EXHIBIT 10.4.1
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EXTENDED SYSTEMS INCORPORATED
1998 DIRECTOR OPTION PLAN
(adopted December, 1997)
(approved by stockholders January, 1998)
(amended and restated January 23, 2001)
(amended and restated October 15, 2003)
1. Purposes of the Plan. The purposes of this 1998 Director Option
Plan are to attract and retain the best available personnel for service as
Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Annual Meeting of Stockholders" means the annual
meeting of stockholders held each year on a date and at a time
designated by the Board and as defined in the Company's bylaws.
(b) "Audit Committee" means the audit committee of the
Board or any successor committee of the Board performing similar
functions.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Common Stock" means the Common Stock of the
Company, par value $0.001 per share.
(f) "Company" means Extended Systems Incorporated, a
Delaware corporation.
(g) "Compensation Committee" means the compensation
committee of the Board of any successor committee of the Board
performing similar functions.
(h) "Director" means a member of the Board.
(i) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a Director's fee by the Company shall
not be sufficient in and of itself to constitute "employment" by the
Company.
(j) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(k) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system,
including without limitation the NASDAQ National Market
or The NASDAQ Small Cap Market of The NASDAQ Stock
Market, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system on
the date of determination, as reported in The Wall
Street Journal or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is regularly quoted
by a recognized securities dealer but selling prices are
not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low
asked prices for the Common Stock on the date of
determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; or
(iii) In the absence of an established
market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Board.
(l) "Inside Director" means a Director who is an
Employee.
(m) "Option" means a stock option granted pursuant to
the Plan.
(n) "Optioned Stock" means the Common Stock subject to
an Option or Restricted Stock award.
(o) "Optionee" means a Director who holds an Option.
(p) "Outside Director" means a Director who is not an
Employee.
(q) "Parent" means a "parent corporation," whether now
or hereafter existing, as defined in Section 424(e) of the Code.
(r) "Plan" means this 1998 Director Option Plan.
(s) "Restricted Stock" means a grant of Shares subject
to a forfeiture restriction that lapses over time.
(t) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.
(u) "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of
the Internal Revenue Code of 1986.
3. Stock Subject to the Plan.
(a) Plan Pool. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be
granted as Restricted Stock or optioned and sold pursuant to an
Option under the Plan is 250,000 Shares of Common Stock (the
"Pool"). The Shares may be authorized, but unissued, or reacquired
Common Stock.
(b) Shares Returned to Pool. Unless the Plan has
previously been terminated, the following events will result in
Shares being returned to the Pool to be available for future grant
under the Plan:
(i) An Option expires or becomes
unexercisable without having been exercised in full;
(ii) Unvested Restricted Stock is forfeited;
and
(iii) Shares tendered to the Company to
exercise an Option.
Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not
become available for future distribution under the Plan.
4. Administration of Options under the Plan.
(a) Procedures for Grant. The provisions set forth in
this Section 4(a) shall not be amended more than once every six
months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules
thereunder. All grants of Options to Outside Directors under this
Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to
select which Outside Directors shall be granted Options
or to determine the number of Shares to be covered by
Options granted to Outside Directors.
(ii) Initial Board Grant. Each Outside
Director shall be automatically granted an Option to
purchase 20,000 Shares (the "First Option") on the date
on which the later of the following events occurs:
(A) the effective date of this
Plan, as determined in accordance with
Section 6 hereof, or
(B) the date on which such
person first becomes an Outside Director,
whether through election by the stockholders
of the Company or appointment by the Board
to fill a vacancy; provided, however, that
an Inside Director who ceases to be an
Inside Director but who remains a Director
shall not receive a First Option.
(iii) Annual Board Option Grant. Each
Outside Director shall be automatically granted an
Option to purchase 10,000 Shares (a "Subsequent Option")
on the date of the Company's Annual Meeting of
Stockholders of each year provided he or she is then an
Outside Director and if as of such date, he or she shall
have served on the Board for at least the preceding six
(6) months.
