ePhone Telecom, Inc.
2000 Long - Term Incentive Plan
1. Definitions. In this Plan, except where the context otherwise indicates, the
following definitions shall apply:
1.1. "Affiliate" means a mean a corporation, partnership, business trust,
limited liability company or other form of business organization at least a
majority of the total combined voting power of all classes of stock or other
equity interests of which is owned by the Company, either directly or through
one or more other Affiliates.
1.2. "Agreement" means a written agreement evidencing an Award.
1.3. "Award" means a grant of an Option or Performance Award or an award of
Restricted Stock or Incentive Shares.
1.4. "Board" means the Board of Directors of the Company.
1.5. "Code" means the Internal Revenue Code of 1986, as amended.
1.6. "Committee" means such committee(s), subcommittee(s) or person(s) appointed
by the Board to administer this Plan or to make and/or administer specific
Awards hereunder. If no such appointment is in effect at any time, "Committee"
shall mean the Board.
1.7. "Common Stock" means the common stock, par value $0.001 per share, of the
Company.
1.8. "Company" means ePhone Telecom, Inc., and any successor thereto.
1.9. "Date of Exercise" means the date on which the Company receives notice of
the exercise of an Option in accordance with the terms of Section 8.1.
1.10. "Date of Grant" means the date on which an Option, a Right, or a
Performance Award, Restricted Stock or Incentive Shares are granted to an
Eligible Person under this Plan.
1.11. "Eligible Person" means any person who is (a) an Employee, (b) hired to be
an Employee, (c) a Non-Employee Director or (d) a consultant or independent
contractor to the Company or an Affiliate and who is determined by the Committee
to render key services to the Company or an Affiliate.
1.12. "Employee" means any person determined by the Committee to be an employee
of the Company or an Affiliate.
1.13. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.14. "Fair Market Value" means the fair market value of a Share as determined
by such methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of a Share as of a particular date shall mean (i) the
closing sales price per share of Common Stock on the national securities
exchange on which the Shares are principally traded, for the last preceding date
on which there was a sale of such Common Stock on such exchange, or (ii) if the
Shares are then traded in an over-the-counter market, the average of the closing
bid and asked prices for the Shares in such over-the-counter market for the last
preceding date on which there was a sale of such Shares in such market, or (iii)
if the shares of Common Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the Committee,
in its sole discretion, shall determine.
1.15. "Incentive Shares" means an award providing for the contingent grant of
Shares pursuant to the provisions of Section 10 hereof.
1.16. "Incentive Stock Option" means an Option granted under this Plan that the
Company designates as an incentive stock option under Section 422 of the Code.
1.17. "Non-Employee Director" means any member of the Company's or an
Affiliate's Board of Directors who is not an Employee.
1.18. "Nonstatutory Stock Option" means an Option granted under this Plan that
is not an Incentive Stock Option.
1.19. "Option" means an option to purchase Shares granted under this Plan in
accordance with the terms of Section 6 hereof.
1.20. "Option Period" means the period during which an Option may be exercised.
1.21. "Option Price" means the price per Share at which an Option may be
exercised.
1.22. "Participant" means an Eligible Person who has been granted an Award
hereunder.
1.23. "Performance Award" means a performance award granted under the Plan in
accordance with the terms of Section 11 hereof.
1.24. "Performance Goals" means performance goals established by the Committee
which may be based on earnings or earnings growth, sales, return on assets, cash
flow, total shareholder return, equity or investment, regulatory compliance,
satisfactory internal or external audits, improvement of financial ratings,
achievement of balance sheet or income statement objectives, or any other
objective goals established by the Committee, and may be absolute in their terms
or measured against or in relationship to other companies comparably, similarly
or otherwise situated. Such performance standards may be particular to an
Eligible Person or the department, branch, Affiliate or other division in which
he or she works, or may be based on the performance of the Company, or
Affiliate, or the Company and its Affiliates, and may cover such period as may
be specified by the Committee.
1.25. "Plan" means the ePhone Telecom, Inc. 2000 Long-Term Incentive Plan, as
amended from time to time.
1.26. "Related Option" means an Option in connection with which, or by amendment
to which, a specified Right is granted.
1.27. "Related Right" means a Right granted in connection with, or by amendment
to, a specified Option.
1.28. "Restricted Stock" means Shares awarded under the Plan pursuant to the
provisions of Section 9 hereof.
1.29. "Right" means a stock appreciation right granted under the Plan in
accordance with the terms of Section 7 hereof.
