EXHIBIT 10.3
PHASECOM, INC.
1999 EMPLOYEE AND CONSULTANT EQUITY INCENTIVE PLAN
1. PURPOSE. The purpose of the 1999 Employee and Consultant Equity
Incentive Plan (the "Plan") of PHASECOM, Inc., a Delaware corporation (the
"Company"), is to provide incentives to attract, retain and motivate eligible
persons whose present and potential contributions are important to the
success of the Company, its Parent, Subsidiaries and Affiliates, by offering
them an opportunity to participate in the Company's future performance
through awards of Options, Restricted Stock and Stock Bonuses. The company
wishes the issuance of options to its employees in Israel to conform with the
requirements of Section 3(9) of the Israeli Income Tax Ordinance, and for
this purpose the appended document Annex A amends this plan to so conform.
Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and
18, the total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be one million six hundred thousand (1,600,000)
Shares. Subject to Sections 2.2 and 18, Shares shall again be available for
grant and issuance in connection with future Awards under the Plan that: (a)
are subject to issuance upon exercise of an Option but cease to be subject to
such Option for any reason other than exercise of such Option; (b) are
subject to an Award granted hereunder but are forfeited; or (c) are subject
to an Award that otherwise terminates without Shares being issued.
2.2 ADJUSTMENT OF SHARES. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under the Plan; (b) the
Exercise Prices of and number of Shares subject to outstanding Options; and
(c) the number of Shares subject to other outstanding Awards shall be
proportionately adjusted, subject to any required action by the Board or the
shareholders of the Company and compliance with applicable securities laws;
PROVIDED, HOWEVER, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees)
of the Company, or of a Parent or Subsidiary of the Company. All other Awards
may be granted to employees, officers, directors, consultants and advisors of
the Company or any Parent, Subsidiary or Affiliate of the Company; PROVIDED,
HOWEVER, such consultants and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. A person may be granted more than one Award under the Plan.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. The Plan shall be administered by
the Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of the Plan, and to the direction of the
Board, the Committee shall have full power to implement and carry out the
Plan. The Committee shall have the authority to:
(a) construe and interpret the Plan, any Award
Agreement and any other agreement or
document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and
regulations relating to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other
consideration subject to Awards;
(f) determine whether Awards will be granted
singly, in combination, in tandem with, in
replacement of, or as alternatives to, other
Awards under the Plan or any other incentive
or compensation plan of the Company or any
Parent, Subsidiary or Affiliate of the
Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and
payment of Awards;
(i) correct any defect, supply any omission, or
reconcile any inconsistency in the Plan, any
Award or any Award Agreement;
(j) determine whether an Award has been earned;
and
(k) make all other determinations necessary or
advisable for the administration of the
Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the
Committee with respect to any Award shall be made in its sole discretion at
the time of grant of the Award or, unless in contravention of any express
term of the Plan or Award, at any later time, and such determination shall be
final and binding on the company and all persons having an interest in any
Award under the Plan. The Committee may delegate to one or more officers of
the Company the authority to grant an Award under the Plan to Participants
who are not Insiders of the Company.
4.3 EXCHANGE ACT REQUIREMENTS. If the Company is subject to
the Exchange Act, the Company will take appropriate steps to comply with the
disinterested director requirements of Section 16(b) of the Exchange Act,
including but not limited to, the appointment by the Board of a Committee
consisting of not less than two (2) persons (who are members of the Board),
each of whom is a Disinterested Person.
5. OPTIONS. The Committee may grant Options to eligible persons and
shall determine whether such Options shall be Incentive Stock Options within
the meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the
number of Shares subject to the
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Option, the Exercise Price of the Option, the period during which the Option
may be exercised, and all other terms and conditions of the Option, subject
to the following:
5.1 FORM OF OPTION GRANT. Each Option granted under the
Plan shall be evidenced by an Award Agreement which shall expressly identify
the Option as an ISO or NQSO ("STOCK OPTION AGREEMENT"), and be in such form
and contain such provisions (which need not be the same for each Participant)
as the Committee shall from time to time approve, and which shall comply with
and be subject to the terms and conditions of the Plan.
