
an opportunity to acquire a proprietary interest in the Company and reward them
for achieving a high level of corporate performance and thereby develop a
stronger incentive to put forth maximum effort for the continued success and
growth of the Company and its Affiliates. In addition, the opportunity to
acquire a proprietary interest in the Company will aid in attracting and
retaining key personnel of outstanding ability. The Plan is also intended to
provide Outside Directors with an opportunity to acquire a proprietary interest
in the Company, to compensate Outside Directors for their contribution to the
Company and to aid in attracting and retaining Outside Directors.
2. Definitions.
2.1 The capitalized terms used elsewhere in the Plan have the
meanings set forth below.
(a) "Affiliate" means any corporation that is a
"parent corporation" or "subsidiary corporation" of the
Company, as those terms are defined in Code Sections 424(e)
and (f), or any successor provisions, and, for purposes other
than the grant of Incentive Stock Options, any joint venture
in which the Company or any such "parent corporation" or
"subsidiary corporation" owns an equity interest.
(b) "Agreement" means a written contract (i)
consistent with the terms of the Plan entered into between the
Company or an Affiliate and a Participant and (ii) containing
the terms and conditions of an Award in such form and not
inconsistent with the Plan as the Committee shall approve from
time to time, together with all amendments thereto, which
amendments may be unilaterally made by the Company (with the
approval of the Committee) unless such amendments are deemed
by the Committee to be materially adverse to the Participant
and not required as a matter of law.
(c) "Award" or "Awards" means a grant made under the
Plan in the form of Restricted Stock, Options, Stock
Appreciation Rights, Performance Units, Stock or any other
stock-based award.
(d) "Board" means the Board of Directors of the
Company.
(e) "Code" means the Internal Revenue Code of 1986,
as amended and in effect from time to time or any successor
statute.
(f) "Committee" means two or more Non-Employee
Directors designated by the Board to administer the Plan under
Plan Section 3.1 and constituted so as to permit grants
thereby to comply with Exchange Act Rule 16b-3 and Code
Section 162(m).
(g) "Company" means Digi International Inc., a
Delaware corporation, or any successor to all or substantially
all of its businesses by merger, consolidation, purchase of
assets or otherwise.
(h) "Effective Date" means the date specified in Plan
Section 12.1.
(i) "Employee" means an employee (including an
officer or director who is also an employee) of the Company or
an Affiliate.
(j) "Exchange Act" means the Securities Exchange Act
of 1934, as amended and in effect from time to time or any
successor statute.
(k) "Exchange Act Rule 16b-3" means Rule 16b-3
promulgated by the Securities and Exchange Commission under
the Exchange Act, as now in force and in effect from time to
time or any successor regulation.
(l) "Fair Market Value" as of any date means, unless
otherwise expressly provided in the Plan:
(i) the closing sale price of a Share on the
date immediately preceding that date or, if no sale
of Shares shall have occurred on that date, on the
next preceding day on which a sale of Shares occurred
(A) on the composite tape for New
York Stock Exchange listed shares, or
(B) if the 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 Exchange Act on which the Shares
are listed, or
(C) if the Shares are not listed on
any such exchange, on the National
Association of Securities Dealers, Inc.
Automated Quotations National Market System
or any system then in use, or
(ii) if clause (i) is inapplicable, the mean
between the closing "bid" and the closing "asked"
quotation of a Share on the date immediately
preceding that date, or, if no closing bid or asked
quotation is made on that date, on the next preceding
day on which a closing bid and asked quotation is
made, on the National Association of Securities
Dealers, Inc. Automated Quotations System or any
system then in use, or
(iii) if clauses (i) and (ii) are
inapplicable, what the Committee determines in good
faith to be 100% of the fair market value of a Share
on that date, using such criteria as it shall
determine, in its sole discretion, to be appropriate
for valuation.
However, if the applicable securities exchange or
system has closed for the day at the time the event occurs
that triggers a determination of Fair Market Value, whether
the grant of an Award, the exercise of an Option or Stock
Appreciation Right or otherwise, all references in this
paragraph to the "date immediately preceding that date" shall
be deemed to be references to "that date." In the case of an
Incentive Stock Option, if this determination of Fair Market
Value is not consistent with the then current regulations of
the Secretary of the Treasury, Fair Market Value shall be
determined in accordance with those regulations. The
determination of Fair Market Value shall be subject to
adjustment as provided in Plan Section 16.
(m) "Fundamental Change" means a dissolution or
liquidation of the Company, a sale of substantially all of the
assets of the Company, a merger or consolidation of the
Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, or a
statutory share exchange involving capital stock of the
Company.
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(n) "Incentive Stock Option" means any Option
designated as such and granted in accordance with the
requirements of Code Section 422 or any successor provision.
(o) "Insider" as of a particular date means any
person who, as of that date is an officer of the Company as
defined under Exchange Act Rule 16a-1(f) or its successor
provision.
(p) "Non-Employee Director" means a member of the
Board who is considered a non-employee director within the
meaning of Exchange Act Rule 16b-3(b)(3) or its successor
provision and an outside director for purposes of Code Section
162(m).
(q) "Non-Statutory Stock Option" means an Option
other than an Incentive Stock Option.
(r) "Option" means a right to purchase Stock,
including both Non-Statutory Stock Options and Incentive Stock
Options.
(s) "Outside Director" means a director who is not an
Employee.
(t) "Participant" means a person or entity to whom an
Award is or has been made in accordance with the Plan.
