EXHIBIT 4.04
DIGI INTERNATIONAL INC.
STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
===============================================================================
Full Name of Optionee:
-------------------------------------------------------------------------------
No. of Shares Covered: Date of Grant:
-------------------------------------------------------------------------------
Exercise Price Per Share: $ Expiration Date:
-------------------------------------------------------------------------------
Exercise Schedule:
No. of Shares
As to Which Option
Vesting Date Becomes Exercisable
------------ -------------------
===============================================================================
This is a NONSTATUTORY STOCK OPTION AGREEMENT between Digi
International Inc., a Delaware corporation (the "Company"), and the optionee
(the "Optionee") listed above.
WHEREAS, the Company desires to carry out the purposes of its Digi
International Inc. Stock Option Plan (the "Plan"), by affording the Optionee an
opportunity to purchase Common Stock of the Company, par value $.01 per share
(the "Common Shares"), according to the terms set forth herein;
NOW THEREFORE, the parties hereto hereby agree as follows:
1. GRANT OF OPTION. Subject to the terms of the Plan, the Company
hereby grants to the Optionee the right and option (the "Option") to purchase
the number of Common Shares specified at the beginning of this Agreement, on the
terms and conditions hereinafter set forth. The Option is not intended by the
Company to be an "incentive stock option" within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended (the "Code").
2. PURCHASE PRICE. The purchase price of each of the Common Shares
subject to the Option shall be the exercise price per share specified at the
beginning of this Agreement, which price has been specified in accordance with
the Plan.
3. OPTION PERIOD.
(a) Subject to the provisions of paragraphs 5(a), 5(b) and 6(b)
hereof, the Option shall become exercisable as to the number of shares and on
the dates specified in the exercise schedule at the beginning of this Agreement.
The exercise schedule shall be cumulative; thus, to the extent the Option has
not already been exercised and has not expired, terminated or been canceled, the
Optionee may at any time, and from time to time, purchase all or any portion of
the Common Shares then purchasable under the exercise schedule. Notwithstanding
the foregoing or any other provision herein to the contrary, the Option shall
become immediately exercisable:
(i) upon the occurrence of the death or disability within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), of the Optionee (as more particularly described
in paragraphs 5(a)(ii) or 5(b) and 6(a) hereof); or
(ii) in the event that the committee under the Plan (the
"Committee") shall declare pursuant to paragraph 6(b) hereof that the
Option shall be canceled at the time of, or immediately prior to the
occurrence of an Event, as defined in paragraph 6(b) hereof.
(b) The Option and all rights to purchase shares thereunder shall
cease on the earliest of:
(i) the expiration date specified at the beginning of this
Agreement (which date shall not be more than ten years after the date
of this Agreement);
(ii) the expiration of the period after the termination of the
Optionee's employment (as defined in paragraph 4 of the Plan) within
which the Option is exercisable as specified in paragraph 5(a) or
5(b), whichever is applicable; or
(iii) the date, if any, fixed for cancellation pursuant to
paragraph 6(b) hereof.
Notwithstanding any other provision in this Agreement, in no event may anyone
exercise the Option, in whole or in part, after its original expiration date.
-2-
4. MANNER OF EXERCISING OPTION.
(a) Subject to the terms and conditions of this Agreement, the Option
may be exercised by delivering written notice of exercise to the Company at its
principal executive office, to the attention of its President. The notice shall
state the election to exercise the Option and the number of Common Shares in
respect of which it is being exercised, and shall be signed by the person
exercising the Option. If the person exercising the Option is not the Optionee,
he or she also shall send with the notice appropriate proof of his or her right
to exercise the Option. Such notice shall be accompanied by either:
(i) payment (by check, bank draft or money order payable to the
Company) of the full purchase price of the Common Shares being
purchased; or
(ii) certificates for unencumbered Common Shares having an
aggregate Fair Market Value (as defined in paragraph 5(c) of the Plan)
on the date of exercise equal to the purchase price of the Common
Shares to be purchased; or
(iii) a combination of cash and such unencumbered Common Shares.
The Optionee shall duly endorse all certificates delivered to the Company
pursuant to the foregoing subparagraphs (a)(ii) or (a)(iii) in blank and shall
represent and warrant in writing that he or she is the owner of the Common
Shares so delivered free and clear of all liens, security interests and other
restrictions or encumbrances.
(b) As soon as practicable after receipt of the purchase price
provided for above, the Company shall deliver to the person exercising the
Option, in the name of the Optionee or his or her estate or heirs, as the case
may be, a certificate or certificates representing the Common Shares being
purchased. The Company shall pay all original issue or transfer taxes, if any,
with respect to the issue or transfer of the Common Shares to the person
exercising the Option and all fees and expenses necessarily incurred by the
Company in connection therewith. All Common Shares so issued shall be fully
paid and nonassessable. Notwithstanding anything to the contrary in this
Agreement, the Company shall not be required, upon the exercise of this Option
or any part thereof, to issue or deliver any Common Shares prior to the
completion of such registration or other qualification of such Common Shares
under any State law, rule or regulation as the Company shall determine to be
necessary or desirable.
