EXHIBIT 10.1
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[LOGO OF NEWBRIDGE NETWORKS APPEARS HERE]
NEWBRIDGE NETWORKS CORPORATION
CONSOLIDATED KEY EMPLOYEE STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of the Newbridge Networks Corporation Consolidated Key Employee
Stock Option Plan is to develop the interest of and provide an incentive to
eligible employees, directors and consultants of Newbridge Networks
Corporation (the "Corporation") and its subsidiaries in the Corporation's
growth and development by granting to eligible employees, directors and
consultants from time to time options to purchase Common Shares of the
Corporation, thereby advancing the interests of the Corporation and its
shareholders.
2. Definitions
In this Plan:
(a) "Associates" has the meaning assigned by the Ontario Securities Act;
(b) "Board of Directors" means the board of directors of the Corporation;
(c) "Committee" means:
(i) with respect to Participants, the Employee Compensation Committee
of three or more members appointed by the Board of Directors to
administer the Plan and the Board of Directors if no Employee
Compensation Committee has been appointed; and
(ii) with respect to Director Participants, the Board of Directors;
(d) "Common Shares" means the common shares of the Corporation;
(e) "Corporations Act" means the Canada Business Corporations Act, as
amended, and the regulations promulgated thereunder.
(f) "Date of Grant" means, for any Option, the date upon which the Option
was granted;
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(g) "Director Participant" means a director of the Corporation who is not
an employee of the Corporation;
(h) "Disability" means permanent and total disability as determined under
policies established by the Committee for the purposes of the Plan;
(i) "Exercise Period" means, with respect to any Option Shares, the period
during which an Optionee may purchase such Option Shares;
(j) "Insider" means an insider of the Corporation as defined in the
"Employee Stock Option and Stock Purchase Plans, Options for Service
and Related Matters" section of The Toronto Stock Exchange Company
Manual;
(k) "Ontario Securities Act" means the Securities Act, RSO 1990, c.s 5, as
amended;
(l) "Option" means a non-assignable and non-transferable option to
purchase Common Shares granted pursuant to the Plan;
(m) "Optionee" means a Participant or a Director Participant who has been
granted one or more Options;
(n) "Option Shares" means Common Shares which are subject to purchase upon
the exercise of outstanding Options;
(o) "Participant" means a current or former full-time permanent employee
of the Corporation or any of its Subsidiaries or a director (other
than a Director Participant) of any Subsidiary of the Corporation, or
a person (other than a Director Participant) or corporation or other
entity providing consulting or similar services to the Corporation or
any of its Subsidiaries;
(p) "Plan" means the Newbridge Networks Corporation Consolidated Key
Employee Stock Option Plan as set out herein;
(q) "Plan Shares" means that number of Common Shares reserved for issuance
pursuant to the exercise of stock options in accordance with the terms
of the Plan;
(r) "Retirement" means retirement from active employment with the
Corporation or a Subsidiary in accordance with the Corporation's or
Subsidiary's policies from time to time relating to mandatory or early
retirement of employees, or with the consent for purposes of the Plan
of such officer of the Corporation as may be designated by the
Committee, at or after such earlier age and upon the completion of
such years of service as the Committee may specify; and
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(s) "Subsidiary" means any corporation in which the Corporation, directly
or through one or more corporations which are themselves Subsidiaries
of the Corporation, owns 50% or more of the shares eligible to vote at
meetings of the shareholders.
3. Eligibility
All Participants and Director Participants shall be eligible to participate
in the Plan. Eligibility to participate shall not confer upon any
Participant any right to be granted Options pursuant to the Plan. The
extent to which any Participant shall be entitled to be granted Options
pursuant to the Plan shall be determined in the sole and absolute
discretion of the Committee.
Provided however that:
(i) The number of Common Shares reserved for issuance to any one
person pursuant to Options shall not exceed 5% of the
outstanding issue; and
(ii) The number of Common Shares reserved for issuance pursuant to
Options granted to Insiders shall not exceed 10% of the
outstanding issue;
(iii) The number of Common Shares issued to Insiders within a one year
period pursuant to the Plan shall not exceed 10% of the
outstanding issue; and
(iv) The number of Common Shares issued to any one Insider and such
Insider's Associates within a one-year period shall not exceed
5% of the outstanding issue.