(u) "Performance Cycle" means the period of time as
specified in an Agreement over which Performance Units are to
be earned.
(v) "Performance Units" means an Award made pursuant
to Plan Section 11.
(w) "Plan" means this Digi International Inc. 2000
Omnibus Stock Plan, as may be amended and in effect from time
to time.
(x) "Restricted Stock" means Stock granted under Plan
Section 7 so long as such Stock remains subject to one or more
restrictions.
(y) "Section 16" or "Section 16(b)" means Section 16
or Section 16(b), respectively, of the Exchange Act or any
successor statute and the rules and regulations promulgated
thereunder as in effect and as amended from time to time.
(z) "Share" means a share of Stock.
(aa) "Stock" means the common stock, par value $.01
per share, of the Company.
(bb) "Stock Appreciation Right" means a right, the
value of which is determined in relation to the appreciation
in value of Shares pursuant to an Award granted under Plan
Section 10.
(cc) "Subsidiary" means a "subsidiary corporation,"
as that term is defined in Code Section 424(f) or any
successor provision.
(dd) "Successor" with respect to a Participant means
the legal representative of an incompetent Participant, and if
the Participant is deceased the estate of the Participant or
the person or persons who may, by bequest or inheritance, or
pursuant to the terms of an Award, acquire the right to
exercise an Option or Stock Appreciation Right or to receive
cash and/or Shares issuable in satisfaction of an Award in the
event of the Participant's death.
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(ee) "Term" means the period during which an Option
or Stock Appreciation Right may be exercised or the period
during which the restrictions or terms and conditions placed
on Restricted Stock or any other Award are in effect.
(ff) "Transferee" means any member of the
Participant's immediate family (i.e., his or her children,
step-children, grandchildren and spouse) or one or more trusts
for the benefit of such family members or partnerships in
which such family members are the only partners.
2.2 Gender and Number. Except when otherwise indicated by the
context, reference to the masculine gender shall include, when used,
the feminine gender and any term used in the singular shall also
include the plural.
3. Administration and Indemnification.
3.1 Administration.
(a) The Committee shall administer the Plan. The
Committee shall have exclusive power to (i) make Awards, (ii)
determine when and to whom Awards will be granted, the form of
each Award, the amount of each Award (except as to the amount
of the Outside Director Options pursuant to Plan Section 9.3),
and any other terms or conditions of each Award consistent
with the Plan, and (iii) determine whether, to what extent and
under what circumstances, Awards may be settled, paid or
exercised in cash, Shares or other Awards, or other property
or canceled, forfeited or suspended. Each Award shall be
subject to an Agreement authorized by the Committee. A
majority of the members of the Committee shall constitute a
quorum for any meeting of the Committee, and 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. Notwithstanding the foregoing, the Board shall have
the sole and exclusive power to administer the Plan with
respect to Awards granted to Outside Directors, including any
grants made under Plan Section 9.3(e).
(b) Solely for purposes of determining and
administering Awards to Participants who are not Insiders, the
Committee may delegate all or any portion of its authority
under the Plan to one or more persons who are not Non-Employee
Directors.
(c) To the extent within its discretion and subject
to Plan Sections 15 and 16, other than price, the Committee
may amend the terms and conditions of any outstanding Award.
(d) It is the intent that the Plan and all Awards
granted pursuant to it shall be administered by the Committee
so as to permit the Plan and Awards to comply with Exchange
Act Rule 16b-3, except in such instances as the Committee, in
its discretion, may so provide. If any provision of the Plan
or of any Award would otherwise frustrate or conflict with the
intent expressed in this Section 3.1(d), that provision to the
extent possible shall be interpreted and deemed amended in the
manner determined by the Committee so as to avoid the
conflict. To the extent of any remaining irreconcilable
conflict with this intent, the provision shall be deemed void
as applicable to Insiders to the extent permitted by law and
in the manner deemed advisable by the Committee.
(e) The Committee's interpretation of the Plan and of
any Award or Agreement made under the Plan and all related
decisions or resolutions of the Board or Committee shall be
final and binding on all parties with an interest therein.
Consistent with its terms, the Committee shall have the power
to establish, amend or waive regulations to administer the
Plan. In carrying out any of its responsibilities, the
Committee shall have discretionary authority to construe the
terms of the Plan and any Award or Agreement made under the
Plan.
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3.2 Indemnification. Each person who is or shall have been a
member of the Committee, or of the Board, and any other person to whom
the Committee delegates authority under the Plan, shall be indemnified
and held harmless by the Company, to the extent permitted by law,
against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with
or resulting from any claim, action, suit or proceeding to which such
person may be a party or in which such person may be involved by reason
of any action taken or failure to act, made in good faith, under the
Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company's approval, or paid by such person
in satisfaction of any judgment in any such action, suit or proceeding
against such person, provided such person shall give the Company an
opportunity, at the Company's expense, to handle and defend the same
before such person undertakes to handle and defend it on such person's
own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such person
or persons may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless.
4. Shares Available Under the Plan.
(a) The number of Shares available for distribution
under the Plan shall not exceed 750,000 (subject to adjustment
pursuant to Plan Section 16).
(b) Any Shares subject to the terms and conditions of
an Award under the Plan that are not used because the terms
and conditions of the Award are not met may again be used for
an Award under the Plan; provided however, that Shares with
respect to which a Stock Appreciation Right has been exercised
whether paid in cash and/or in Shares may not again be awarded
under the Plan.
(c) Any unexercised or undistributed portion of any
terminated, expired, exchanged, or forfeited Award, or any
Award settled in cash in lieu of Shares (except as provided in
Plan Section 4(b)) shall be available for further Awards.
