Exhibit 10.1
AMENDED AND RESTATED
1993 NON-STATUTORY STOCK OPTION AND PURCHASE PLAN OF
NETCOM SYSTEMS, INC.,
a California corporation
This 1993 Non-Statutory Stock Option and Purchase Plan is amended and
restated as of February 18, 1997 and the number of shares set forth in Section 4
hereof reflects the two for one stock split effected in January 1997.
1. PURPOSE OF PLAN. The purpose of this Plan is to strengthen NETCOM
SYSTEMS, INC. (hereinafter the "Corporation") by providing non-statutory
incentive stock options as a means to attract, retain, and motivate corporate
personnel.
2. ADMINISTRATION OF PLAN. This plan shall be administered by a
Compensation Committee (hereinafter the "Committee") composed of members
selected by, and serving at the pleasure of, the Board of Directors. The
Committee shall have the power to make all determinations necessary for the
administration of the Plan, subject to the restrictions on committee powers set
forth in Section 311 of the California Corporations Code.
3. GRANT OF OPTIONS. The Corporation is hereby authorized to grant
nonstatutory stock options, i.e., stock options which are intended NOT to be
"incentive stock options" incentive stock options as defined in Internal Revenue
Code Section 422A, to key employees of the Corporation. Options may not be
granted to employees who own stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the corporation, or of its
parent or subsidiary, except pursuant to the restrictions set forth in
Paragraphs 6 and 7. Any option granted under this Plan shall be granted within
10 years from the date this Plan is adopted, or the date this Plan is approved
by the shareholders pursuant to Paragraph 13, whichever is earlier.
4. STOCK SUBJECT TO PLAN. The aggregate number of shares that may be
issued pursuant to options granted under this Plan shall be 5,000,000 shares of
the Corporation's voting common stock.
5. AGGREGATE FAIR MARKET VALUE. The aggregate fair market value of the
stock, as determined in good faith by the Committee at the time the option is
granted, with respect to which incentive stock options are exercisable for the
first time by an employee during any calendar year (under all incentive stock
option plans of the Corporation and its parent and subsidiary corporations)
shall not exceed $100,000.00.
6. EXERCISE OF OPTION. Any option granted pursuant to this Plan shall
contain provisions, established by the Committee, setting forth the manner of
exercising the option. However, no option granted under this Plan shall be
exercisable by its terms after the expiration of 10 years from the grant of the
option, and no option granted to a person who owns stock possessing more than 10
percent of the total combined voting power of all classes of the Corporation's
stock shall be exercisable by its terms after the expiration of five years from
the date of the grant. The option may be subject to earlier termination as
provided in Paragraph 9. The optionee shall have the right to receive property
at the time of exercising the option, so long as the property is subject to
inclusion in income under Internal Revenue Code Section 83.
7. OPTION PRICE. The price for a share of stock subject to an option
granted pursuant to this Plan shall not be less than the fair market value for
the stock at the time the option is granted, as determined in good faith by the
Committee at the time the option is granted. However, when an option is granted
to a person who owns stock possessing more than 10 percent of the total combined
voting power of all classes of the Corporation's stock, the purchase price per
share of the stock subject to the option shall not be less than 110 percent of
the fair market value of the stock at the time the option is granted, as
determined by the Committee in good faith at the time the option is granted.
8. OPTIONS NONTRANSFERABLE. Except as provided in paragraph 9 of this
Plan, the terms of any option granted under this Plan shall make the option
nontransferable by the optionee except by will or the laws of descent and
distribution, and exercisable only by the optionee during his or her lifetime.
9. TERMINATION OF EMPLOYMENT. Unless earlier cancelled by the
Corporation or breach of the option agreement, an optionee's option shall expire
three months after termination of employment for reasons other than death or
disability, subject to earlier termination pursuant to Paragraph 6 of this Plan.
An optionee's option shall expire 12 months after termination of employment due
to permanent and total disability, as defined in Internal Revenue Code
Section 22(e)(3), subject to earlier termination pursuant to Paragraph 6 of this
Plan. If an optionee should die while employed by the Corporation, or its
parent, subsidiary, or successor as defined in Section 425(a) of the Internal
Revenue Code, or within the 90-day period after termination of employment, and
more than one year after the grant of the option, the person to whom the
optionee's rights pass by will or the laws of descent and distribution may
exercise the option for any of the shares not previously exercised during
Employee's lifetime, within 12 months after the optionee's death, subject to
earlier termination pursuant to Paragraph 6 of this Plan.
