1
EX-4.3
INTELLIGENT SYSTEMS CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSE. The purpose of the Intelligent Systems Corporation
Non-Employee Directors' Stock Option Plan (the "Plan") is to advance the
interests of Intelligent Systems Corporation (the "Company"), a Georgia
corporation, and its shareholders by providing members of the Company's Board of
Directors (the "Board") who are not employees of the Company or any of its
subsidiaries with additional incentives to promote the success of the Company,
to increase their proprietary interest in the success of the Company, and to
encourage them to remain on its Board.
2. ADMINISTRATION.
This Plan shall be administered by the Board or a committee appointed
by it for the purpose of administering the Plan (the Board or such committee, as
the case may be, in such administrative capacity being hereinafter referred to
as the "Administrator"). The Administrator shall have all the powers vested in
it by the terms of the Plan, which include the authority (within the limitations
described herein) to prescribe the form of the agreements embodying the awards
of the non-qualified stock options (the "Options"). The Administrator, subject
to the provisions of the Plan, shall grant Options under the Plan and shall have
the power to construe the Plan, to determine all questions arising hereunder,
and to adopt and amend such rules and regulations for the administration of the
Plan as it may deem desirable. Any decision of the Administrator in the
administration of the Plan, as described herein, shall be final and conclusive.
The Administrator may act only by a majority of its members in office, except
that the members of the Administrator may authorize any one or more of their
number or the Secretary or any other executive officer of the Company to execute
and deliver documents on behalf of the Administrator.
3. PARTICIPATION. Each member of the Board of the Company who is
not an employee of the Company or any of its subsidiaries (a "Non-Employee
Director") shall receive Options in accordance with Paragraph 5 below. As used
herein, the term "subsidiary" means any corporation at least 50% of whose
outstanding voting stock is owned, directly or indirectly, by the Company.
4. AWARDS UNDER THE PLAN.
(a) Type of Awards. Awards under the Plan shall include only
Options, which are rights to purchase shares of the common stock of the Company
having a par value of $.01 per share (the "Shares"). All Options are subject to
the terms, conditions, and restrictions specified in this Plan.
(b) Maximum Number of Shares That May be Issued. No more than
200,000 Shares, subject to adjustment as provided in Paragraph 6 below, may be
issued under the Plan pursuant to the exercise of Options.
(c) Rights with Respect to Shares. A Non-Employee Director to whom
an Option is granted (and any person succeeding to such a Non-Employee
Director's rights pursuant to the Plan) shall have no rights as a shareholder
with respect to any Shares issuable pursuant to any such Option until the date
of the issuance of a stock certificate to him for such Shares. Except as
provided in Paragraph 6 below, no adjustment shall be made for dividends,
distributions, or other rights (whether ordinary or extraordinary, and whether
in cash, securities, or other property) for which the record date is prior to
the date such stock certificate is issued.
5. NON-QUALIFIED STOCK OPTIONS. All Options shall be
non-qualified. Each Option shall be evidenced by an agreement in such form as
the Board shall prescribe from time to time in accordance with the Plan and
shall be subject to the following terms and conditions:
7
2
(a) The Option exercise price shall be the fair market value of
the Shares subject to such Option on the date the Option is granted. The fair
market value per Share on any date shall mean the closing sales price, regular
way, or in the absence thereof, the mean of the last reported bid and asked
quotations, on the date of grant.
(b) Each Non-Employee Director on the date of adoption of the Plan
shall receive an Option for 5,000 Shares. Any Non-Employee Director initially
elected to the Board subsequent to the adoption of the Plan shall receive an
Option for 5,000 Shares upon his election to the Board. Beginning on the date of
the adoption of this Plan, on the date of the Annual Meeting of Shareholders
each year thereafter during the life of this Plan, each Non-Employee Director
then serving, shall receive an Option for 4,000 Shares. Such Options shall be
subject to the terms, conditions and restrictions specified in this Plan.
(c) An Option shall not be transferable by the optionee other than
by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act of 1974, as
amended.
(d) All Options shall have a term not to exceed ten (10) years and
shall become cumulatively exercisable as to 50 percent of the shares covered
thereby on each of the first and second anniversaries of the date of grant, so
that on and after the second anniversary the Option shall be exercisable (to the
extent not theretofore exercised) as to all of the Shares covered thereby. If an
Option becomes exercisable on any such anniversary as to other than a whole
number of Shares, such number shall be rounded down to the nearest whole number.
(e) An Option shall not be exercisable unless payment in full is
made for the Shares being acquired thereunder at the time of exercise, such
payment to be made in United States Dollars by cash or check. It is expressly
acknowledged, however, that to the extent permitted by Section 16 of the
Securities Exchange Act of 1934 ("Section 16") "Cashless" exercises are
permitted under this Plan.
(f) Subject to Subparagraph 5(g) with respect to a Change of
Control (as hereinafter defined), if a participant ceases to be a Non-Employee
Director, the Non-Employee Director shall continue to have the right to exercise
any Options for Shares that were exercisable at the time the Non-Employee
Director ceased being a Non-Employee Director. All Options that were not
exercisable at the time the Non-Employee Director ceased being a Non-Employee
Director, shall be cancelled and of no further force or effect.
(g) Notwithstanding any other contrary provision of this Plan, any
outstanding Option which has not by its terms expired shall become exercisable
in full in the event of a Change in Control. For purposes of this paragraph (g),
a Change in Control shall mean:
(i) The accumulation by an unrelated person of beneficial
ownership of more than 25% of the Company's stock; or
(ii) The sale, or agreement to sell, all or substantially
all of the Company's assets to an unrelated person, in a merger or
otherwise; or
(iii) A change in control within the meaning of the SEC
rules (control means "the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a
person, whether through ownership of voting securities, by contract, or
otherwise").