(d) For the purposes of computing the total number of
Shares granted under the Plan, the following rules shall apply
to Awards payable in Shares where appropriate:
(i) each Option shall be deemed to be the
equivalent of the maximum number of Shares that may
be issued upon exercise of the particular Option;
(ii) an Award (other than an Option) payable
in some other security shall be deemed to be equal to
the number of Shares to which it relates;
(iii) where the number of Shares available
under the Award is variable on the date it is
granted, the number of Shares shall be deemed to be
the maximum number of Shares that could be received
under that particular Award; and
(iv) where two or more types of Awards (all
of which are payable in Shares) are granted to a
Participant in tandem with each other, such that the
exercise of one type of Award with respect to a
number of Shares cancels at least an equal number of
Shares of the other, each such joint Award shall be
deemed to be the equivalent of the maximum number of
Shares available under the largest single Award.
Additional rules for determining the number of Shares
granted under the Plan may be made by the Committee as it
deems necessary or desirable.
(e) No fractional Shares may be issued under the
Plan; however, cash shall be paid in lieu of any fractional
Share in settlement of an Award.
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(f) The maximum number of Shares that may be awarded
to a Participant in any calendar year in the form of Options
is 250,000 and the maximum number of Shares that may be
awarded to a Participant in any calendar year in the form of
Stock Appreciation Rights is 100,000.
5. Eligibility. Participation in the Plan shall be limited to Employees
and to individuals or entities who are not Employees but who provide services to
the Company or an Affiliate, including services provided in the capacity of a
consultant, advisor or director. The granting of Awards is solely at the
discretion of the Committee, except that Incentive Stock Options may only be
granted to Employees and except for certain Awards to Outside Directors pursuant
to Plan Section 9.3. References herein to "employed," "employment" or similar
terms (except "Employee") shall include the providing of services in any
capacity or as a director. Neither the transfer of employment of a Participant
between any of the Company or its Affiliates, nor a leave of absence granted to
such Participant and approved by the Committee, shall be deemed a termination of
employment for purposes of the Plan.
6. General Terms of Awards.
6.1 Amount of Award. Each Agreement shall set forth the number
of Shares of Restricted Stock, Stock or Performance Units subject to
the Agreement, or the number of Shares to which the Option subject to
the Agreement applies or with respect to which payment upon the
exercise of the Stock Appreciation Right subject to the Agreement is to
be determined, as the case may be, together with such other terms and
conditions applicable to the Award as determined by the Committee
acting in its sole discretion.
6.2 Term. Each Agreement, other than those relating solely to
Awards of Shares without restrictions, shall set forth the Term of the
Option, Stock Appreciation Right, Restricted Stock or other Award or
the Performance Cycle for the Performance Units, as the case may be.
Acceleration of the expiration of the applicable Term is permitted,
upon such terms and conditions as shall be set forth in the Agreement,
which may, but need not, include, without limitation, acceleration in
the event of the Participant's death or retirement. Acceleration of the
Performance Cycle of Performance Units shall be subject to Plan Section
11.2.
6.3 Transferability. Except as provided in this Section,
during the lifetime of a Participant to whom an Award is granted, only
that Participant (or that Participant's legal representative) may
exercise an Option or Stock Appreciation Right, or receive payment with
respect to Performance Units or any other Award. No Award of Restricted
Stock (before the expiration of the restrictions), Options, Stock
Appreciation Rights or Performance Units or other Award may be sold,
assigned, transferred, exchanged or otherwise encumbered other than to
a Successor in the event of a Participant's death or pursuant to a
qualified domestic relations order as defined in the Code or Title 1 of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules thereunder; any attempted transfer in violation
of this Section 6.3 shall be of no effect. Notwithstanding the
immediately preceding sentence, the Committee, in an Agreement or
otherwise at its discretion, may provide that the Award (other than
Incentive Stock Options) may be transferable to a Transferee if the
Participant does not receive any consideration for the transfer. Any
Award held by a Transferee shall continue to be subject to the same
terms and conditions that were applicable to that Award immediately
before the transfer thereof to the Transferee. For purposes of any
provision of the Plan relating to notice to a Participant or to
acceleration or termination of an Award upon the death, disability or
termination of employment of a Participant (or, in the case of Plan
Section 9.3, an Outside Director) the references to "Participant" (or
"Outside Director") shall mean the original grantee of an Award and not
any Transferee.
6.4 Termination of Employment. Except as otherwise determined
by the Committee or provided by the Committee in an Agreement, in case
of a Participant's termination of employment, the following provisions
shall apply:
(a) Options and Stock Appreciation Rights.
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(i) If a Participant's employment or other
relationship with the Company and its
Affilitates terminates because of the
Participant's death, then any Option or
Stock Appreciation Right that has not
expired or been terminated shall become
exercisable in full if the Participant's
employment or other relationship with the
Company and its Affiliates has been
continuous between the date the Option or
Stock Appreciation Right was granted and a
date not more than three months prior to
such death, and may be exercised by the
Participant's Successor at any time, or from
time to time, within one year after the date
of the Participant's death.
(ii) If a Participant's employment or other
relationship with the Company and its
Affiliates terminates because the
Participant is disabled (within the meaning
of Section 22(e)(3) of the Code), then any
Option or Stock Appreciation Right that has
not expired or been terminated shall become
exercisable in full if the Participant's
employment or other relationship with the
Company and its Affiliates has been
continuous between the date the Option or
Stock Appreciation Right was granted and the
date of such disability, and the Participant
or the Participant's Successor may exercise
such Option or Stock Appreciation Right at
any time, or from time to time, within one
year after the date of the Participant's
disability.