10. STOCK SUBJECT TO OPTION.
a. The Corporation shall at all times during the term of this Plan
reserve the number of shares of its common stock required to meet the
requirements of this Plan, and shall pay all fees and expenses necessarily
incurred by the Corporation in connection with the exercise of options under
this Plan.
-2-
b. In the event of a stock split, reverse stock split, stock
dividend, combination, or reclassification of the Corporation's stock, an
appropriate and proportionate adjustment shall be made in the number of shares
to which stock options may be granted. A corresponding change shall be made to
the number and kind of shares, and the exercise price per share, of unexercised
options.
11. MERGER, CONSOLIDATION, OR DISSOLUTION OF CORPORATION.
a. Following the merger of one or more corporations into the
Corporation, or any consolidation of the Corporation and one or more
corporations in which the Corporation is the surviving corporation, the exercise
of options under this Plan shall apply to the shares of the surviving
corporation.
b. Notwithstanding any other provision of this Plan, all options
under this Plan shall terminate on the dissolution or liquidation of the
Corporation, or on any merger or consolidation in which the Corporation is not
the surviving corporation.
12. OTHER OPTION TERMS. Any option granted pursuant to this Plan shall
contain any other terms that the Board of Directors, the Corporation's legal
counsel, or the Committee deems necessary.
13. EFFECTIVE DATE OF PLAN. This Plan shall be effective upon approval by
the outstanding shares or unanimous written consent of the shareholders of the
Corporation.
14. AMENDMENT AND TERMINATION OF PLAN. The Board of Directors may at any
time amend or terminate this Plan. No option may be granted after termination
of this Plan. The amendment or termination of the Plan shall not, however,
alter any optionee's rights or obligations under an option previously granted,
unless the optionee consents to that alteration.
15. FINANCIAL DISCLOSURE. Optionees under this Plan shall receive, on a
periodic basis, financial and other information regarding the Corporation during
the period the options are outstanding, in the form of annual shareholder
reports or otherwise. This provision does not require the use of financial
statements.
-3-
AMENDMENT NO. 1
TO THE
1993 NON-STATUTORY STOCK OPTION AND PURCHASE PLAN OF
NETCOM SYSTEMS, INC.,
a California corporation
This Amendment No. 1 to the 1993 Non-Statutory Stock Option and Purchase
Plan (the "Plan") of Netcom Systems, Inc. (the "Company") is executed on
February 18, 1997, by the Company at the direction of the Company's Board of
Directors and a majority-in-interest of the Company's shareholders.
1. AMENDMENT TO SECTION 4 . Effective as of the date set forth above,
Section 4 of the Plan is hereby amended in its entirety to read as follows:
"4. STOCK SUBJECT TO PLAN. The aggregate number of shares that may be
issued pursuant to options granted under this Plan shall be 4,000,000 shares of
the Corporation's voting common stock."
With the exception of the amendment set forth above, the Plan shall remain
in full force and effect in accordance with its terms. This Amendment No. 1 to
the Plan is hereby executed by the President of the Company as of the date set
forth above.
__________________________________
Marc Hamon
-1-
AMENDMENT NO. 2 TO THE
1993 NON-STATUTORY STOCK OPTION AND PURCHASE PLAN OF
NETCOM SYSTEMS, INC.,
a California corporation
This Amendment No. 2 to the 1993 Non-Statutory Stock Option and Purchase
Plan (the "Plan") of Netcom Systems, Inc. (the "Company") is executed on
August 28, 1997, by the Company at the direction of the Company's Board of
Directors and a majority-in-interest of the Company's shareholders.
1. AMENDMENT TO SECTION 4. Effective as of the date set forth above,
Section 4 of the Plan is hereby amended in its entirety to read as follows:
"4. STOCK SUBJECT TO PLAN. The aggregate number of shares that may
be issued pursuant to options granted under this Plan shall be
3,922,000 shares of the Corporation's voting common stock."
With the exception of the amendment set forth above, the Plan shall remain
in full force and effect in accordance with its terms. This Amendment No. 2 to
the Plan is hereby executed by the President of the Company as of the date set
forth above.
___________________________________
Marc Hamon
-1-
AMENDMENT NO. 3 TO THE
1993 NON-STATUTORY STOCK OPTION AND PURCHASE PLAN OF
NETCOM SYSTEMS, INC.
a California corporation
This Amendment No. 3 to the 1993 Non-Statutory Stock Option and Purchase
Plan (the "Plan") of Netcom Systems, Inc. (the "Company") is executed on April
10, 1998, by the Company at the direction of the Company's Board of Directors.