For purposes of the meaning of "outstanding issue" in (iii) and (iv) above,
this shall be determined on the basis of the number of Common Shares that
are outstanding immediately prior to the share issuance in question,
excluding shares issued pursuant to the Plan over the preceding one-year
period.
4. Number of Option Shares Available for Grants
The Plan Shares shall not exceed 25,000,000 Common Shares, subject to the
adjustment of such number pursuant to paragraph 18.
No Option may be granted by the Committee which would have the effect of
causing the total number of all Option Shares to exceed the number of Plan
Shares.
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Upon the expiration, cancellation or termination, in whole or in part, of
an unexercised Option, the Option Shares subject to such Option shall be
available for other Options to be granted from time to time.
5. Granting of Options
The Committee may from time to time grant Options to Participants to
purchase a specified number of Common Shares at a specified exercise price
per share. The number of Option Shares to be granted, the exercise price,
the Date of Grant, and such other terms and conditions of the Option shall
be as determined by the Committee.
The Committee shall grant Options to Director Participants upon the
occurrence of the events set forth in Schedule I to the Plan. For all such
Options, the Date of Grant, exercise price and number of Option Shares
shall, subject to the adjustment of the number of Option Shares pursuant to
paragraph 18, be as set forth in Schedule I, and such other terms and
conditions of the Option as determined by the Committee.
6. Exercise Price
The exercise price per Common Share purchasable under an Option shall not
be lower than the average of the average of the daily high and low board
lot trading prices on the Toronto Stock Exchange for the five days
preceding the Date of Grant, rounded to the next highest cent.
7. Exercise Period
Unless otherwise specified by the Committee at the time of granting an
Option, and except as otherwise provided in the Plan, each Option shall be
exercisable in the following installments:
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Percentage of Total Number
of Option Shares Which
May Be Purchased Exercise Period
------------------------------ --------------------------------
25% From the first anniversary of the
Date of Grant to and including the
fifth anniversary of the Date of Grant
25% From the second anniversary of the
Date of Grant to and including the
fifth anniversary of the Date of Grant
25% From the third anniversary of the
Date of Grant to and including the
fifth anniversary of the Date of Grant
25% From the fourth anniversary of the
Date of Grant to and including the
fifth anniversary of the Date of Grant
Once an installment becomes exercisable it shall remain exercisable until
expiration or termination of the Option, unless otherwise specified by the
Committee. Each Option or installment may be exercised at any time or from
time to time, in whole or in part, for up to the total number of Common
Shares with respect to which it is then exercisable. The Committee shall
have the right to accelerate the date upon which any installment of any
Option is exercisable.
8. Term of Options
Subject to accelerated termination as provided for in the Plan, each Option
shall, unless otherwise specified by the Committee, expire on the fifth
anniversary of the Date of Grant, provided, however, that no Option may be
exercised after the tenth anniversary of the Date of Grant.
9. Exercise of Options
An Optionee or the transferee of an Option pursuant to paragraph 14 may, at
any time within the Exercise Period elect to purchase all or a portion of
the Option Shares which the Optionee is then entitled to purchase by
delivering to the Corporation a completed notice of exercise, specifying
the Date of Grant of the Option being exercised, the exercise price of the
Option and the number of Option Shares the Optionee desires to purchase.
The notice of exercise shall be accompanied by payment in full of the
purchase price for such Option Shares.
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Payment can be made by cash, certified cheque, bank draft, money order or
the equivalent payable to the order of the Corporation.
10. Withholding of Tax
If the Corporation determines that under the requirements of applicable
taxation laws it is obliged to withhold for remittance to a taxing
authority any amount upon exercise of an Option, the Corporation may, prior
to and as a condition of issuing the Option Shares, require the Optionee or
the transferee of an Option pursuant to paragraph 14 exercising the Option
to pay to the Corporation, in addition to and in the same manner as the
purchase price for the Option Shares, such amount as the Corporation is
obliged to remit to such taxing authority in respect of the exercise of the
Option. Any such additional payment shall, in any event, be due no later
than the date as of which the applicable amount must be remitted by the
Corporation to the appropriate taxing authority.