(iii) If a Participant's employment terminates for
any reason other than death or disability,
then any Option or Stock Appreciation Right
that has not expired or been terminated
shall remain exercisable for three months
after termination of the Participant's
employment, but, unless otherwise provided
in the Agreement, only to the extent that
such Option or Stock Appreciation Right was
exercisable immediately prior to such
Participant's termination of employment;
provided, however, that if the Participant
is an Outside Director, the Option or Stock
Appreciation Right shall remain exercisable
until the expiration of the Term after such
Outside Director ceases to be a director of
the Company but, unless otherwise provided
in the Agreement, only to the extent that
such Option or Stock Appreciation Right was
exercisable immediately prior to such
Outside Director ceasing to be a director.
(iv) Notwithstanding the foregoing Plan Sections
6.4(a)(i), (ii) and (iii), in no event shall
an Option or a Stock Appreciation Right be
exercisable after the expiration of the Term
of such Award. Any Option or Stock
Appreciation Right that is not exercised
within the periods set forth in Plan
Sections 6.4 (i), (ii) and (iii), except as
otherwise provided by the Committee in the
Agreement, shall terminate as of the end of
the periods described in such Sections.
(b) Performance Units. If a Participant's employment
or other relationship with the Company and its Affiliates
terminates during a Performance Cycle because of death or
disability, or under other circumstances provided by the
Committee in its discretion in the Agreement or otherwise, the
Participant, unless the Committee shall otherwise provide in
the Agreement, shall be entitled to a payment with respect to
Performance Units at the end of the Performance Cycle based
upon the extent to which achievement of performance targets
was satisfied at the end of such period (as determined at the
end of the Performance Cycle) and prorated for the portion of
the Performance Cycle during which the Participant was
employed by the Company or its Affiliates. Except as provided
in this Section 6.4(b) or in the Agreement, if a Participant's
employment or other relationship with the Company and its
Affiliates terminates during a Performance Cycle, then such
Participant shall not be entitled to any payment with respect
to that Performance Cycle.
(c) Restricted Stock Awards. Unless otherwise
provided in the Agreement, in case of a Participant's death or
disability, the Participant shall be entitled to receive a
number of Shares of Restricted Stock under outstanding Awards
that has been prorated for the portion of the Term of the
Awards during which the Participant was employed by the
Company and its Affiliates, and, with
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respect to such Shares, all restrictions shall lapse. Any
Shares of Restricted Stock as to which restrictions do not
lapse under the preceding sentence shall terminate at the date
of the Participant's termination of employment and such Shares
of Restricted Stock shall be forfeited to the Company.
6.5 Rights as Stockholder. Each Agreement shall provide that a
Participant shall have no rights as a stockholder with respect to any
securities covered by an Award unless and until the date the
Participant becomes the holder of record of the Stock, if any, to which
the Award relates.
7. Restricted Stock Awards.
(a) An Award of Restricted Stock under the Plan shall
consist of Shares subject to restrictions on transfer and
conditions of forfeiture, which restrictions and conditions
shall be included in the applicable Agreement. The Committee
may provide for the lapse or waiver of any such restriction or
condition based on such factors or criteria as the Committee,
in its sole discretion, may determine.
(b) Except as otherwise provided in the applicable
Agreement, each Stock certificate issued with respect to an
Award of Restricted Stock shall either be deposited with the
Company or its designee, together with an assignment separate
from the certificate, in blank, signed by the Participant, or
bear such legends with respect to the restricted nature of the
Restricted Stock evidenced thereby as shall be provided for in
the applicable Agreement.
(c) The Agreement shall describe the terms and
conditions by which the restrictions and conditions of
forfeiture upon awarded Restricted Stock shall lapse. Upon the
lapse of the restrictions and conditions, Shares free of
restrictive legends, if any, relating to such restrictions
shall be issued to the Participant or a Successor or
Transferee.
(d) A Participant or a Transferee with a Restricted
Stock Award shall have all the other rights of a stockholder
including, but not limited to, the right to receive dividends
and the right to vote the Shares of Restricted Stock.
(e) No more than 100,000 of the total number of
Shares available for Awards under the Plan shall be issued
during the term of the Plan as Restricted Stock. This
limitation shall be calculated pursuant to the applicable
provisions of Plan Sections 4 and 16.
8. Other Awards. The Committee may from time to time grant Stock and
other Awards under the Plan including, without limitation, those Awards pursuant
to which Shares are or may in the future be acquired, Awards denominated in
Stock units, securities convertible into Stock and phantom securities. The
Committee, in its sole discretion, shall determine the terms and conditions of
such Awards provided that such Awards shall not be inconsistent with the terms
and purposes of the Plan. The Committee may, at its sole discretion, direct the
Company to issue Shares subject to restrictive legends and/or stop transfer
instructions that are consistent with the terms and conditions of the Award to
which the Shares relate. No more than 50,000 of the total number of Shares
available for Awards under the Plan shall be issued during the term of the Plan
in the form of Stock without restrictions.
9. Stock Options.
9.1 Terms of All Options.
(a) An Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a
Non-Statutory Stock Option. The purchase price of each Share
subject to an Option shall be determined by the Committee and
set forth in the Agreement, but shall not be less than 50% of
the Fair Market Value of a Share as of the date the Option is
granted (except as provided in Plan Sections 9.2 and 19).