Section 10 of the Plan is hereby amended to add a new subparagraph (c) as
follows:
"(c) CHANGE IN CONTROL. Effective upon the consummation of a Change in Control
(as defined below) of the Company, the number of shares under each Option
granted hereunder as to which such Option is vested and fully exercisable shall
be accelerated such that each Option shall be immediately vested as to that
additional number of shares as would be vested on the date one year following
consummation of a Change in Control if all conditions to such vesting were
satisfied. For purposes of the foregoing, a "Change in Control" shall be deemed
to have occurred upon any person or entity, together with all affiliates (as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) thereof becoming the beneficial owner (as defined under Section
13(d) of the Exchange Act and Rule 13d-3 thereunder) of more than 50% of the
Company's then outstanding shares of Common Stock."
With the exception of the amendment set forth above, the Plan shall remain
in full force and effect in accordance with its terms.
-2-
AMENDMENT NO. 4 TO THE
1993 NON-STATUTORY STOCK OPTION AND PURCHASE PLAN OF
NETCOM SYSTEMS, INC.,
a California corporation
This Amendment No. 4 to the 1993 Non-Statutory Stock Option and Purchase
Plan (the "Plan") of Netcom Systems, Inc. (the "Company") is executed on May 12,
1998 at the direction of the Company's Board of Directors.
1. DELETION OF SECTIONS 10(b) AND 11. Effective as of the date set forth
above, Sections 10(b) and 11 of the Plan are hereby deleted in their entirety.
With the exception of the amendment set forth above, the Plan shall remain
in full force and effect in accordance with its terms.
-3-
STOCK OPTION AGREEMENT
(NON-STATUTORY STOCK OPTION)
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered into on
the execution date of the Option Certificate to which it is attached (the
"Certificate"), by and between NETCOM SYSTEMS, INC., a California corporation
(the "Company"), and the employee named in the Certificate ("Employee").
Pursuant to the 1993 Non-Statutory Stock Option and Purchase Plan of the
Company (the "Plan"), the Board of Directors of the Company has authorized the
grant to Employee of a non-statutory stock option (the "Option") to purchase
shares of the Company's no par value Common Stock (the "Common Stock"), upon the
terms and subject to the conditions set forth in this Agreement and in the Plan.
The Company and Employee agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Employee the right and
option (the "Option"), upon the terms and subject to the conditions set forth in
this Agreement, to purchase all or any portion of that number of shares of the
Common Stock (the "Shares") set forth in the Certificate, at the option exercise
price set forth in the Certificate (the "Exercise Price").
2. TERM OF OPTION. The Option shall terminate and expire on the Option
Expiration Date set forth in the Certificate, unless sooner terminated as
provided herein.
3. INSTALLMENTS.
a. Subject to the provisions of Paragraphs 3(b), 6 and 19(h) of this
Agreement, the Option shall become exercisable in installments. Each
installment shall include the number of Shares, and shall become exercisable (in
whole or in part) upon and after the dates set forth under the caption "Exercise
Schedule" in the Certificate. The installments shall be cumulative, I.E., the
Option may be exercised, as to any or all Shares covered by an installment, at
any time or times after the installment first becomes exercisable and until
expiration or termination of the Option.
b. Notwithstanding anything to the contrary contained in this
Agreement, the Option may not be exercised, in whole or in part, unless and
until any then applicable requirements of all state and federal laws and
regulatory agencies shall have been fully complied with to the satisfaction of
the Company and its counsel.
4. EXERCISE OF OPTION. There is no obligation to exercise the Option, in
whole or in part. The Option may be exercised, in whole or in part, only by
delivery to the Company of both:
-1-
a. Written notice of exercise in form and substance identical to
Exhibit "A" attached to this Agreement stating the number of shares of Common
Stock then being purchased (the "Purchased Shares"); and
b. Payment of the Exercise Price of the Purchased Shares, either in
cash, by check drawn payable to the order of the Company, or by any combination
of the above methods of payment.
Following receipt of the notice and payment referred to above, the Company
shall issue and deliver to Employee a stock certificate or stock certificates
evidencing the Purchased Shares; PROVIDED, HOWEVER, that the Company shall not
be obligated to issue a fraction or fractions of a share of its Common Stock,
and may pay to Employee, in cash or by check, the fair market value of any
fraction or fractions of a share exercised by Employee, which fair market value
shall be determined by the Board of Directors of the Company (or a committee
thereof) as of the date of such exercise.