5.2 DATE OF GRANT. The date of grant of an Option shall be
the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of the Plan will be delivered to the Participant within a reasonable
time after the granting of the Option.
5.3 EXERCISE PERIOD. Options shall be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement; PROVIDED, HOWEVER, that no Option shall be
exercisable after the expiration of ten (10) years from the date the Option
is granted, and provided further that no Option granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") shall be exercisable
after the expiration of five (5) years from the date the Option is granted.
The Committee also may provide for the exercise of Options to become
exercisable at one time or from time to time, periodically or otherwise, in
such number or percentage as the Committee determines.
5.4 EXERCISE PRICE. The Exercise Price shall be determined
by the Committee when the Option is granted and may be not less than
eighty-five percent (85%) of the Fair Market Value of the Shares on the date
of grant; provided that (i) the Exercise Price of an ISO shall be not less
than one hundred percent (100%) of the Fair Market Value of the Shares on the
date of grant; and (ii) the Exercise Price of any Option granted to a Ten
Percent Shareholder shall not be less than one hundred ten percent (110%) of
the Fair Market Value of the Shares on the date of grant. Payment for the
Shares purchased may be made in accordance with Section 8 of the Plan.
5.5 METHOD OF EXERCISE. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be
the same for each Participant), stating the number of Shares being purchased,
the restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to
information and other matters, if any, as may be required or desirable by the
Company to comply with applicable securities laws, together with payment in
full of the Exercise Price for the number of Shares being purchased.
5.6 TERMINATION. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option shall always be
subject to the following:
(a) If the Participant is Terminated for any
reason except death or Disability, then
Participant may exercise such Participant's
Options only to the extent that such Options
would have been exercisable upon the
Termination Date no later than three (3)
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months after the Termination Date (or such
shorter time period as may be specified in
the Stock Option Agreement), but in any
event, no later than the expiration date of
the Options.
(b) If the Participant is terminated because of
death or Disability (or the Participant dies
within three (3) months of such
termination), then Participant's Options may
be exercised only to the extent that such
Options would have been exercisable by
Participant on the Termination Date and must
be exercised by Participant (or
Participant's legal representative or
authorized assignee) no later than twelve
(12) months after the Termination Date (or
such shorter time period as may be specified
in the Stock Option Agreement), but in any
event no later than the expiration date of
the Options; PROVIDED, HOWEVER, that in the
event of termination due to Disability other
than as defined in Section 22(e)(3) of the
Code, any ISO that remains exercisable after
ninety (90) days after the date of
termination shall be deemed a NQSO.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of
an Option; PROVIDED, HOWEVER, that such minimum number will not prevent
Participant from exercising the Option for the full number of Shares for
which it is then exercisable.
5.8 LIMITATIONS ON ISOS. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year
(under the Plan or under any other incentive stock option plan of the Company
or any Affiliate, Parent or Subsidiary of the Company) shall not exceed One
Hundred Thousand Dollars ($100,000). If the Fair Market Value of Shares on
the date of grant with respect to which ISOs are exercisable for the first
time by a Participant during any calendar year exceeds One Hundred Thousand
Dollars ($100,000), the Options for the first One Hundred Thousand Dollars
($100,000) worth of Shares to become exercisable in such calendar year shall
be ISOs and the Options for the amount in excess of One Hundred Thousand
Dollars ($100,000) that become exercisable in that calendar year shall be
NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of the Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs,
such different limit shall be automatically incorporated herein and shall
apply to any Options granted after the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor; PROVIDED, HOWEVER, that any such action may
not without the written consent of Participant, impair any of Participant's
rights under any Option previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered shall be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; PROVIDED, HOWEVER, that the Exercise
Price may not be reduced below the minimum Exercise price that would be
permitted under Section 5.4 of the Plan for Options granted on the date the
action is taken to reduce the Exercise Price.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision
in the Plan, no term of the Plan relating to ISOs shall be interpreted, amended
or altered, nor shall any
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discretion or authority granted under the Plan be exercised, so as to
disqualify the Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify any ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to
restrictions. The Committee shall determine to whom an offer will be made,
the number of Shares the person may purchase, the price to be paid (the
"Purchase Price"), the restrictions to which the Shares shall be subject, and
all other terms and conditions of the Restricted Stock Award, subject to the
following:
6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a
Restricted Stock Award made pursuant to the Plan shall be evidenced by an
Award Agreement ("Restricted Stock Purchase Agreement") that shall be in such
form (which need not be the same for each Participant) as the Committee shall
from time to time approve, and shall comply with and be subject to the terms
and conditions of the Plan. The offer of Restricted Stock shall be accepted
by the Participant's execution and delivery of the Restricted Stock Purchase
Agreement and full payment for the shares to the Company within thirty (30)
days from the date the Restricted Stock Purchase Agreement is delivered to
the person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company
within thirty (30) days, then the offer shall terminate, unless otherwise
determined by the Committee.