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(b) The purchase price of the Shares with respect to
which an Option is exercised shall be payable in full at the
time of exercise, provided that to the extent permitted by
law, the Agreement may permit some or all Participants to
simultaneously exercise Options and sell the Shares thereby
acquired pursuant to a brokerage or similar relationship and
use the proceeds from the sale as payment of the purchase
price of the Shares. The purchase price may be payable in
cash, by delivery or tender of Shares having a Fair Market
Value as of the date the Option is exercised equal to the
purchase price of the Shares being purchased pursuant to the
Option, or a combination thereof, as determined by the
Committee, but no fractional Shares will be issued or
accepted. Provided, however, that a Participant exercising a
stock option shall not be permitted to pay any portion of the
purchase price with Shares if, in the opinion of the
Committee, payment in such manner could have adverse financial
accounting consequences for the Company.
(c) The Committee may provide, in an Agreement or
otherwise, that a Participant who exercises an Option and pays
the Option price in whole or in part with Shares then owned by
the Participant will be entitled to receive another Option
covering the same number of shares tendered and with a price
of no less than Fair Market Value on the date of grant of such
additional Option ("Reload Option"). Unless otherwise provided
in the Agreement, a Participant, in order to be entitled to a
Reload Option, must pay with Shares that have been owned by
the Participant for at least the preceding 180 days.
(d) Each Option shall be exercisable in whole or in
part on the terms provided in the Agreement. In no event shall
any Option be exercisable at any time after the expiration of
its Term. When an Option is no longer exercisable, it shall be
deemed to have lapsed or terminated.
9.2 Incentive Stock Options. In addition to the other terms
and conditions applicable to all Options:
(i) the purchase price of each Share subject to an
Incentive Stock Option shall not be less than 100% of the Fair
Market Value of a Share as of the date the Incentive Stock
Option is granted if this limitation is necessary to qualify
the Option as an Incentive Stock Option (except as provided in
Plan Section 19);
(ii) the aggregate Fair Market Value (determined as
of the date the Option is granted) of the Shares with respect
to which Incentive Stock Options held by an individual first
become exercisable in any calendar year (under the Plan and
all other incentive stock option plans of the Company and its
Affiliates) shall not exceed $100,000 (or such other limit as
may be required by the Code) if this limitation is necessary
to qualify the Option as an Incentive Stock Option and to the
extent an Option or Options granted to a Participant exceed
this limit the Option or Options shall be treated as a
Non-Statutory Stock Option;
(iii) an Incentive Stock Option shall not be
exercisable more than 10 years after the date of grant (or
such other limit as may be required by the Code) if this
limitation is necessary to qualify the Option as an Incentive
Stock Option;
(iv) the Agreement covering an Incentive Stock Option
shall contain such other terms and provisions that the
Committee determines necessary to qualify this Option as an
Incentive Stock Option; and
(v) notwithstanding any other provision of the Plan
to the contrary, no Participant may receive an Incentive Stock
Option under the Plan if, at the time the Award is granted,
the Participant owns (after application of the rules contained
in Code Section 424(d), or its successor provision), Shares
possessing more than 10% of the total combined voting power of
all classes of stock of the Company or its Subsidiaries,
unless (i) the option price for that Incentive Stock Option is
at least 110% of the Fair Market Value of the Shares subject
to that Incentive Stock Option on
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the date of grant and (ii) that Option is not exercisable
after the date five years from the date that Incentive Stock
Option is granted.
9.3 Terms and Conditions of Outside Director Options. This
Section 9.3 shall apply from and after the earlier of the date of
termination of the Digi International Inc. Stock Option Plan or the
date on which no Shares remain available for issuance thereunder.
(a) Outside Director Option Grants. Subject to the
terms and conditions of the Plan, the Committee shall grant
Options to each Outside Director who is not on the date such
Option would be granted the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of more than 5% of the
outstanding Shares, on the terms and conditions set forth in
this Section 9.3. During the term of the Plan and provided
that sufficient Shares are available pursuant to Plan Section
4:
(i) each person who is elected to be an Outside
Director and who was not at any time
previously a director of the Company shall
be granted a Non-Statutory Stock Option. The
date such person is elected to be an Outside
Director of the Company shall be the date of
grant for such Options granted pursuant to
this Section 9.3(a)(i). The number of Shares
covered by each such Option shall be 7,500;
(ii) each person who is an Outside Director at
the conclusion of an Annual Meeting of
Stockholders shall be granted a
Non-Statutory Stock Option on the date of
such Annual Meeting of Stockholders. The
date of such Annual Meeting of Stockholders
shall also be the date of grant for Options
granted pursuant to this Section 9.3(a)(ii).
The number of Shares covered by each such
Option shall be 2,500;
(iii) each person who is elected to be an Outside
Director between Annual Meetings of
Stockholders shall be granted a
Non-Statutory Stock Option. The date such
person is elected to be an Outside Director
of the Company by the Board shall be the
date of grant for such Options granted
pursuant to this Section 9.3(a)(iii). The
number of Shares covered by each such Option
shall be 2,500 multiplied by a fraction, the
numerator of which shall be 12 minus the
number of whole 30-day months that have
elapsed from the date of the most recent
Annual Meeting of Stockholders to the date
such person is elected to be an Outside
Director, and the denominator of which shall
be 12;
(iv) each person who is an Outside Director at
the conclusion of an Annual Meeting of
Stockholders may elect in writing to be
granted a Non-Statutory Stock Option on the
date of such Annual Meeting of Stockholders
in lieu of all cash compensation to which
such Outside Director would be entitled for
the Board year of the Company commencing
with such Annual Meeting of Stockholders.
