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 exercise 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.