EXHIBIT 4.1
APPLIED DIGITAL SOLUTIONS, INC.
2003 FLEXIBLE STOCK PLAN
(AS AMENDED THROUGH JULY 24, 2004)
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APPLIED DIGITAL SOLUTIONS, INC.
2003 FLEXIBLE STOCK PLAN
TABLE OF CONTENTS
Page
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1. NAME AND PURPOSE
1.1.
Name...........................................................1
1.2.
Purpose........................................................1
2. DEFINITIONS OF TERMS AND RULES OF
CONSTRUCTION.............................
2.1. General Definitions.
2.1.1. Affiliate...........................................1
2.1.2. Agreement...........................................1
2.1.3. Benefit.............................................1
2.1.4. Board...............................................1
2.1.5. Cash Award..........................................1
2.1.6. Change of Control...................................1
2.1.7. Code................................................3
2.1.8. Company.............................................3
2.1.9.
Committee...........................................3
2.1.10. Common Stock.......................................3
2.1.11. Effective Date.....................................3
2.1.12. Employee...........................................4
2.1.13. Employer...........................................4
2.1.14. Exchange Act.......................................4
2.1.15. Fair Market Value..................................4
2.1.16. Fiscal Year........................................4
2.1.17. ISO................................................4
2.1.18. NQSO...............................................4
2.1.19. Option.............................................4
2.1.20. Other Stock Based Award............................4
2.1.21. Parent.............................................4
2.1.22.
Participant........................................4
2.1.23. Performance Based Compensation.....................5
2.1.24. Performance Share..................................5
2.1.25. Plan...............................................5
2.1.26. Reload Option......................................5
2.1.27. Restricted Stock...................................5
2.1.28. Rule 16b-3.........................................5
2.1.29. SEC................................................5
2.1.30. Share..............................................5
2.1.31. SAR................................................5
2.1.32. Subsidiary.........................................5
2.2. Other
Definitions..............................................6
2.3.
Conflicts......................................................6
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3. COMMON STOCK
3.1. Number of
Shares.................................................6
3.2.
Reusage..........................................................6
3.3.
Adjustments......................................................6
4. ELIGIBILITY
4.1. Determined By
Committee..........................................6
5. ADMINISTRATION
5.1.
Committee........................................................7
5.2.
Authority........................................................7
5.3.
Delegation.......................................................8
5.4.
Determination....................................................8
6. AMENDMENT
6.1. Power
of Board...................................................8
6.2.
Limitation.......................................................8
7. TERM AND TERMINATION
7.1.
Term.............................................................8
7.2.
Termination......................................................8
8. MODIFICATION OR TERMINATION OF
BENEFITS
8.1.
General..........................................................8
8.2. Committee's
Right................................................9
9. CHANGE OF CONTROL
9.1. Vesting and
Payment..............................................9
9.2. Other
Action.....................................................9
10. AGREEMENTS AND CERTAIN BENEFITS
10.1. Grant Evidenced by
Agreement....................................9
10.2. Provisions of
Agreement........................................10
10.3.
Transferability................................................10
11. REPLACEMENT AND TANDEM AWARDS
11.1.
Replacement....................................................10
11.2. Tandem
Awards..................................................10
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12. PAYMENT, DIVIDENDS, DEFERRAL AND
WITHHOLDING
12.1.
Payment........................................................10
12.2. Dividend
Equivalents...........................................11
12.3.
Deferral.......................................................11
12.4.
Withholding....................................................11
13. OPTIONS
13.1. Types of
Options...............................................11
13.2. Grant of ISOs and Option
Price.................................11
13.3. Other Requirements for
ISOs....................................12
13.4.
NQSOs..........................................................12
13.5. Determination by
Committee.....................................12
14. SARS
14.1. Grant and
Payment..............................................12
14.2. Grant of Tandem
Award..........................................12
14.3. ISO Tandem
Award...............................................12
14.4. Payment of
Award...............................................12
15. ANNUAL LIMITATIONS
15.1. Limitation on Options and
SARs.................................12
15.2.
Computations...................................................12
16. RESTRICTED STOCK AND PERFORMANCE
SHARES
16.1. Restricted
Stock...............................................13
16.2. Cost of Restricted
Stock.......................................13
16.3.
Non-Transferability............................................13
16.4. Performance
Shares.............................................13
16.5.
Grant..........................................................13
17. CASH AWARDS
17.1.
Grant..........................................................13
17.2. Rule
16b-3.....................................................14
17.3.