(iv) 2003 Transition Option Grant. Each
Outside Director appointed by the Board to fill a
vacancy after July 1, 2003 who is also elected by the
stockholders of the Company at the Company's 2003 Annual
Meeting of Stockholders shall be automatically granted
an Option to purchase 5,000 Shares (a "Transition
Option") on the date of the Company's 2003 Annual
Meeting of Stockholders provided he or she is then an
Outside Director.
(v) Annual Board Restricted Stock Grant.
Each Outside Director shall be automatically granted a
number of Shares of Restricted Stock on the date of the
Company's Annual Meeting of Stockholders, determined by
dividing (a) $16,000 by (b) the Fair Market Value of a
Share on the date of the Company's Annual Meeting of
Stockholders of each year provided he or she is then an
Outside Director.
(vi) Annual Chairman of the Board Restricted
Stock Grant. The Chairman of the Board of Directors
shall be automatically granted a number of Shares of
Restricted Stock on the date of the Company's Annual
Meeting of Stockholders, determined by dividing (a)
$20,000 by (b) the Fair Market Value of a Share on the
date of the Company's Annual Meeting of Stockholders of
each year provided he or she is then an Outside
Director.
(vii) Annual Chairman of the Audit Committee
Restricted Stock Grant. The Chairman of the Audit
Committee Board of Directors shall be automatically
granted a number of Shares of Restricted Stock on the
date of the Company's Annual Meeting of Stockholders,
determined by dividing (a) $12,500 by (b) the Fair
Market Value of a Share on the date of the Company's
Annual Meeting of Stockholders of each year provided he
or she is then an Outside Director.
(viii) Annual Chairman of the Compensation
Committee Restricted Stock Grant. The Chairman of the
Audit Committee Board of Directors shall be
automatically granted a number of Shares of Restricted
Stock on the date of the Company's Annual Meeting of
Stockholders, determined by dividing (a) $7,500 by (b)
the Fair Market Value of a Share on the date of the
Company's Annual Meeting of Stockholders of each year
provided he or she is then an Outside Director.
(ix) Notwithstanding the provisions of
subsections (ii) and (iii) hereof, any exercise of an
Option granted or vesting of a Restricted Stock grant
before the Company has obtained stockholder approval of
the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such stockholder approval of
the Plan in accordance with Section 16 hereof.
(x) First Option Terms. The terms of a First
Option granted hereunder shall be as follows:
(A) the term of the First Option
shall be ten (10) years,
(B) the First Option shall be
exercisable only while the Outside Director
remains a Director of the Company, except as
set forth in Sections 8 and 10 hereof,
(C) the exercise price per Share
shall be 100% of the Fair Market Value per
Share on the date of grant of the First
Option. In the event that the date of grant
of the First Option is not a trading day,
the exercise price per Share shall be the
Fair Market Value on the next trading day
immediately following the date of grant of
the First Option.
(D) subject to Section 10 hereto
the First Option shall be exercisable, in
whole or in part, according to the following
vesting schedule: 33% of the total Shares
subject to option shall vest twelve months
after the date of grant, and 1/36 of the
Shares subject to the First Option shall
vest each month thereafter subject to the
Optionee continuing to be a Director.
(xi) Subsequent Option Terms. The terms of a
Subsequent Option granted hereunder shall be as follows:
(A) term of the Subsequent
Option shall be ten (10) years.
(B) the Subsequent Option shall
be exercisable only while the Outside
Director remains a Director of the Company,
except as set forth in Sections 8 and 10
hereof,
(C) the exercise price per Share
shall be 100% of the Fair Market Value per
Share on the date of grant of the Subsequent
Option. In the event that the date of grant
of the Subsequent Option is not a trading
day, the exercise price per Share shall be
the Fair Market Value on the next trading
day immediately following the date of grant
of the Subsequent Option.
(D) subject to Section 10 hereto
the Subsequent Option shall become vested
and exercisable, in whole or in part, on the
earlier of the first anniversary of the date
of grant of the Subsequent Option or the
date of the next Annual Meeting of
Stockholders, provided that the Optionee
continues to serve as a Director on such
dates.
(xii) 2003 Transition Option Terms. The
terms of a 2003 Transition Option granted hereunder
shall be as follows:
(A) term of the 2003 Transition
Option shall be ten (10) years.