1.30. "Right Period" means the period during which a Right may be exercised.
1.31. "Share" means a share of Common Stock.
1.32. "Ten-Percent Stockholder" means an Eligible Person who (applying the rules
of Section 424(d) of the Code) owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or an Affiliate.
2. Purpose. This Plan is intended to assist the Company and its Affiliates in
attracting and retaining Eligible Persons of outstanding ability and to promote
the identification of their interests with those of the stockholders of the
Company and its Affiliates.
3. Administration. The Committee shall administer this Plan and shall have
plenary authority, in its discretion, to grant Options, Restricted Stock,
Incentive Shares and Performance Awards to Eligible Persons, subject to the
provisions of this Plan. The Committee shall have plenary authority and
discretion, subject to the provisions of this Plan, to determine the Eligible
Persons to whom Awards shall be granted, the terms (which terms need not be
identical) of all Awards, including without limitation the Option Price of
Options, the time or times at which Awards are made, the number of Shares
covered by Awards, whether an Option shall be an Incentive Stock Option or a
Nonstatutory Stock Option, any exceptions to non-transferability, any
Performance Goals applicable to Awards, any provisions relating to vesting, and
the term of Awards. In making these determinations, the Committee may take into
account the nature of the services rendered or to be rendered by the Award
recipients, their present and potential contributions to the success of the
Company and its Affiliates, and such other factors as the Committee in its
discretion shall deem relevant. Subject to the provisions of the Plan, the
Committee shall have plenary authority to interpret the Plan, prescribe, amend
and rescind rules and regulations relating to it, and make all other
determinations deemed necessary or advisable for the administration of this
Plan. The determinations of the Committee on the matters referred to in this
Section 3 shall be binding and final.
4. Eligibility. Options, Restricted Stock, Incentive Shares and Performance
Awards may be granted only to Eligible Persons; provided, however, that
Incentive Stock Options may not be granted to Eligible Persons who are not
Employees.
5. Stock Subject to Plan.
5.1. Subject to adjustment as provided in Section 10, (a) the maximum number of
Shares that may be issued under this Plan is 6,000,000 Shares, and (b) the
maximum number of Shares with respect to which an Employee may be granted
Options under this Plan during a calendar year is 1,250,000 Shares.
5.2. If an Option or Right expires or terminates for any reason (other than
termination by virtue of the exercise of a Related Option or Related Right, as
the case may be) without having been fully exercised, if Shares of Restricted
Stock are forfeited or if Shares covered by an Incentive Share Award or
Performance Award are not issued, or if Shares issued pursuant to an Award are
forfeited pursuant to the terms of the Award, the unissued or forfeited Shares
that had been subject to the Award shall become available for the grant of
additional Awards. In no event shall Shares which, under this Plan, are
authorized to be used in payment of any Incentive Shares or Performance Awards
be deemed to be unavailable for purposes of the Plan until such Shares have been
issued in payment of such Awards in accordance with the provisions of Sections
10 and 11 hereof.
5.3. Upon exercise of a Right (regardless of whether the Right is settled in
cash or Shares), the number of Shares with respect to which the Right is
exercised shall be charged against the number of Shares issuable under the Plan
and shall not become available for the grant of other Awards.
6. Options.
6.1. Options granted under this Plan to Eligible Persons shall be either
Incentive Stock Options or Nonstatutory Stock Options, as designated by the
Committee; provided, however, that Incentive Stock Options may not be granted to
Eligible Persons who are not Employees. Each Option granted under this Plan
shall be clearly identified as to the extent to which it is a Nonstatutory Stock
Option and/or an Incentive Stock Option and shall be evidenced by an Agreement
that specifies the terms and conditions of the grant. Options shall be subject
to the terms and conditions set forth in this Section 6 and such other terms and
conditions not inconsistent with this Plan as the Committee may specify.
6.2. The price per share of Common Stock at which an Incentive Stock Option
granted under this Plan may be exercised shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock on the Date of
Grant. Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to an Employee who, at the time of grant, is a Ten Percent Shareholder,
the exercise price per share shall not be less than one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the date on which the
Option is granted.
6.3. The Option Period shall be determined by the Committee and specifically set
forth in the Agreement; provided, however, that an Option shall not be
exercisable after ten years (five years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) from its Date of Grant.