6.2 PURCHASE PRICE. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award shall be determined by the Committee and
shall be at least eighty-five percent (85%) of the Fair Market Value of the
Shares on the date the Restricted Stock Award is granted, except in the case
of a sale to a Ten Percent Shareholder, in which case the Purchase Price
shall be one hundred and ten percent (110%) of the Fair Market Value. Payment
of the Purchase Price may be made in accordance with Section 8 of the Plan.
6.3 RESTRICTIONS. Restricted Stock Awards shall be subject
to such restrictions as the Committee may impose. The Committee may provide
for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or in part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
Restricted Stock Awards which the Committee intends to qualify under Code
section 162(m) shall be subject to a performance-based goal. Restrictions on
such stock shall lapse based on one or more of the following performance
goals: stock price, market share, sales increases, earning per share, return
on equity, cost reductions, or any other similar performance measure
established by the Committee. Such performance measures shall be established
by the Committee, in writing, no later than the earlier of (a) ninety (90)
days after the commencement of the performance period with respect to which
the Restricted Stock award is made and (b) the date as of which twenty-five
percent (25%) of such performance period has elapsed.
7. STOCK BONUSES.
7.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company pursuant to an Award Agreement (the
"Stock Bonus Agreement") that shall be in such form (which need
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not be the same for each Participant) as the Committee shall from time to
time approve, and shall comply with and be subject to the terms and
conditions of the Plan subject to Section 7.2 herein, a Stock Bonus may be
awarded upon satisfaction of such performance goals as are set out in advance
in Participant's individual Award Agreement (the "Performance Stock Bonus
Agreement") that shall be in such form (which need not be the same for each
Participant) as the Committee shall from time to time approve, and shall
comply with and be subject to the terms and conditions of the Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon such other criteria as the Committee may
determine; PROVIDED, HOWEVER, that performance-based bonuses shall be
restricted to individuals earning at least Sixty Thousand Dollars ($60,000)
per year and of adequate sophistication and sufficiently empowered to achieve
the performance goals.
7.2 CODE SECTION 162(m). A Stock Bonus that the Committee
intends to qualify for the performance-based exception under Code section
162(m) shall only be awarded based upon the attainment of one or more of the
following performance goals: stock price, market share, sales increases,
earning per share, return on equity, cost reductions, or any other similar
performance measure established by the Committee. Such performance measures
shall be established by the Committee, in writing, no later than the earlier
of: (a) ninety (90) days after the commencement of the performance period
with respect to which the Stock Bonus award is made; and (b) the date as of
which twenty-five percent (25%) of such performance period has elapsed.
7.3 TERMS OF STOCK BONUSES. The Committee shall determine
the number of Shares to be awarded to the Participant and whether such Shares
shall be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee shall determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"Performance Period") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of
Shares that may be awarded to the Participant; and (d) the extent to which
such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses
that are subject to different Performance Periods and different performance
goals and other criteria. The number of Shares may be fixed or may vary in
accordance with such performance goals and criteria as may be determined by
the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events
or circumstances to avoid windfalls or hardships.
7.4 FORM OF PAYMENT. The earned portion of a Stock Bonus
may be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in
the form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the
Committee shall determine.