11. Share Certificates
Upon exercise of an Option and payment in full of the purchase price and
any applicable tax withholdings, the Corporation shall cause to be issued
and delivered to the Optionee within a reasonable period of time a
certificate or certificates in the name of or as directed by the Optionee
representing the number of Common Shares the Optionee has purchased.
12. Termination of Employment or Services
Unless otherwise determined by the Committee, if an Optionee's
employment or services as a director or consultant terminate for any reason
other than death, Disability or Retirement, any Option held by such
Optionee shall expire and be cancelled upon the earlier of the 60th day
following such termination or the expiration of the stated term of such
Option.
Options shall not be affected by any change of employment within or among
the Corporation or its Subsidiaries or by termination of services as a
director, unless otherwise determined by the Committee, so long as the
Participant continues to be an employee of or consultant to the Corporation
or a Subsidiary or a director of the Corporation or a Subsidiary.
13. Termination by Reason of Death, Disability or Retirement
Unless otherwise determined by the Committee, if an Optionee's employment
or services as a director or consultant terminate by reason of death,
Disability or Retirement, any Option held by such Optionee shall expire and
be cancelled upon the earlier of the 180th day following such termination
or the expiration of the stated term of such Option.
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14. Transfer and Assignment
Options granted under the Plan are not assignable or transferable by the
Optionee or the Optionee's personal representative or subject to any other
alienation, sale, pledge or encumbrance by such Optionee except by will or
by the laws of intestacy. During the Optionee's lifetime Options shall be
exercisable only by the Optionee or the Optionee's personal
representatives. The obligations of each Optionee shall be binding on his
heirs, executors and administrators.
15. No Right to Employment
The granting of an Option to a Participant under the Plan does not confer
upon the Participant any right to expectation of employment by, or to
continue in the employment of, the Corporation or any Subsidiary, or to be
retained as a consultant by the Corporation or any Subsidiary.
16. Rights as Shareholders
The Optionee or the transferee of an Option pursuant to paragraph 14 shall
not have any rights as a shareholder with respect to Option Shares until
the Common Shares have been duly purchased and paid for in accordance with
the terms of the Plan.
17. Administration of the Plan
The Plan shall be administered by the Committee. No member of the
Committee, while a member, shall be eligible to participate in the Plan
other than with respect to Options granted as set forth in Schedule I to
the Plan. Subject to the terms of the Plan, the Committee shall have the
authority to:
(a) determine the individuals and entities (from among the class of
individuals and entities eligible to receive Options) to whom Options
may be granted;
(b) determine the number of Common Shares to be subject to each Option;
(c) determine the terms and conditions of any grant of Option, including
but not limited to
(i) the time or times at which Options may be granted;
(ii) the exercise price at which Option Shares may be purchased;
(iii) the time or times when each Option shall become exercisable and
the duration of the Exercise Period;
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(iv) whether restrictions or limitations are to be imposed on Option
Shares, and the nature of such restrictions or limitations, if
any; and
(v) any acceleration of exercisability or waiver of termination
regarding any Option, based on such factors as the Committee
may determine;
(d) interpret the Plan and prescribe and rescind rules and regulations
relating to the Plan.
The interpretation and construction by the Committee or the Board of
Directors of any provisions of the Plan or of any Option granted under it
shall be final and binding on all persons. No member of the Committee or
the Board of Directors shall be liable for any action or determination made
in good faith with respect to the Plan or any Option granted under it. The
day-to-day administration of the Plan may be delegated to such officers and
employees of the Corporation or any Subsidiary as the Committee shall
determine.