6.4. The Committee, in its discretion, may provide in an Agreement for the right
of a Participant to surrender to the Company an Option (or a portion thereof)
that has become exercisable and to receive upon such surrender, without any
payment to the Company (other than required tax withholding amounts) that number
of Shares (equal to the highest whole number of Shares) having an aggregate fair
market value as of the date of surrender equal to that number of Shares subject
to the Option (or portion thereof) being surrendered multiplied by an amount
equal to the excess of (i) the Fair Market Value on the date of surrender over
(ii) the Option Price, plus an amount of cash equal to the fair market value of
any fractional Share to which the Participant would be entitled but for the
parenthetical above relating to whole number of Shares. Any such surrender shall
be treated as the exercise of the Option (or portion thereof).
7. Rights.
7.1. Rights granted under the Plan shall be evidenced by an Agreement specifying
the terms and conditions of the grant.
7.2. A Right may be granted under the Plan: (a) in connection with, and at the
same time as, the grant of an Option under the Plan; (b) by amendment of an
outstanding Option granted under the Plan; or (c) independently of any Option
granted under the Plan. A Right described in clause (a) or (b) of the preceding
sentence is a Related Right. A Related Right may, in the Committee's discretion,
apply to all or any portion of the Shares subject to the Related Option.
7.3. A Right may be exercised in whole or in part as provided in the applicable
Agreement, and, subject to the terms of the Agreement, entitles a Participant to
receive, without payment to the Company (but subject to required tax
withholding), either cash or that number of Shares (equal to the highest whole
number of Shares), or a combination thereof, in an amount or having a fair
market value determined as of the Date of Exercise not to exceed the number of
Shares subject to the portion of the Right exercised multiplied by an amount
equal to the excess of (a) the Fair Market Value on the Date of Exercise of the
Right (or such amount in excess of such Fair Market Value as may be specified by
the Committee) over (b) either (i) the Fair Market Value on the Date of Grant of
the Right if it is not a Related Right, or (ii) the Option Price as provided in
the Related Option if the Right is a Related Right.
7.4. The Right Period shall be determined by the Committee and specifically set
forth in the Agreement; provided, however, that: (a) a Right will expire no
later than the earlier of (i) ten years from the Date of Grant, or (ii) in the
case of a Related Right, the expiration of the Related Option; and (b) a Right
that is a Related Right to an Incentive Stock Option may be exercised only when
and to the extent the Related Option is exercisable.
7.5. The exercise, in whole or in part, of a Related Right shall cause a
reduction in the number of Shares subject to the Related Option equal to the
number of Shares with respect to which the Related Right is exercised. The
exercise, in whole or in part, of a Related Option shall cause a reduction in
the number of Shares subject to the Related Right equal to the number of Shares
with respect to which the Related Option is exercised.
8. Exercise of Options and Rights.
8.1. An Option or Right may, subject to the terms of the applicable Agreement
under which it was granted, be exercised in whole or in part by the delivery to
the Company of written notice of the exercise, in such form as the Committee may
prescribe, accompanied, in the case of an Option, by (a) a full payment for the
Shares with respect to which the Option is exercised or (b) irrevocable
instructions to a broker to deliver promptly to the Company cash equal to the
exercise price of the Option. To the extent provided in the applicable Option
Agreement, payment may be made in whole or in part by delivery (including
constructive delivery) of Shares (provided that such Shares, if acquired
pursuant to execrise of an option granted hereunder or under any other plan
maintained by the Company or any Affiliate have been held by the Participant for
at least six (6) months) valued at Fair Market Value on the Date of Exercise, or
by delivery of a promissory note as provided in Section 7.2 hereof.
8.2. To the extent provided in an Agreement and permitted by applicable law, the
Committee may accept as partial payment of the Option Price a promissory note
executed by the Participant evidencing his or her obligation to make future cash
payment thereof. Promissory notes made pursuant to this Section 7.2 shall be
payable upon such terms as may be determined by the Committee, shall be secured
by a pledge of the Shares received upon exercise of the Option, or other
securities the Committee may deem to be acceptable for such purposes, and shall
bear interest at a rate fixed by the Committee.
8.3. Awards granted under this Plan shall not be transferable except by will,
the laws of descent and distribution, except to the extent provided in an
Agreement.
9. Restricted Stock Awards.
9.1. Restricted Stock awards under this Plan shall consist of Shares that are
restricted as to transfer, subject to forfeiture, and subject to such other
terms and conditions as may be determined by the Committee. Such terms and
conditions may provide, in the discretion of the Committee, for the lapse of
such transfer restrictions or forfeiture provisions to be contingent upon the
achievement of one or more specified Performance Goals.