(B) the 2003 Transition Option
shall be exercisable only while the Outside
Director remains a Director of the Company,
except as set forth in Sections 8 and 10
hereof,
(C) the exercise price per Share
shall be 100% of the Fair Market Value per
Share on the date of grant of the 2003
Transition Option. In the event that the
date of grant of the 2003 Transition Option
is not a trading day, the exercise price per
Share shall be the Fair Market Value on the
next trading day immediately following the
date of grant of the Subsequent Option.
(D) subject to Section 10 hereto
the 2003 Transition Option shall become
vested and exercisable, in whole or in part,
on the earlier of the first anniversary of
the date of grant of the 2003 Transition
Option or the date of the next Annual
Meeting of Stockholders, provided that the
Optionee continues to serve as a Director on
such dates.
(xiii) Vesting of Restricted
Stock. Subject to Section 10 hereto,
Restricted Stock granted hereunder shall
vest according to following vesting
schedule: 33% of the total Shares subject to
option shall vest on each of the first three
anniversary dates of the restricted stock
grant. In the event that the Optionee has
attended at least 75% of all Board meetings
(for Annual Board Restricted Stock grant and
Annual Chairman of the Board of Directors
Restricted Stock grant), Audit Committee
meetings (for Annual Chairman of the Audit
Committee Restricted Stock Grant) and
Compensation Committee meetings (for Annual
Chairman of the Compensation Committee
Restricted Stock grant), held during the
past year, as applicable, the Restricted
Stock shall vest, in whole, on the earlier
of the first anniversary of the date of
grant of the Restricted Stock or the date of
the next Annual Meeting of Stockholders,
provided that the Optionee continues to
serve as a Director on such dates.
(xiii) In the event that any Option or
Restricted Stock granted under the Plan would cause the
number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options and
issued under Restricted Stock grants to exceed the Pool
then the remaining Shares available for grant shall be
granted to the Outside Directors on a pro rata basis. No
further grants shall be made until such time, if any, as
additional Shares become available for grant under the
Plan through action of the Board or the stockholders to
increase the number of Shares which may be issued under
the Plan or through cancellation or expiration of
Options previously granted hereunder.
5. Eligibility. Options and Restricted Stock may be granted only to
Outside Directors. All Options and Restricted Stock shall be automatically
granted in accordance with the terms set forth in Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a Director,
nor shall it interfere in any way with any rights which the Director or the
Company may have to terminate the Director's relationship with the Company at
any time.
6. Term of Plan. The Plan shall become effective upon the date of
the effectiveness that the Company's registration statement for the purpose of
effecting the initial public offering of the Common Stock becomes effective
under the Securities Act of 1933, as amended (the Securities Act"). It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall consist of:
(i) cash, or
(ii) check, or
(iii) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan provided
that Optionee is eligible to participate in such cashless exercise program, as
determined in the sole discretion of the Company, or
(iv) other shares which (x) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised,
(v) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price, or
(vi) any combination of the foregoing methods of payment.
8. Exercise of Option.
(a) Procedure for Exercise: Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are
set forth in Section 4 hereof, provided, however, that no Options
shall be exercisable until stockholder approval of the Plan in
accordance with Section 16 hereof has been obtained.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment
may consist of any consideration and method of payment allowable
under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to
the Optionee as soon as practicable after exercise of the Option. No
adjustment shall be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available,
both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors
must comply with the applicable provisions of Rule 16b-3 promulgated
under the Exchange Act or any successor thereto and shall contain
such additional conditions or restrictions as may be required
thereunder to qualify Plan transactions, and other transactions by
Outside Directors that otherwise could be matched with Plan
transactions, for the maximum exemption from Section 16 of the
Exchange Act.
(c) Termination of Continuous Status as a Director.
Subject to Section 10 hereof, in the event an Optionee's status as a
Director terminates (other than upon the Optionee's death or total
and permanent disability (as defined in Section 22(e)(3) of the
Code)), the Optionee may exercise his or her Option, but only within
twelve (12) months following the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the
date of such termination (but in no event later than the expiration
of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of such termination and
to the extent that the Optionee does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein,
the Option shall terminate. Unvested Restricted Stock held by a
Director on the date of such termination shall be forfeited.
