EXHIBIT 10(g)
DIGI INTERNATIONAL INC.
2000 OMNIBUS STOCK PLAN
AS AMENDED AND RESTATED AS OF
SEPTEMBER 28, 2005
(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
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(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.
(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.
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(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.
(ee) "Term" means the period during which an Option or Stock
Appreciation Right may be exercised or the period during which the
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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
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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.
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.
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(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.
(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
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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
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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.
(i) If a Participant's employment or other relationship with
the Company and its Affiliates 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
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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 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.
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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.
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(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).
(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);
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(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 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
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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
9,500;
(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 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;
(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 3,500. 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
14
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 such Option shall be 3,500
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%
15
(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.
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.
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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 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
17
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.
18
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.
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
19
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 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,
20
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.
21
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.
22