The date of such Annual Meeting of
Stockholders shall also be the date of grant
for Options granted pursuant to this Section
9.3(a)(iv). The number of Shares covered by
each such Option shall be 9,500. Any such
election by an Outside Director shall be
subject to prior approval by the Committee;
and
(v) each person who is elected to be an Outside
Director between Annual Meetings of
Stockholders may elect in writing to be
granted a Non-Statutory Stock Option in lieu
of all cash compensation to which such
Outside Director would otherwise be entitled
for the period commencing with the date such
person is elected to be an Outside Director
of the Company by the Board and ending on
the date of the next Annual Meeting of
Stockholders. The date such person is
elected to be an Outside Director of the
Company by the Board shall be the date of
grant for such Options granted pursuant to
this Section 9.3(a)(v). The number of Shares
covered by each
10
such Option shall be 9,500 multiplied by a
fraction, the numerator of which shall be 12
minus the number of whole 30-day months that
have elapsed from the date of the most
recent Annual Meeting of Stockholders to the
date such person is elected to be an Outside
Director, and the denominator of which shall
be 12. Such election by an Outside Director
shall be subject to prior approval by the
Committee.
(b) Exercise Price of Outside Director Options. The
purchase price of each Share subject to an Option granted to
an Outside Director pursuant to this Section 9.3 shall be the
Fair Market Value of a Share on the date of grant.
(c) Vesting of Outside Director Options.
(i) Subject to the provisions of Plan Sections
9.3(d) and (e), (x) options granted to
Outside Directors pursuant to Plan Sections
9.3(a)(ii) and (iv) and (y) options granted
to Outside Directors pursuant to Plan
Section 9.3(a)(i) if the date of grant of
such Options is the date of an Annual
Meeting of Stockholders shall vest and
become exercisable in accordance with the
following schedule:
Annual Meeting Cumulative Percentage
of Stockholders Becoming Exercisable
--------------------- ---------------------
One Year After Grant 50%
Two Years After Grant 100%
(ii) Subject to the provisions of Plan Sections
9.3(d) and (e), (x) the options granted to
Outside Directors pursuant to Plan Sections
9.3(a)(iii) and (v) and (y) options granted
to Outside Directors pursuant to Plan
Section 9.3(a)(i) if the date of grant of
such Options is a date other than the date
of an Annual Meeting of Stockholders shall
vest and become exercisable in accordance
with the following schedule:
Anniversary of the Cumulative Percentage
Date of Grant Becoming Exercisable
--------------------- ---------------------
One Year After Grant 50%
Two Years After Grant 100%
(d) Accelerated Vesting of Outside Director Options.
Notwithstanding the vesting schedules set forth in Plan
Section 9.3(c), an Option held by an Outside Director shall
vest and become immediately exercisable upon the latest of (i)
the date on which such Outside Director attains 62 years of
age, (ii) the date on which such Outside Director has
completed five years of Service (as hereinafter defined) and
(iii) the first anniversary of the date of grant of such
Option or, if applicable, the Annual Meeting of Stockholders
next succeeding the Annual Meeting at which such Option was
granted. Any Option granted to an Outside Director on or after
the first accelerated vesting date for such Outside Director
shall automatically vest on the Annual Meeting of Stockholders
next succeeding the Annual Meeting at which such Option was
granted. As used herein, "Service" shall mean service to the
Company or an Affiliate in the capacity of any advisor,
consultant, employee, officer or director, and Service as a
director from an Annual Meeting of Stockholders to the next
succeeding Annual Meeting shall constitute a year of Service,
notwithstanding that such period may actually be more or less
than one year.
(e) Non-exclusivity of Section 9.3. The provisions of
this Section 9.3 are not intended to be exclusive; the
Committee, in its discretion, may grant Options or other
Awards to an Outside Director.
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10. Stock Appreciation Rights. An Award of a Stock Appreciation Right
shall entitle the Participant (or a Successor or Transferee), subject to terms
and conditions determined by the Committee, to receive upon exercise of the
Stock Appreciation Right all or a portion of the excess of (i) the Fair Market
Value of a specified number of Shares as of the date of exercise of the Stock
Appreciation Right over (ii) a specified price that shall not be less than 100%
of the Fair Market Value of such Shares as of the date of grant of the Stock
Appreciation Right. A Stock Appreciation Right may be granted in connection with
part or all of, in addition to, or completely independent of an Option or any
other Award under the Plan. If issued in connection with a previously or
contemporaneously granted Option, the Committee may impose a condition that
exercise of a Stock Appreciation Right cancels a pro rata portion of the Option
with which it is connected and vice versa. Each Stock Appreciation Right may be
exercisable in whole or in part on the terms provided in the Agreement. No Stock
Appreciation Right shall be exercisable at any time after the expiration of its
Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated. Upon exercise of a Stock Appreciation
Right, payment to the Participant or a Successor or Transferee shall be made at
such time or times as shall be provided in the Agreement in the form of cash,
Shares or a combination of cash and Shares as determined by the Committee. The
Agreement may provide for a limitation upon the amount or percentage of the
total appreciation on which payment (whether in cash and/or Shares) may be made
in the event of the exercise of a Stock Appreciation Right.