6. CAPITAL ADJUSTMENTS. The number and price of Shares covered by
each Option and the total number of Shares that may be optioned and sold under
the Plan shall be proportionately adjusted to reflect any stock dividend, stock
split, or share combination of the common stock or any recapitalization of the
Company. In the event of any merger, consolidation, reorganization, liquidation,
or dissolution of the Company, or any exchange of Shares involving the common
stock, any Option granted under the Plan shall automatically be deemed to
pertain to the securities and other property to which a holder of the number of
Shares covered by the Option would have been entitled to receive in connection
with any such event. The
8
3
Administrator shall have the sole discretion to make all interpretations and
determinations required under this paragraph to the extent it deems equitable
and appropriate.
The Company, during the term of the Options granted hereunder,
shall at all times reserve and keep available, and will seek to obtain from any
regulatory body having jurisdiction, any requisite authority in order to issue
and sell such number of Shares of common stock as shall be sufficient to satisfy
the requirements of the Options granted under the Plan. If, in the opinion of
its counsel, the issuance or sale of any Shares of its stock hereunder shall not
be lawful for any reason, including the inability of the Company to obtain from
any regulatory body having jurisdiction authority deemed by such counsel to be
necessary to such issuance or sale, the Company shall not be obligated to issue
or sell any such Shares.
7. DEATH OR TOTAL DISABILITY. If any person to whom an Option has
been granted shall die or become totally disabled while holding an Option that
has not been fully exercised, his executors, administrators, heirs, personal
representatives, or distributees, as the case may be, may, at any time until the
expiration of the term of the Option, exercise the Option to the extent it was
exercisable at the date of such participant's death or total disability. All
Options that were not exercisable at the date of such participant's death or
total disability shall be cancelled and of no further force and effect.
8. INDEMNIFICATION. Each person who is or shall have been a
member of the Board shall be indemnified and held harmless by the Company
against and from any and all loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be or become involved by
reason of any action taken or failure to act under the Plan and against and from
any and all amounts paid by him in settlement thereof (with the Company's
written approval) or paid by him in satisfaction of a judgment in any such
action, suit, or proceeding, except a judgment in favor of the Company based
upon a finding of his lack of good faith; subject, however, to the condition
that upon the institution of any claim, action, suit, or proceeding against him,
he shall in writing give the Company an opportunity, at its expense, to handle
and defend the same before he undertakes to handle and defend it on such
person's own behalf. The foregoing right of indemnification shall not be
exclusive of any other right to which such person may be entitled as a matter of
law or otherwise, or any power that the Company may have to indemnify him or
hold him harmless. Each member of the Board and each officer and employee of the
Company shall be fully justified in relying or acting in good faith upon any
information furnished in connection with the administration of the Plan by any
appropriate person or persons other than himself. In no event shall any person
who is or shall have been a member of the Board or an officer or employee of the
Company be held liable for any determination made or other action taken or any
omission to act in reliance upon any such information as referred to in the
preceding sentence, or for any action (including the furnishing of information)
taken or any omission to act, when any such determination, action, or omission
is made in good faith.
9. MISCELLANEOUS PROVISIONS.
(a) No Non-Employee Director or other person shall have any claim
or right to be granted an Option under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving a Non-Employee Director any right
to be retained in the service of the Company.
(b) A participant's rights and interests under the Plan may not be
assigned or transferred in whole or in part either directly or by operation of
law or otherwise (except in the event of a participant's death, by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order), including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy, or in any other manner, and no such right or
interest of any participant in the Plan shall be subject to any obligation or
liability of such participant.
(c) No Shares shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable federal, state, and other securities laws.
(d) The Shares issued hereunder may not be sold except in full
compliance with Section 16 and all other applicable federal, state and other
securities laws. In particular, but without limiting the foregoing, no
9
4
Shares received pursuant to an exercise of an Option may be sold within 6 months
of a purchase that is subject to the liability provisions of Section 16.
(e) It shall be a condition to the obligation of the Company to
issue Shares upon exercise of an Option that the participant (or any beneficiary
or person entitled to act under paragraph 7 above) pay to the Company, upon its
demand, such amount as may be requested by the Company for the purpose of
satisfying any liability to withhold federal, state, local, or foreign income or
other taxes. If the amount requested is not paid, the Company may refuse to
issue Shares.
(f) The expenses of administration of the Plan shall be borne by
the Company.
(g) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to ensure the issuance of Shares upon exercise of any Option under the
Plan and issuance of Shares upon exercise of Options shall be subordinate to the
claims of the Company's general creditors.
(h) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken under the Plan by the Company or the Administrator.
(i) The appropriate officers of the Company shall cause to be
filed any reports, returns, or other information regarding Options hereunder or
any Shares issued pursuant hereto as may be required by the Securities Exchange
Act of 1934, as amended, the Securities Act of 1933, as amended, or any other
applicable statute, rule, or regulation (excluding reports pursuant to Section
16, which shall be the sole responsibility of a Non-Employee Director who
receives or exercises an Option).
10. AMENDMENT. The Plan may be amended at any time and from time
to time by the Board as the Board shall deem advisable. No amendment of the Plan
shall materially and adversely affect any right of any participant with respect
to any Option theretofore granted without such participant's written consent.
11. TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) ten years from the date the Plan is initially approved and
adopted by the Board.
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any person, without his or her consent, under any
Option theretofore granted under the Plan.
10