(d) Disability of 0ptionee. In the event Optionee's
status as a Director terminates as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), the
Optionee may exercise his or her Option, but only within twelve (12)
months following the date of such termination, and only to the
extent that the Optionee was entitled to exercise it on the date of
such termination (but in no event later than the expiration of its
ten 10) year term). To the extent that the Optionee was not entitled
to exercise an Option on the date of termination, or if he or she
does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
Unvested Restricted Stock held by a Director on the date of such
termination shall be forfeited.
(e) Death of Optionee. In the event of an Optionee's
death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise the
Option, but only within twelve (12) months following the date of
death, and only to the extent that the Optionee was entitled to
exercise it on the date of death (but in no event later than the
expiration of its ten (IO) year term). To the extent that the
Optionee was not entitled to exercise an Option on the date of
death, and to the extent that the Optionee's estate or a person who
acquired the right to exercise such Option does not exercise such
Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate. Unvested Restricted
Stock held by a Director on the date of such termination shall be
forfeited.
9. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.
(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares
covered by each outstanding Option or Restricted Stock award, the
number of Shares which have been authorized for issuance under the
Plan but as to which no Options or Restricted Stock awards have yet
been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Restricted Stock award,
as well as the price per Share covered by each such outstanding
Option, and the number of Shares issuable pursuant to the automatic
grant provisions of Section 4 hereof shall be proportionately
adjusted for any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration."
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares
subject to an Option or Restricted Stock award.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent
that an Option has not been previously exercised, it shall terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of
the Company with or into
another corporation or the sale of substantially all of the assets
of the Company, outstanding Options and Restricted Stock awards may
be assumed or equivalent options and Restricted Stock awards may be
substituted by the successor corporation or a Parent or Subsidiary
thereof (the "Successor Corporation"). If an Option or Restricted
Stock award is assumed or substituted for, the Option or equivalent
option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a
director of the Successor Corporation. Following such assumption or
substitution, if the Optionee's status as a Director or director of
the Successor Corporation, as applicable, is terminated other than
upon a voluntary resignation by the Optionee, the Option or option
or Restricted Stock award shall become fully exercisable, including
as to Shares for which it would not otherwise be exercisable.
Thereafter, the Option or option shall remain exercisable in
accordance with Sections 8(c) through (e) above.
If the Successor Corporation does not assume an
outstanding Option or Restricted Stock award or substitute for it an
equivalent option or award, the Option or Restricted Stock award
shall become fully vested and exercisable, including as to Shares
for which it would not otherwise be exercisable. In such event the
Board shall notify the Optionee that the Option shall be fully
exercisable for a period of thirty (30) days from the date of such
notice, and upon the expiration of such period the Option shall
terminate.
For the purposes of this Section 10(c), an Option or
Restricted Stock award shall be considered assumed if, following the
merger or sale of assets, the Option or Restricted Stock award
confers the right to purchase or receive, for each Share of Optioned
Stock subject to the Option or Restricted Stock award immediately
prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger
or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a
choice of consideration the type of consideration chosen by the
holders of a majority of the outstanding Shares). If such
consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation
provide for the consideration to be received upon the exercise or
vesting of the Option or Restricted Stock award, for each Share of
Optioned Stock subject to the Option or Restricted Stock award, to
be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received
by holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in
Section 4, the Board may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to
comply with Rule 16b-3 under the Exchange Act (or any other
applicable law or regulation), the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree
as required.
(b) Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options or
Restricted Stock already granted and such Options and Restricted
Stock shall remain in full force and effect as if this Plan had not
been amended or terminated.
12. Time of Granting Options and Restricted Stock. The date of grant
of an Option or Restricted Stock grant shall, for all purposes, be the date
determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or grant of Restricted Stock unless the
issuance and delivery of such Shares pursuant thereto, and in the case of an
Option, the exercise of such Option shall comply with all relevant provisions of
law, including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
15. Option or Restricted Stock Agreement. Options and or Restricted
Stock awards shall be evidenced by written agreements in such form as the Board
shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject
to approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.