Restrictions...................................................14
18. OTHER STOCK BASED AWARDS AND OTHER
BENEFITS
18.1. Other Stock Based
Awards.......................................14
18.2. Other
Benefits.................................................14
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19. MISCELLANEOUS PROVISIONS
19.1. Underscored
References.........................................14
19.2. Number and
Gender..............................................14
19.3. Unfunded Status of
Plan........................................14
19.4. Termination of
Employment......................................15
19.5. Designation of
Beneficiary.....................................15
19.6. Governing
Law..................................................15
19.7. Purchase for
Investment........................................15
19.8. No Employment
Contract.........................................15
19.9. No Effect on Other
Benefits....................................16
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APPLIED DIGITAL SOLUTIONS, INC.
2003 FLEXIBLE STOCK PLAN
1. NAME
AND PURPOSE
1.1. Name.
The name of this Plan is the "Applied Digital Solutions,
Inc.
2003 Flexible Stock Plan."
1.2. Purpose.
The Company has
established
this Plan to
attract, retain,
motivate and reward Employees and other
individuals, to
encourage ownership
of
the Company's common stock by Employees and
other individuals,
and to promote
and further the best interests of the
Company by granting cash and other awards.
The Company also intends in appropriate circumstances to grant awards of its
common stock in lieu of cash compensation pursuant to the mutual
agreement of
the Participant and the Company. This Plan
is intended to be "Broadly Based" (as
such term is used for purposes of rules
promulgated by The National Association
of Securities Dealers).
2.
DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
2.1. General Definitions.
The following words and phrases, when used in the Plan, unless
otherwise specifically defined or unless
the context clearly otherwise requires,
shall have the following respective
meanings:
2.1.1. Affiliate.
A Parent or Subsidiary of the Company.
2.1.2. Agreement.
The document which evidences the grant of any Benefit
under the Plan
and which sets forth the Benefit and the terms,
conditions and
provisions
of, and restrictions relating to, such
Benefit.
2.1.3. Benefit.
Any benefit granted to a Participant under the Plan.
2.1.4. Board.
The Board of Directors of the Company.
2.1.5. Cash Award.
A Benefit payable in the form of cash.
2.1.6. Change of Control.
The occurrence of any of the following:
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A. An acquisition of any common stock or other voting securities of the
Company
entitled to vote
generally for the election of directors (the
"Voting
Securities") by any "Person" or "Group" (as each such term is
used
for
purposes of Section 13(d) or 14(d) of the Exchange Act), immediately
after
which such
Person or Group,
as the case may be,
has "Beneficial
Ownership"
(within the meaning of Rule 13d-3 promulgated under the
Exchange
Act) of more than 20%
of the then
outstanding shares of
common
stock or
the combined
voting power of the Company's then outstanding
Voting
Securities; provided, however, that in determining whether a
Change
of Control
has occurred, shares
of common stock or Voting Securities that
are
acquired in a
Non-Control
Acquisition (as
defined below) shall
not
constitute
an acquisition which would cause a Change of Control. A
"Non-Control
Acquisition" shall
mean an acquisition by
(i) the Company,
(ii) any
Subsidiary or (ii) any
employee benefit plan
maintained by the
Company or any
Subsidiary, including a trust forming part of any such plan
(an
"Employee Benefit Plan");
B. When, during any 2-year period,
individuals who, at
the beginning of the
2-year
period, constitute the Board (the "Incumbent Board"), cease for
any
reason to
constitute at least
50% of the members of the Board; provided,
however,
that (i) if the
election or nomination for election by the
Company's
shareholders
of any new
director was approved
by a vote of at
least
two-thirds of the
Incumbent Board,
such new director
shall, for
purposes
hereof, be deemed to be a member of the Incumbent Board; and
(ii)
no
individual
shall be deemed to be
a member of the
Incumbent Board if
such individual initially assumed office as a result of
either an actual
or
threatened "Election
Contest" (as described in Rule 14a-11 promulgated
under the
Exchange Act) or other
actual or threatened solicitation of
proxies or
consents by or on behalf of a Person or
Group other than
the
Board (a
"Proxy Contest") including by reason of any agreement intended
to
avoid or
settle any Election Contest or Proxy Contest;
C. The consummation
of:
(i)
a merger, consolidation or reorganization
involving the Company
or any Subsidiary,
unless the merger,
consolidation or reorganization is a Non-Control Transaction.