11. Performance Units.
11.1 Initial Award.
(a) An Award of Performance Units under the Plan
shall entitle the Participant or a Successor or Transferee to
future payments of cash, Shares or a combination of cash and
Shares, as determined by the Committee, based upon the
achievement of pre-established performance targets. These
performance targets may, but need not, include, without
limitation, targets relating to one or more of the Company's
or a group's, unit's, Affiliate's or an individual's
performance. The Agreement may establish that a portion of a
Participant's Award will be paid for performance that exceeds
the minimum target but falls below the maximum target
applicable to the Award. The Agreement shall also provide for
the timing of the payment.
(b) Following the conclusion or acceleration of each
Performance Cycle, the Committee shall determine the extent to
which (i) performance targets have been attained, (ii) any
other terms and conditions with respect to an Award relating
to the Performance Cycle have been satisfied and (iii) payment
is due with respect to an Award of Performance Units.
11.2 Acceleration and Adjustment. The Agreement may permit an
acceleration of the Performance Cycle and an adjustment of performance
targets and payments with respect to some or all of the Performance
Units awarded to a Participant, upon the occurrence of certain events,
which may, but need not include, without limitation, a Fundamental
Change, a recapitalization, a change in the accounting practices of the
Company, a change in the Participant's title or employment
responsibilities, the Participant's death or retirement or, with
respect to payments in Shares with respect to Performance Units, a
reclassification, stock dividend, stock split or stock combination as
provided in Plan Section 16. The Agreement also may provide for a
limitation on the value of an Award of Performance Units that a
Participant may receive.
12. Effective Date and Duration of the Plan.
12.1 Effective Date. The Plan shall become effective as of
November 6, 2000, provided that the Plan is approved by the requisite
vote of stockholders at the January 2001 Annual Meeting of Stockholders
or any adjournment thereof.
12.2 Duration of the Plan. The Plan shall remain in effect
until all Stock subject to it shall be distributed, all Awards have
expired or lapsed, the Plan is terminated pursuant to Plan Section 15,
or November 6, 2010 (the "Termination Date"); provided, however, that
Awards made before the Termination
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Date may be exercised, vested or otherwise effectuated beyond the
Termination Date unless limited in the Agreement or otherwise. No Award
of an Incentive Stock Option shall be made more than 10 years after the
Effective Date (or such other limit as may be required by the Code) if
this limitation is necessary to qualify the Option as an Incentive
Stock Option. The date and time of approval by the Committee of the
granting of an Award shall be considered the date and time at which the
Award is made or granted.
13. Plan Does Not Affect Employment Status.
(a) Status as an eligible Employee shall not be
construed as a commitment that any Award will be made under
the Plan to that eligible Employee or to eligible Employees
generally.
(b) Nothing in the Plan or in any Agreement or
related documents shall confer upon any Employee or
Participant any right to continue in the employment of the
Company or any Affiliate or constitute any contract of
employment or affect any right that the Company or any
Affiliate may have to change such person's compensation, other
benefits, job responsibilities, or title, or to terminate the
employment of such person with or without cause.
14. Tax Withholding. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person (including a
Successor or a Transferee) an amount sufficient to cover any required
withholding taxes. The Company shall have the right to require a Participant or
other person receiving Shares under the Plan to pay the Company a cash amount
sufficient to cover any required withholding taxes before actual receipt of
those Shares. In lieu of all or any part of a cash payment from a person
receiving Shares under the Plan, the Committee may permit the individual to
cover all or any part of the required withholdings through a reduction of the
number of Shares delivered or delivery or tender return to the Company of Shares
held by the Participant or other person, in each case valued in the same manner
as used in computing the withholding taxes under the applicable laws.
15. Amendment, Modification and Termination of the Plan.
(a) The Board may at any time and from time to time terminate,
suspend or modify the Plan. Except as limited in (b) below, the
Committee may at any time alter or amend any or all Agreements under
the Plan to the extent permitted by law.
(b) No termination, suspension, or modification of the Plan
will materially and adversely affect any right acquired by any
Participant or Successor or Transferee under an Award granted before
the date of termination, suspension, or modification, unless otherwise
agreed to by the Participant in the Agreement or otherwise, or required
as a matter of law; but it will be conclusively presumed that any
adjustment for changes in capitalization provided for in Plan Sections
11.2 or 16 does not adversely affect these rights.
16. Adjustment for Changes in Capitalization. Subject to any required
action by the Company's stockholders, appropriate adjustments, so as to prevent
enlargement of rights or inappropriate dilution -- (i) in the aggregate number
and type of Shares available for Awards under the Plan, (ii) in the limitations
on the number of Shares that may be issued to an individual Participant as an
Option or a Stock Appreciation Right in any calendar year or that may be issued
in the form of Restricted Stock or Shares without restrictions, (iii) in the
number and type of Shares and amount of cash subject to Awards then outstanding,
(iv) in the Option price as to any outstanding Options and, (v) subject to Plan
Section 11.2, in outstanding Performance Units and payments with respect to
outstanding Performance Units -- may be made by the Committee in its sole
discretion to give effect to adjustments made in the number or type of Shares
through a Fundamental Change (subject to Plan Section 17), recapitalization,
reclassification, stock dividend, stock split, stock combination or other
relevant change, provided that fractional Shares shall be rounded to the nearest
whole Share.