-3-
5. EXERCISABILITY OF OPTION AFTER TERMINATION OF EMPLOYMENT.
(a) During the lifetime of the Optionee, the Option may be exercised
only while the Optionee is employed (as defined in paragraph 4 of the Plan) by
the Company or a parent or subsidiary thereof, and only if the Optionee has been
continuously so employed since the date of this Agreement, except that:
(i) if the Optionee is not an Outside Director, the Option shall
continue to be exercisable for three months after termination of the
Optionee's employment but only to the extent that the Option was
exercisable immediately prior to the Optionee's termination of
employment, and if the Optionee is an Outside Director, the Option
shall continue to be exercisable after the Optionee ceases to be a
director of the Company but only to the extent that the Option was
exercisable immediately prior to the Optionee's ceasing to be a
director;
(ii) in the event the Optionee is disabled (within the meaning of
Section 22(e)(3) of the Code) while employed, the Optionee or his or
her legal representative may exercise the Option within one year after
the termination of the Optionee's employment; and
(iii) if the Optionee's employment terminates after a
declaration pursuant to paragraph 6(b) of this Agreement, the Optionee
may exercise the Option at any time permitted by such declaration.
(b) In the event of the Optionee's death while employed by the
Company or a parent or subsidiary thereof, or within three months after his or
her termination of employment, the legal representative, heirs or legatees of
the Optionee's estate or the person who acquired the right to exercise the
Option by bequest or inheritance may exercise the Option within one year after
the death of the Optionee.
(c) Neither the transfer of the Optionee between any combination of
the Company, its parent and any subsidiary of the Company, nor a leave of
absence granted to the Optionee and approved by the Committee, shall be deemed a
termination of employment. The terms "parent" and "subsidiary" as used herein
shall have the meaning ascribed to "parent corporation" and "subsidiary
corporation," respectively, in Sections 425(e) and (f) (or successor provisions)
of the Code.
6. ACCELERATION OF OPTION.
(a) DISABILITY OR DEATH. If paragraph 5(a)(ii) or 5(b) of this
Agreement is applicable, the Option, whether or not previously exercisable,
shall become immediately exercisable in full if the Optionee shall have been
employed continuously by the Company or a
-4-
parent or subsidiary thereof between the date the Option was granted and the
date of such disability or, in the event of death, a date not more than three
months, prior to such death.
(b) DISSOLUTION, LIQUIDATION, MERGER. In the event of (i) a proposed
merger or consolidation of the Company with or into any other corporation,
regardless of whether the Company is the surviving corporation, unless
appropriate provision shall have been made for the protection of the Option by
the substitution, in lieu of the Option, of an option to purchase appropriate
voting common stock (the "Survivor's Stock") of the corporation surviving any
such merger or consolidation or, if appropriate, the parent corporation of the
Company or such surviving corporation, or, alternatively, by the delivery of a
number of shares of the Survivor's Stock which has a Fair Market Value (as
defined in paragraph 5(c) of the Plan) as of the effective date of such merger
or consolidation equal to the product of (A) the excess of (x) the Event
Proceeds per Common Share (as hereinafter defined) covered by the Option as of
such effective date, over (y) the Option exercise price per Common Share, times
(B) the number of Common Shares covered by the Option, or (ii) the proposed
dissolution or liquidation of the Company (such merger, consolidation,
dissolution or liquidation being herein called an "Event"), the Committee shall
declare, at least ten days prior to the actual effective date of an Event, and
provide written notice to the Optionee of the declaration, that the Option,
whether or not then exercisable, shall be canceled at the time of, or
immediately prior to the occurrence of, the Event (unless it shall have been
exercised prior to the occurrence of the Event) in exchange for payment to the
Optionee, within ten days after the Event, of cash equal to the amount (if any),
for each Common Share covered by the canceled Option, by which the Event
Proceeds per Common Share (as hereinafter defined) exceeds the exercise price
per Common Share covered by the Option. At the time of the declaration provided
for in the immediately preceding sentence, the Option shall immediately become
exercisable in full and the Optionee shall have the right, during the period
preceding the time of cancellation of the Option, to exercise the Option as to
all or any part of the Common Shares covered thereby. The Option, to the extent
it shall not have been exercised prior to the Event, shall be canceled at the
time of, or immediately prior to, the Event, as provided in the declaration, and
this Plan shall terminate at the time of such cancellation, subject to the
payment obligations of the Company provided in this paragraph 6(b). For
purposes of this paragraph, "Event Proceeds per Common Share" shall mean the
cash plus the fair market value, as determined in good faith by the Committee,
of the non-cash consideration to be received per Common Share by the
stockholders of the Company upon the occurrence of the Event.