7.5 TERMINATION DURING PERFORMANCE PERIOD. If a Participant
is Terminated during a Performance Period for any reason, then such
Participant shall be entitled to payment (whether in Shares, cash or
otherwise) with respect to the Stock Bonus only to the extent earned as of
the date of Termination in accordance with the Performance Stock Bonus
Agreement, unless the Committee shall determine otherwise.
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8. PAYMENT FOR SHARE PURCHASES.
8.1 PAYMENT. Payment for Shares purchased pursuant to the
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the
Company to the Participant;
(b) by surrender of Shares that either (1) have
been owned by Participant for more than six
(6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a
promissory note, such note has been fully
paid with respect to such Shares); or (2)
were obtained by Participant in the public
market;
(c) by tender of a full recourse promissory note
having such terms as may be approved by the
Committee and bearing interest at a rate
sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code;
PROVIDED, HOWEVER, that Participants who are
not employees of the Company shall not be
entitled to purchase Shares with a
promissory note unless the note is
adequately secured by collateral other than
the Shares.
(d) by waiver of compensation due or accrued to
Participant for services rendered;
(e) by tender of property;
(f) with respect only to purchases upon exercise
of an Option, and provided that a public
market for the Company's stock exists:
(1) through a "same day sale" commitment
from Participant and a broker-dealer
that is a member of the National
Association of Securities Dealers
(an "NASD Dealer") whereby the
Participant irrevocably elects to
exercise the Option and to sell a
portion of the Shares so purchased
to pay for the Exercise Price, and
whereby the NASD Dealer irrevocably
commits upon receipt of such Shares
to forward the Exercise Price
directly to the Company; or
(2) through a "margin" commitment from
Participant and an NASD Dealer
whereby Participant irrevocably
elects to exercise the Option and to
pledge the Shares so purchased to
the NASD Dealer in a margin account
as security for a loan from the NASD
Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer
irrevocably commits upon receipt of
such Shares to forward the exercise
price directly to the Company; or
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(g) by any combination of the foregoing.
8.2 LOAN GUARANTIES. The Committee may help the Participant
pay for Shares purchased under the Plan by authorizing a guaranty by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued
in satisfaction of Awards granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under the Plan,
payments in satisfaction of Awards are to be made in cash, such payment shall
be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.
9.2 STOCK WITHHOLDING. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting
of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the
Committee may allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be
issued that number of Shares having a Fair Market Value equal to the minimum
amount required to be withheld, determined on the date that the amount of tax
to be withheld is to be determined (the "Tax Date"). All elections by a
Participant to have Shares withheld for this purpose shall be made in writing
in a form acceptable to the Committee and shall be subject to the following
restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
(b) once made, then except as provided below,
the election shall be irrevocable as to the
particular Shares as to which the election
is made;
(c) all elections shall be subject to the
consent or disapproval of the Committee;
(d) if the Participant is an Insider and if the
Company is subject to Section 16(b) of the
Exchange Act: (1) the election may not be
made within six (6) months of the date of
grant of the Award, except as otherwise
permitted by SEC Rule 16b-3(e) under the
Exchange Act, and (2) either (A) the
election to use stock withholding must be
irrevocably made at least six (6) months
prior to the Tax Date (although such
election may be revoked at any time at least
six (6) months prior to the Tax Date), or
(B) the exercise of the Option or election
to use stock withholding must be made in the
ten (10) day period beginning on the third
day following the release of the Company's
quarterly or annual summary statement of
sales or earnings; and
(e) in the event that the Tax Date is deferred
until six (6) months after the delivery of
Shares under Section 83(b) of the Code, the
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Participant shall receive the full number of
Shares with respect to which the exercise
occurs, but such Participant shall be
unconditionally obligated to tender back to
the Company the proper number of Shares on
the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 VOTING AND DIVIDENDS. No Participant shall have any of
the rights of a shareholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant shall be a shareholder and have all the rights of a shareholder
with respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to such Shares;
PROVIDED, HOWEVER, that if such Shares are Restricted Stock, then any new,
additional or different securities the Participant may become entitled to
receive with respect to such Shares by virtue of a stock dividend, stock
split or any other change in the corporate or capital structure of the
Company shall be subject to the same restrictions as the Restricted Stock.