9.2. Restricted Stock awards under this Plan shall be evidenced by Agreements
specifying the terms and conditions of the Award. Each Agreement evidencing an
Award of Restricted Stock shall contain the following:
(a) prohibitions against the sale, assignment, transfer, exchange, pledge,
hypothecation, or other encumbrance of (i) the Shares awarded as Restricted
Stock, (ii) the right to vote such Shares, and (iii) the right to receive
dividends thereon, in each case during, the restriction period applicable to the
Shares; provided, however, that the Participant shall have all the other rights
of a stockholder including without limitation the right to receive dividends and
the right to vote the Shares;
(b) a requirement that each certificate representing Shares of Restricted Stock
shall be deposited with the Company, or its designee, and shall bear the
following legend:
"This certificate and the shares of stock represented hereby are
subject to the terms and conditions (including the risks of forfeiture
and restrictions against transfer) contained in the ePhone Telecom,
Inc. 2000 Long-Term Incentive Plan, and an Agreement entered into
between the registered owner and ePhone Telecom, Inc. Release from such
terms and conditions shall be made only in accordance with the
provisions of this Plan and the Agreement, a copy of each of which is
on file in the office of the Secretary of ePhone Telecom, Inc."
(c) the terms and conditions upon which any restrictions applicable to Shares of
Restricted Stock shall lapse and new certificates free of the foregoing legend
shall be issued to the Participant or the Participant's legal representative;
and
(d) such other terms, conditions and restrictions as the Committee in its
discretion may specify, including without limitation terms that condition the
lapse of forfeiture provisions and transfer restrictions upon the achievement of
one or more specified Performance Goals.
10. Incentive Share Awards. Incentive Shares granted under this Plan shall be
evidenced by an Agreement specifying the terms and conditions of such Award.
Incentive Share Awards shall provide for the issuance of Shares to a Participant
at such times and subject to such terms and conditions as determined by the
Committee, including without limitation terms that condition the issuance of
Shares upon the achievement of one or more specified Performance Goals.
11. Performance Awards. Performance Awards granted under this Plan shall be
evidenced by an Agreement specifying the terms and conditions of such Award.
Performance Awards shall become payable on account of attainment of one or more
specified Performance Goals. Performance Awards may be paid by the delivery of
Common Stock or cash, or any combination of Common Stock and cash, as specified
in the Agreement. If a Performance Award is paid in cash, the Award shall be
deemed, for purposes of Section 5.1 hereof, to cover a number of shares of
Common Stock equal to the quotient obtained by dividing the dollar amount of the
Award payment by the Fair Market Value of a Share as of the date of payment,
rounded to the next highest whole number.
12. Capital Adjustments. In the event of any change in the outstanding Common
Stock by reason of any stock dividend, split-up, recapitalization,
reclassification, combination or exchange of shares, merger, consolidation,
liquidation or the like, the Committee may, in its discretion, provide for a
substitution for or adjustment in (a) the number and class of Shares subject to
outstanding Options, Rights, Restricted Stock Awards, Incentive Shares Awards or
Performance Awards, (b) the Option Price of Options and the base price upon
which payments under Rights that are not Related Rights are determined, (c) the
aggregate number and class of Shares for which Awards thereafter may be made
under this Plan, and (d) the maximum number of Shares with respect to which an
Employee may be granted Options during the period specified in Section 5.1(b)
hereof.
13. Termination or Amendment. The Board may amend, alter or terminate this Plan
in any respect at any time; provided, however, that, after this Plan has been
approved by the stockholders of the Company, no amendment, alteration or
termination of this Plan shall be made by the Board without approval of (a) the
Company's stockholders to the extent stockholder approval of the amendment is
required by applicable law or regulations or the requirements of the principal
exchange or interdealer quotation system on which the Common Stock is listed or
quoted, if any, and (b) each affected Participant if such amendment, alteration
or termination would adversely affect such Participant's rights or obligations
under any Award made prior to the date of such amendment, alteration or
termination.
14. Modification, Extension, Renewal, Substitution.
14.1. The Committee may modify, extend or renew outstanding Options and Rights,
or accept the surrender of outstanding Options and Rights granted under this
Plan or options and stock appreciation rights granted under any other plan of
the Company or an Affiliate (to the extent not theretofore exercised), and
authorize the granting of new Options and Rights pursuant to this Plan in
substitution therefor. Subject to the terms and conditions of this Plan, any
substituted Options or Rights may specify a lower exercise price than the
surrendered options and stock appreciation rights, a longer term than the
surrendered options and stock appreciation rights, or have any other provisions
that are authorized by this Plan. Subject to the terms and conditions of this
Plan, the Committee may modify the terms of any outstanding Awards.