7. LIMITATION ON TRANSFER. During the lifetime of the Optionee,
only the Optionee or his or her guardian or legal representative may exercise
the Option. The Optionee shall not assign or transfer the Option otherwise than
by will or the laws of descent and distribution, and the Option shall not be
subject to pledge, hypothecation, execution, attachment or similar process. Any
attempt to assign, transfer, pledge, hypothecate or otherwise dispose of the
Option contrary to the provisions hereof, and the levy of any attachment or
similar process upon the Option, shall be null and void.
-5-
8. STOCKHOLDER RIGHTS BEFORE EXERCISE. The Optionee shall have none
of the rights of a stockholder of the Company with respect to any share subject
to the Option until the share is actually issued to him or her upon exercise of
the Option.
9. DISCRETIONARY ADJUSTMENT. The Committee may in its sole
discretion make appropriate adjustments in the number of shares subject to the
Option and in the purchase price per share to give effect to any adjustments
made in the number of outstanding Common Shares of the Company through a merger,
consolidation, recapitalization, reclassification, combination, stock dividend,
stock split or other relevant change, provided that fractional shares shall be
rounded to the nearest whole share.
10. TAX WITHHOLDING. The parties hereto recognize that the Company
or a parent or subsidiary thereof may be obligated to withhold federal and state
income taxes and social security or other taxes upon the Optionee's exercise of
the Option. The Optionee agrees that, at the time he or she exercises the
Option, if the Company or a parent or subsidiary thereof is required to withhold
such taxes, he or she will promptly pay in cash upon demand to the Company, or
the parent or subsidiary having such obligation, such amounts as shall be
necessary to satisfy such obligation; provided, however, that in lieu of all or
any part of such a cash payment, the Committee may, but shall not be required
to, (or, in the case of an Optionee who is an Outside Director (as defined in
paragraph 4 of the Plan), the Committee shall) permit the Optionee to elect to
cover all or any part of the required withholdings, and to cover any additional
withholdings up to the amount needed to cover the Optionee's full FICA and
federal, state and local income tax with respect to income arising from the
exercise of the Option, through a reduction of the number of Common Shares
delivered to the Optionee or through a subsequent return to the Company of
shares delivered to the Optionee. If the Optionee is subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934, as amended,
any such election, except as set forth in paragraph 10(c) below, is also subject
to the following:
(a) TIME OF ELECTION. The Optionee may make the election only during
certain specified time periods, as follows:
(i) the election may be made during the period beginning on the
third business day following the date of public release of the
Company's quarterly or annual financial statement and ending on the
twelfth business day following such date of public release; or
(ii) the election may be made at least six months prior to the
date as of which the amount of tax to be withheld is determined;
provided, however, an election by the Optionee pursuant to clause (i) or (ii)
may not be made within six months of the date of grant of the Option unless the
Optionee's death or disability occurs during said six-month period.
-6-
(b) COMMITTEE APPROVAL; REVOCATION. The Committee's approval of such
an election, if given, may be granted in advance but is subject to revocation by
the Committee at any time. In the case of an Optionee who is an Outside
Director (as defined in paragraph 4 of the Plan), such election by the Optionee
shall not be subject to approval nor revocation by the Committee in accordance
with the Plan. Once an election is made, the Optionee may not revoke it.
(c) EXCEPTION. Notwithstanding the foregoing, the Optionee who
tenders previously owned shares to the Company in payment of the purchase price
of shares in connection with an option exercise may also tender previously owned
shares to the Company in satisfaction of any tax withholding obligations in
connection with such option exercise without regard to the specified time
periods set forth in paragraph 10(a) above.
11. INTERPRETATION OF THIS AGREEMENT. All decisions and
interpretations made by the Committee with regard to any question arising
hereunder or under the Plan shall be binding and conclusive upon the Company and
the Optionee. In the event that there is any inconsistency between the
provisions of this Agreement and the Plan, the provisions of the Plan shall
govern.
12. DISCONTINUANCE OF EMPLOYMENT. This Agreement shall not give the
Optionee a right to continued employment with the Company or any parent or
subsidiary thereof, and the Company or any such parent or subsidiary thereof
employing the Optionee may terminate his or her employment and otherwise deal
with the Optionee without regard to the effect it may have upon him or her under
this Agreement.
13. GENERAL. The Company shall at all times during the term of this
Option reserve and keep available such number of Common Shares as will be
sufficient to satisfy the requirements of this Option Agreement. This Agreement
shall be binding in all respects on the Optionee's heirs, representatives,
successors and assigns. This Agreement is entered into under the laws of the
State of Minnesota and shall be construed and interpreted thereunder.
-7-
IN WITNESS WHEREOF, the Optionee and the Company have executed this
Agreement as of the day of , .
---- ----------- ----
---------------------------------------
Optionee
DIGI INTERNATIONAL INC.
By
------------------------------------
Its
---------------------------------
M1:0088904.01
-8-