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17. Fundamental Change. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:
(a) if the Fundamental Change is a merger or consolidation or
statutory share exchange, make appropriate provision for the protection
of the outstanding Options and Stock Appreciation Rights by the
substitution of options, stock appreciation rights and appropriate
voting common stock of the corporation surviving any merger or
consolidation or, if appropriate, the parent corporation of the Company
or such surviving corporation; or
(b) at least ten days before the occurrence of the Fundamental
Change, declare, and provide written notice to each holder of an Option
or Stock Appreciation Right of the declaration, that each outstanding
Option and Stock Appreciation Right, whether or not then exercisable,
shall be canceled at the time of, or immediately before the occurrence
of the Fundamental Change in exchange for payment to each holder of an
Option or Stock Appreciation Right, within ten days after the
Fundamental Change, of cash equal to (i) for each Share covered by the
canceled Option, the amount, if any, by which the Fair Market Value (as
defined in this Section) per Share exceeds the exercise price per Share
covered by such Option or (ii) for each Stock Appreciation Right, the
price determined pursuant to Section 10, except that Fair Market Value
of the Shares as of the date of exercise of the Stock Appreciation
Right, as used in clause (i) of Plan Section 10, shall be deemed to
mean Fair Market Value for each Share with respect to which the Stock
Appreciation Right is calculated determined in the manner hereinafter
referred to in this Section. At the time of the declaration provided
for in the immediately preceding sentence, each Stock Appreciation
Right and each Option shall immediately become exercisable in full and
each person holding an Option or a Stock Appreciation Right shall have
the right, during the period preceding the time of cancellation of the
Option or Stock Appreciation Right, to exercise the Option as to all or
any part of the Shares covered thereby or the Stock Appreciation Right
in whole or in part, as the case may be. In the event of a declaration
pursuant to Plan Section 17(b), each outstanding Option and Stock
Appreciation Right granted pursuant to the Plan that shall not have
been exercised before the Fundamental Change shall be canceled at the
time of, or immediately before, the Fundamental Change, as provided in
the declaration. Notwithstanding the foregoing, no person holding an
Option or a Stock Appreciation Right shall be entitled to the payment
provided for in this Section 17(b) if such Option or Stock Appreciation
Right shall have terminated, expired or been cancelled. For purposes of
this Section only, "Fair Market Value" per Share means the cash plus
the fair market value, as determined in good faith by the Committee, of
the non-cash consideration to be received per Share by the stockholders
of the Company upon the occurrence of the Fundamental Change.
18. Forfeitures. An Agreement may provide that if a Participant has
received or been entitled to payment of cash, delivery of Shares, or a
combination thereof pursuant to an Award within six months before the
Participant's termination of employment with the Company and its Affiliates, the
Committee, in its sole discretion, may require the Participant to return or
forfeit the cash and/or Shares received with respect to the Award (or its
economic value as of (i) the date of the exercise of Options or Stock
Appreciation Rights, (ii) the date of, and immediately following, the lapse of
restrictions on Restricted Stock or the receipt of Shares without restrictions,
or (iii) the date on which the right of the Participant to payment with respect
to Performance Units vests, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than 15 months after the Participant's
termination of employment with the Company and its Affiliates. The occurrences
may, but need not, include competition with the Company or any Affiliate,
unauthorized disclosure of material proprietary information of the Company or
any Affiliate, a violation of applicable business ethics policies of the Company
or Affiliate or any other occurrence specified in the Agreement within the
period or periods of time specified in the Agreement.
19. Corporate Mergers, Acquisitions, Etc. The Committee may also grant
Options, Stock Appreciation Rights, Restricted Stock or other Awards under the
Plan in substitution for, or in connection with the assumption of, existing
options, stock appreciation rights, restricted stock or other award granted,
awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving
a corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a Subsidiary is a party.
The terms and conditions of the substitute Awards may vary from the terms and
conditions set forth in the Plan to the extent as the Board at the time
14
of the grant may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.
20. Unfunded Plan. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Neither the Company, its Affiliates, the Committee, nor
the Board of Directors shall be deemed to be a trustee of any amounts to be paid
under the Plan nor shall anything contained in the Plan or any action taken
pursuant to its provisions create or be construed to create a fiduciary
relationship between the Company and/or its Affiliates, and a Participant or
Successor or Transferee. To the extent any person acquires a right to receive an
Award under the Plan, this right shall be no greater than the right of an
unsecured general creditor of the Company.
21. Limits of Liability.
(a) Any liability of the Company to any Participant with
respect to an Award shall be based solely upon contractual obligations
created by the Plan and the Award Agreement.
(b) Except as may be required by law, neither the Company nor
any member of the Board of Directors or of the Committee, nor any other
person participating in any determination of any question under the
Plan, or in the interpretation, administration or application of the
Plan, shall have any liability to any party for any action taken, or
not taken, in good faith under the Plan.
22. Compliance with Applicable Legal Requirements. No certificate for
Shares distributable pursuant to the Plan shall be issued and delivered unless
the issuance of the certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of applicable
state securities laws, the Securities Act of 1933, as amended and in effect from
time to time or any successor statute, the Exchange Act and the requirements of
the exchanges on which the Company's Shares may, at the time, be listed.
23. Deferrals and Settlements. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.
24. Other Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay laws of any country
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or unless the Committee expressly
determines that an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.
25. Beneficiary Upon Participant's Death. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate or
to the person who acquires the right to succeed to the Award by bequest or
inheritance.
26. Requirements of Law.
(a) To the extent that federal laws do not otherwise control,
the Plan and all determinations made and actions taken pursuant to the
Plan shall be governed by the laws of the State of Minnesota without
regard to its conflicts-of-law principles and shall be construed
accordingly.
(b) If any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not effect
the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
15