Notwithstanding the foregoing, however, no modification of an Award shall,
without the consent of the Participant, alter or impair any of the Participant's
rights or obligations under such Award.
14.2. Anything contained herein to the contrary notwithstanding, Options,
Rights, Restricted Stock, Incentive Shares and Performance Awards may, at the
discretion of the Committee, be granted under this Plan in substitution for
options and other awards covering capital stock of another corporation which is
merged into, consolidated with, or all or a substantial portion of the property
or stock of which is acquired by, the Company or one of its Affiliates. The
terms and conditions of the substitute Awards so granted may vary from the terms
and conditions set forth in this Plan to such extent as the Committee may deem
appropriate in order to conform, in whole or part, to the provisions of the
awards in substitution for which they are granted. Such substitute Options
granted hereunder shall not be counted toward the Share limit imposed by Section
5.1(b), except to the extent it is determined by the Committee that counting
such Options is required in order for Options hereunder to be eligible to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code.
15. Effectiveness of this Plan. This Plan and any amendments hereto requiring
stockholder approval pursuant to Section 13 are subject to approval by vote of
the stockholders of the Company at the next annual or special meeting of
stockholders following adoption by the Board. Subject to such stockholder
approval, this Plan and any amendments hereto are effective on the date on which
they are adopted by the Board.
16. Withholding. The Company's obligation to deliver Shares or pay any amount
pursuant to the terms of any Award hereunder shall be subject to satisfaction of
applicable federal, state and local tax withholding requirements. To the extent
provided in the applicable Agreement and in accordance with rules prescribed by
the Committee, a Participant may satisfy any such withholding tax obligation by
any of the following means or by a combination of such means: (a) tendering a
cash payment, (b) authorizing the Company to withhold Shares otherwise issuable
to the Participant, or (c) delivering to the Company already-owned and
unencumbered Shares.
17. Terms of this Plan. Unless sooner terminated by the Board pursuant to
Section 13, this Plan shall terminate on May 5, 2010 and no Awards may be
granted or awarded after such date. The termination of this Plan shall not
affect the validity of any Award outstanding on the date of termination.
18. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and reasonably incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with this
Plan or any Award granted hereunder, and against all amounts reasonably paid by
them in settlement thereof or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, if such members acted in good faith and in a
manner which they believed to be in, and not opposed to, the best interests of
the Company.
19. General Provisions.
19.1. The establishment of this Plan shall not confer upon any Eligible Person
any legal or equitable right against the Company, any Affiliate or the
Committee, except as expressly provided in this Plan.
19.2. This Plan does not constitute inducement or consideration for the
employment or service of any Eligible Person, nor is it a contract between the
Company or any Affiliate and any Eligible Person. Participation in this Plan
shall not give any Eligible Person any right to be retained in the service of
the Company or any Affiliate.
19.3. Neither the adoption of this Plan nor its submission to the stockholders,
shall be taken to impose any limitations on the powers of the Company or its
Affiliates to issue, grant, or assume options, warrants, rights, or restricted
stock, or other awards otherwise than under this Plan, or to adopt other stock
option, restricted stock, or other plans or to impose any requirement of
stockholder approval upon the same.
19.4. The interests of any Eligible Person under this Plan are not subject to
the claims of creditors and may not, in any way, be assigned, alienated or
encumbered except to the extent provided in an Agreement.
19.5. This Plan shall be governed, construed and administered in accordance with
the laws of the Commonwealth of Virginia.
19.6. The Committee may require each person acquiring Shares pursuant to Awards
hereunder to represent to and agree with the Company in writing that such person
is acquiring the Shares without a view to distribution thereof. The certificates
for such Shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer. All certificates for Shares issued
pursuant to this Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed or interdealer quotation
system upon which the Common Stock is then quoted, and any applicable federal or
state securities laws. The Committee may place a legend or legends on any such
certificates to make appropriate reference to such restrictions.
19.7. The Company shall not be required to issue any certificate or certificates
for Shares with respect to Awards under this Plan, or record any person as a
holder of record of such Shares, without obtaining, to the complete satisfaction
of the Committee, the approval of all regulatory bodies deemed necessary by the
Committee, and without complying to the Board's or Committee's complete
satisfaction, with all rules and regulations, under federal, state or local law
deemed applicable by the Committee.