18. Recapitalization and Reorganization
The number of Plan Shares, the number of Option Shares subject to each
outstanding and unexercised Option and the exercise price for such Option
Shares, as well as the number of Option Shares for Director Participants
set out in Schedule 1, shall be appropriately adjusted for any change in
the Common Shares or in the number of Common Shares outstanding by reason
of any stock split, stock dividend on the Common Shares payable in Common
Shares other than pursuant to any optional stock dividend program,
subdivision, combination, reclassification, amalgamation, arrangement,
consolidation, rights or warrant offering to purchase Common Shares at or
below market price, or any other relevant change or event affecting the
Common Shares. Each adjustment to the exercise price for Option Shares
pursuant to this provision shall be calculated and rounded to the nearest
higher cent. Any fractional shares which might otherwise become subject to
an Option as a result of an adjustment pursuant to this paragraph shall be
eliminated without any payment therefor.
19. Conditions of Exercise
The Plan and each Option shall be subject to the requirement that, if at
any time the Committee determines that the listing, registration or
qualification of the Common Shares subject to such Option upon any
securities exchange or under any provincial, state or federal law, or the
consent or approval of any governmental body, securities exchange, or the
holders of the Common Shares generally, is necessary or desirable, as a
condition of, or in connection with, the granting of such Option or the
issue or purchase of Common Shares thereunder, no such Option may be
granted or exercised in whole or in part unless such
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listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Committee.
20. Loans
The Board of Directors may, in its discretion, but subject always to
section 44 of the Corporations Act, grant loans, on such terms as are
permitted by law and the Board of Directors may determine, to Optionees,
who are employees of the Corporation or its subsidiaries, to enable them to
purchase Option Shares, provided that all Common Shares purchased with the
proceeds of such loans shall be held by a trustee until the Corporation has
been repaid in full.
21. Notices
All written notices to be given by the Optionee to the Corporation shall be
delivered personally or by registered mail, postage prepaid, addressed as
follows:
Newbridge Networks Corporation
600 March Road
Kanata, Ontario
K2K 2E6
Attention: Secretary
Any notice given by the Optionee pursuant to the terms of an Option shall
not be effective until actually received by the Corporation at the above
address.
22. Corporate Action
Nothing contained in the Plan or in an Option shall be construed so as to
prevent the Corporation or any Subsidiary of the Corporation from taking
corporate action which is deemed by the Corporation or the Subsidiary to be
appropriate or in its best interest, whether or not such action would have
an adverse effect on the Plan or any Option.
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23. Amendments
The Board of Directors shall have the right, in its sole discretion,
subject to the prior approval of The Toronto Stock Exchange and, if
required, of the holders of Common Shares of the Corporation, to alter,
amend, modify or terminate the Plan or any Option granted under the Plan at
any time without notice. The Board of Directors shall not, however, alter,
amend or modify Schedule I more often than once every six months other than
to comport with changes to applicable tax and employee benefit laws and the
respective rules and regulations thereunder. No such amendment, however,
may, without the consent of the Optionee or the transferee of an Option
pursuant to paragraph 14, alter or impair any rights or increase any
obligations with respect to an Option previously granted under the Plan.
24. Amendment and Consolidation of Prior Plans
This Plan amends, consolidates and restates each of the Newbridge Networks
Corporation 1989-1994 Stock Option Plan for United States Subsidiaries, the
Newbridge Networks Corporation Canadian Key Employee Stock Option Plan and
the Newbridge Networks Corporation United Kingdom Key Employee Stock Option
Plan (together, the "Prior Plans"), and the terms and provisions of this
Plan shall be deemed to supersede and replace the terms and provisions of
each of the Prior Plans. No provision of this Plan, however, may, without
the consent of the Optionee, alter or impair any rights or increase any
obligations with respect to an option granted under the Prior Plans prior
to the effective date of this Plan.
25. Change in Control
In the event of a "Change in Control", as defined below, unless otherwise
determined by the Committee or the Board of Directors prior to the
occurrence of such Change in Control, any Options outstanding as of the
date such Change in Control is determined to have occurred and not then
exercisable shall become fully exercisable effective one day prior to the
date of such Change of Control. In addition, the value of all outstanding
Options shall, unless otherwise determined by the Committee or the Board of
Directors at or after the Date of Grant, be cashed out on the basis of the
"Change in Control Price", as defined below, as of the date such Change in
Control is determined to have occurred or such other date as the Committee
or the Board of Directors may determine prior to the Change in Control.