10.2 FINANCIAL STATEMENTS. The Company shall provide
financial statements to each Participant prior to such Participant's purchase
of Shares under the Plan, and to each Participant annually during the period
such Participant has Awards outstanding; PROVIDED, HOWEVER, the Company shall
not be required to provide such financial statements to Participants whose
services in connection with the Company assure them access to equivalent
information.
11. TRANSFERABILITY. Awards granted under the Plan, and any interest
therein, shall not be transferable or assignable by Participant, and may not
be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or as consistent with the
specific Plan and Award Agreement provisions relating thereto. During the
lifetime of the Participant an Award shall be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by
the Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan shall be subject to such stock transfer orders,
legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or
foreign securities law, or any rules, regulations and other requirements of
the SEC or any stock exchange or automated quotation system upon which the
Shares may be listed.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit
all certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee
may cause a legend or legends referencing such restrictions to be placed on
the certificates. Any Participant who is permitted to execute a promissory
note as partial or full consideration for
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the purchase of Shares under the Plan shall be required to place and deposit
with the Company all or part of the Shares so purchased as collateral to
secure the payment of Participant's obligation to the Company under the
promissory note; PROVIDED, HOWEVER, that the Committee may require or accept
other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company shall have full recourse against
the Participant under the promissory note notwithstanding any pledge of the
Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant shall be required to execute and deliver a written
pledge agreement in such form as the Committee shall from time to time
approve. The Shares purchased with the promissory note may be released from
the pledge on a pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time
buy from a Participant an Award previously granted with payment in cash,
Shares (including Restricted Stock) or other consideration, based on such
terms and conditions as the Committee and the Participant shall agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall
not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation
system upon which the Shares may then be listed, as they are in effect on the
date of grant of the Award and also on the date of exercise or other
issuance. Notwithstanding any other provision in the Plan, the Company shall
have no obligation to issue or deliver certificates for Shares under the Plan
prior to (a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable, and/or (b) completion of any
registration or other qualification of such shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company shall be under no obligation to register
the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company shall have no
liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
granted under the Plan shall confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or
limit in any way the right of the Company or any Parent, Subsidiary or
Affiliate of the Company to terminate Participant's employment or other
relationship at any time, with or without cause.
18. CORPORATE TRANSACTIONS.
18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the
event of (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the company and the Awards granted under the Plan are assumed or replaced by the
successor corporation, which assumption shall be binding on all Participants);
(b) a dissolution or liquidation of the Company; (c) the sale of substantially
all of the assets of the Company; or (d) any other transaction which qualifies
as a "corporate transaction" under
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Section 424(a) of the Code wherein the shareholders of the Company give up
all of their equity interest in the Company (EXCEPT for the acquisition, sale
or transfer of all or substantially all of the outstanding shares of the
Company), any or all outstanding Awards may be assumed or replaced by the
successor corporation (if any), which assumption or replacement shall be
binding on all Participants. In the alternative, the successor corporation
may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to shareholders (after taking
into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company
held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant.
In the event such successor corporation (if any) refuses to
assume or substitute Options, as provided above, pursuant to a transaction
described in this Subsection 18.1, such Options shall expire on such
transaction at such time and on such conditions as the Board shall determine.
18.2 OTHER TREATMENT OF AWARDS. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
18, in the event of the occurrence of any transaction described in Section
18.1, any outstanding Awards shall be treated as provided in the applicable
agreement or plan of merger, consolidation, dissolution, liquidation, sale of
assets or other "corporate transaction."
18.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other
company or otherwise, by either (a) granting an Award under the Plan in
substitution of such other company's award; or (b) assuming such award as if
it had been granted under the Plan if the terms of such assumed award could
be applied to an Award granted under the Plan. Such substitution or
assumption shall be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under the Plan if the
other company had applied the rules of the Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award shall remain unchanged (EXCEPT that the exercise
price and the number and nature of Shares issuable upon exercise of any such
option will be adjusted approximately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.
19. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall become effective
on the date that it is adopted by the Board (the "Effective Date"). The Plan
shall be approved by the shareholders of the Company (excluding Shares issued
pursuant to this Plan), consistent with applicable laws, within twelve months
before or after the Effective Date. Upon the Effective Date, the Board may grant
Awards pursuant to the Plan; PROVIDED, HOWEVER, that: (a) no Option may be
exercised prior to initial shareholder approval of the Plan; (b) no Option
granted pursuant to an increase in the number of Shares approved by the Board
shall be exercised prior to the time such increase has been approved by the
shareholders of the Company; and (c) in the event that shareholder approval is
not obtained within the time period provided herein, all Awards granted
hereunder shall be cancelled, any Shares issued pursuant to any Award shall be
cancelled and any purchase of Shares hereunder shall be rescinded. After the
Company becomes subject to Section 16(b) of the Exchange Act, the Company will
comply with the
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requirements of Rule 16b-3 (or its successor), as amended, with respect to
shareholder approval.
20. TERM OF PLAN. The Plan will terminate ten (10) years from the
Effective Date or, if earlier, the date of shareholder approval of the Plan.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed
pursuant to the Plan; PROVIDED, HOWEVER, that the Board shall not, without
the approval of the shareholders of the Company, amend the Plan in any manner
that requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans or
pursuant to the Exchange Act or Rule 16b-3 (or its successor), as amended,
thereunder.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board, the submission of the Plan to the shareholders of the Company for
approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in
specific cases.
23. DEFINITIONS. As used in the Plan, the following terms shall have
the following meanings:
"AFFILIATE" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, another corporation, where "control"
(including the terms "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to cause the direction of
the management and policies of the corporation, whether through the ownership
of voting securities, by contract or otherwise.
"AWARD" means any award under the Plan, including any
Option, Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.
"COMPANY" means PhaseCom, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"DISINTERESTED PERSON" means a director who has not, during
the period that person is a member of the Committee and for one (1) year
prior to service as a member of the Committee, been granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any
Parent, Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rule 16b-3(c)(2)(i) (and any successor regulation
thereto) as promulgated by the SEC under Section 16(b) of the Exchange Act,
as such rule is amended from time to time and as interpreted by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the
Nasdaq National Market, its last reported
sale price on the Nasdaq National Market or,
if no such reported sale takes place on such
date, the average of the closing bid and
asked prices;
(b) if such Common Stock is publicly traded and
is then listed on a national securities
exchange, the last reported sale price or,
if no such reported sale takes place on such
date, the average of the closing bid and
asked prices on the principal national
securities exchange on which the Common
Stock is listed or admitted to trading;
(c) if such Common Stock is publicly traded but
is not quoted on the Nasdaq National Market
nor listed or admitted to trading on a
national securities exchange, the average of
the closing bid and asked prices on such
date, as reported by The Wall Street
Journal, for the over-the-counter market; or
(d) if none of the foregoing is applicable, by
the Board of Directors of the Company in
good faith.
"INSIDER" means an officer or director of the Company or
any other person whose transactions in the Company's Common Stock are subject
to Section 16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"PARENT" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if at the time of
the granting of an Award under the Plan, each of such corporations other than
the Company owns stock possessing fifty percent (50%), or more, of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
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"PARTICIPANT" means a person who receives an Award under
the Plan.
"PLAN" means this PhaseCom, Inc. 1999 Employee and
Consultant Equity Incentive Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant
to Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SHARES" means shares of the Company's Common Stock
reserved for issuance under the Plan, as adjusted pursuant to Sections 2 and
15, and any successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the
time of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%),
or more, of the total combined voting power of all classes of stock in one of
the other corporations in such claim.
"TERMINATION" or "TERMINATED" means, for purposes of the
Plan with respect to a Participant, that the Participant has ceased to
provide services as an employee, director, consultant or adviser, to the
Company or a Parent, Subsidiary or Affiliate of the Company, except in the
case of sick leave, military leave, or any other leave of absence approved by
the Committee; PROVIDED, HOWEVER, that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee shall have sole discretion
to determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the
"Termination Date").
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