A "Non-Control Transaction" shall mean a merger, consolidation
or reorganization of the Company or any Subsidiary where:
(a) the
shareholders
of the Company immediately prior to the
merger, consolidation
or reorganization own, directly or
indirectly,
immediately following such merger, consolidation
or reorganization,
at least 50% of the
combined voting power
of the outstanding voting securities of the corporation
resulting from such merger, consolidation or reorganization
(the "Surviving
Corporation")
in substantially the same
proportion as their
ownership of the common stock or Voting
Securities, as the
case may be, immediately prior to the
merger, consolidation or reorganization,
(b) the
individuals
who were members of the Incumbent Board
immediately prior to the execution of the agreement providing
for the merger,
consolidation or reorganization constitute at
least two-thirds
of the members of the
board of directors of
the Surviving
Corporation,
or a corporation beneficially
owning, directly
or indirectly, a majority of the voting
securities of the Surviving Corporation, and
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(c) no
Person or Group, other than (1) the Company, (2) any
Subsidiary, (3) any
Employee Benefit Plan or (4) any other
Person or Group who, immediately prior to the merger,
consolidation or reorganization, had Beneficial Ownership of
not less than 20% of the then outstanding Voting Securities or
common stock, has
Beneficial Ownership
of 20% or more of the
combined voting
power of the
Surviving Corporation's then
outstanding voting securities or common stock;
(d) A complete
liquidation or dissolution of the Company; or
(e) The sale or
other disposition of
all or substantially
all of
the assets of the Company to any Person (other than a transfer
to a Subsidiary).
Notwithstanding the
foregoing, a Change of
Control shall not
be deemed to have occurred solely because any Person or Group (the
"Subject
Person") acquired Beneficial Ownership of more than the
permitted amount of the
then outstanding Voting Securities or
common stock of the Company as a result of
an acquisition of Voting Securities or common stock by the
Company which,
by
reducing the number of shares of Voting Securities or common stock then
outstanding, increases the proportional
number of shares
beneficially owned by
the Subject Person; provided, however, that if a Change of Control would
have
occurred (but for the operation of this
sentence) as a result of the acquisition
of Voting Securities or common stock by the
Company, and after
such acquisition
by the Company, the Subject Person becomes the beneficial owner of any
additional shares of Voting Securities or common stock, which increases the
percentage of the then outstanding
shares of Voting
Securities or common
stock
beneficially owned by the Subject Person, then a Change of Control
shall be
deemed to have occurred.
2.1.7. Code.
The Internal Revenue
Code of 1986, as
amended. Any
reference to the Code includes the regulations promulgated pursuant to
the Code.
2.1.8. Company.
Applied Digital Solutions, Inc.
2.1.9. Committee.
The Committee described in Section 0.
2.1.10. Common Stock.
The Company's common
stock which presently has a par
value of $.01 per Share.
2.1.11. Effective Date.
The date that the Plan is approved by the
shareholders of the
Company which must occur within one year before or
after approval
by the Board. Any grants of Benefits prior to the
approval by the
shareholders
of the Company shall be void if such
approval is not obtained.
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2.1.12. Employee.
Any person employed by the Employer.
2.1.13. Employer.
The Company and all Affiliates.
2.1.14. Exchange Act.
The Securities Exchange Act of 1934, as amended.
2.1.15. Fair Market Value.
The closing
price of Shares on the
Nasdaq National
Market on a given
date, or, in the
absence of sales on a
given date,
the closing
price on the
Nasdaq National Market on the last day on
which a sale occurred prior to such date.
2.1.16. Fiscal Year.
The taxable year of the Company which is the calendar
year.
2.1.17. ISO.
An Incentive
Stock Option as
defined in Section 422
of the Code.
2.1.18. NQSO.
A non-qualified stock Option, which is an Option that
does not qualify as an ISO.
2.1.19. Option.
An option to purchase Shares granted under the Plan.
2.1.20. Other Stock Based Award.
An award under Section
18 that is valued in whole or
in part by reference to, or otherwise based on, common stock.
2.1.21. Parent.
Any corporation
(other
than the Company or a
Subsidiary) in an
unbroken chain of corporations ending with the
Company, if, at the
time of the grant of
an Option or other
Benefit,
each of the corporations (other than the Company) owns stock
possessing
50% or more of the total combined voting power of all classes of
stock
in one of the other corporations in such chain.
2.1.22. Participant.
An individual
who is granted a Benefit under the
Plan. Benefits may be granted only to Employees, members of the Board,
(including former
Employees and former members of the Board if in
connection with their
separation
from the Company), employees and
owners of entities
which are not Affiliates but which have a direct or
indirect ownership
interest in an Employer or in which an Employer has
a direct or indirect ownership interest, individuals who, and
employees
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and owners of
entities which, are customers and suppliers of an
Employer, individuals
who, and employees and owners of entities which,
render services to an Employer, and individuals who, and employees
and
owners of entities,
which have ownership or business affiliations with
any individual or entity previously described.
2.1.23. Performance Based Compensation.
Compensation whi