Outstanding options as of the date of such Change of Control may be cashed
out only if the Change in Control Price is higher than the Exercise Price
of such outstanding options. Further, the Committee or the Board of
Directors shall have the right to provide for the conversion or exchange of
any outstanding Options into or for options, rights or other securities in
any entity participating in, or resulting from, the Change in Control.
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For purposes of the Plan, a "Change in Control" means the happening of any
of the following:
(a) When any "person", together with any "affiliate" or "associate" of
such person, as such terms are defined by the Corporations Act (other
than the Corporation, a Subsidiary or a Corporation employee benefit
plan, including any trustee of such plan acting as trustee), or a
group of persons acting jointly or in concert with one another,
hereafter acquires the "beneficial ownership", as defined in the
Corporations Act, of, or control or direction over, directly or
indirectly, securities of the Corporation representing 20 percent or
more of the combined voting power of the Corporation's then
outstanding securities; or
(b) The occurrence of a transaction requiring shareholder approval
involving the acquisition of the Corporation by an entity other than
the Corporation or a Subsidiary through purchase of assets, by
amalgamation or otherwise.
For purposes of the Plan, "Change in Control Price" means the highest price
per Common Share paid in any transaction reported on The Toronto Stock
Exchange or paid or offered in any bona fide transaction related to a
potential or actual change in control of the Corporation at any time during
the preceding 60-day period as determined by the Committee or the Board of
Directors.
26. Termination of Plan
Except as otherwise provided herein, Options may be granted only within the
ten year period from the date the Plan has been adopted by the Board of
Directors. The termination of the Plan shall have no effect on outstanding
Options, which shall continue in effect in accordance with their terms and
conditions and the terms and conditions of the Plan, provided that no
Option may be exercised after the tenth anniversary of its Date of Grant.
27. Further Assurances
Each Participant or Director Participant shall, when requested to do so by
the Corporation, sign and deliver all such documents relating to the
granting or exercise of Options deemed necessary or desirable by the
Corporation.
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28. Governing Law
The Plan is established under the laws of the Province of Ontario, and the
rights of all parties and the construction and effect of each provision of
the Plan shall be according to the laws of the Province of Ontario.
DATED the 21st day of October, 1991, as amended the 13th day of September, 1993,
the 6th day of June, 1995, the 5th day of July, 1996 and the 3rd day of June,
1997.
NEWBRIDGE NETWORKS CORPORATION
/s/ Terence H. Matthews
- ---------------------------------
Chairman
/s/ John A. Farmer
- ---------------------------------
Secretary
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SCHEDULE I
Reason for Grant Date of Grant Option Grant
- ---------------- ------------- ------------
Annual service on Board of Date of each annual meeting of 10,000 Option Shares
Directors shareholders at which the
Director Participant is elected to
the Board of Directors by the
shareholders
Annual service as member Date of each annual meeting of 2,000 Option Shares
of a Standing Committee shareholders following which
(other than as Chair) the Director Participants is
appointed as a member of a
Standing Committee by the
Board of Directors
Annual service as Chair of Date of each annual meeting of 4,000 Option Shares
a Standing Committee Shareholders following which
the Director Participant is
appointed as Chair of a Standing
Committee by the Board of
Directors
Notes:
1. A Director Participant must be a member of the Board of Directors or a
Standing Committee of the Board of Directors, as the case may be, as of the
Date of Grant.
2. The exercise price of Options granted to Director Participants shall not be
lower than the average of the average of the daily high and low board lot
trading prices of the Common Shares on The Toronto Stock Exchange for the
five days preceding the Date of Grant, rounded to the next highest cent.
3. "Standing Committee" of the Board of Directors means a committee formed by
the board to meet on a regular basis over an extended period of time, and
which is declared by the Board of Directors to be a Standing Committee, and
includes the Audit Committee, the Employee Compensation Committee and the
Directors' Affairs Committee.
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