5. EMPLOYMENT. In consideration for the grant of the Option, Employee
agrees to remain in the employ of, and continue to render services to, the
Company, any Subsidiary of the Company, or any Parent of the Company, as the
Board of Directors (or a committee thereof) of the Company may from time to time
direct, for a period of one year from the date of this Agreement. This
provision shall not obligate the Company, or any Subsidiary or Parent of the
Company, to continue to employ Employee for any period whatsoever. The sole
remedy to the Company should Employee breach his or her obligations under this
Paragraph 5 shall be to cancel this Agreement and the Option granted under this
Agreement. For the purposes of this Agreement, the terms "Subsidiary" and
"Parent" shall mean any present or future corporation which would be a
"subsidiary corporation" or a "parent corporation," respectively, of the
Company, as those terms are defined in Section 425 of the Internal Revenue Code
of 1986 (the "Code").
6. TERMINATION OF EMPLOYMENT. If Employee shall cease to be employed by
the Company, or any Subsidiary or any Parent of the Company, for any reason
other than death or permanent disability (see subparagraph (c)) or as provided
in subparagraph (b), subject to the cancellation remedy available to the Company
under Paragraph 5 of this Agreement, Employee shall have the right to exercise
the Option at any time within 90 days after such termination of employment and
prior to the date of Option termination under Paragraph 2 of this Agreement, to
the extent that his or her right to exercise the Option had accrued pursuant to
the provisions of Paragraph 3 of this Agreement and had not previously been
exercised at the date of such termination; and to the extent unexercised at the
end of period, the Option shall terminate. The Board of Directors of the
Company (or a committee thereof), in its sole and absolute discretion, shall
determine whether or not authorized leaves of absence shall constitute
termination of employment for the purposes of this Agreement.
a. If Employee shall cease to be employed by the Company, or any
Subsidiary or any Parent of the Company, because of Employee's involuntary
termination for the convenience of the employer and not for cause, Employee
shall have the right to exercise the Option, at any time
-2-
within 90 days after such termination of employment and prior to the date of
Option termination under Paragraph 2 of this Agreement, but only (1) to the
extent the Option has vested as of the effective date of Employee's termination
and (2) to the extent that his or her right to exercise the Option otherwise had
accrued pursuant to the provisions of Paragraph 3 of this Agreement and had not
previously been exercised at the date of such termination; and to the extent
unexercised at the end of this period, the Option shall terminate.
b. If Employee shall die or become permanently disabled while in the
employ of the Company, any Subsidiary or any Parent of the Company, then the
Employee, the Employee's executors or administrators or any person or persons
acquiring the Option directly from Employee by bequest or inheritance, may
exercise the Option, to the extent that his or her right to exercise the Option
had accrued pursuant to the provisions of Paragraph 3 of this Agreement and had
not previously been exercised, at any time with one year after Employee's death
or permanent disability, but not later than the Option Expiration Date set forth
in the Certificate; to the extent unexercised at the end of that period, the
Option shall terminate. If, prior to Employee's death or permanent disability,
Employee shall not have remained in the employ of, or shall not have continued
to render services to, the Company, any Subsidiary or any Parent for a period of
one year from the date of Agreement, the Option shall terminate as of the date
of Employee's death or permanent disability.
7. RESTRICTIONS ON PURCHASED SHARES. Employee shall not sell, transfer,
assign, pledge, hypothecate or otherwise dispose of any of the Purchased Shares
unless and until all of the following have occurred:
a. The Purchased Shares are disposed of pursuant to and in
conformity with an effective registration statement filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), or Employee delivers to the Company a written opinion of counsel,
satisfactory to the Company and its counsel, to the effect that the proposed
disposition is exempt from the registration and prospectus delivery requirements
of the Act; and
b. Employee delivers to the Company a written opinion of counsel,
satisfactory in form and substance to the Company and its counsel, to the effect
that the proposed disposition will not result in a violation of the securities
laws of any state of the United States; and
c. Employee has complied with the provisions of Paragraph 9 of this
Agreement with respect to the Purchased Shares.
Any attempted transfer which is not in full compliance with this Paragraph 7
shall be null and void AB INITIO, and of no force or effect.
8. OPTION OF COMPANY TO REPURCHASE SHARES.
a. OPTION TO REPURCHASE. If at any time, prior to such time as the
Company shall issue and sell any shares of any class of securities of the
Company pursuant to an effective
-3-
registration statement filed with the Securities and Exchange Commission under
the Act, Employee shall cease to be employed by the Company, or any Subsidiary
or any Parent of the Company, regardless of the cause therefor, the Company
shall have the option to repurchase all, but not less than all, of the Purchased
Shares beneficially owned by Employee on the terms set forth in Paragraph 8.
The Company may exercise its option to repurchase by delivering to Employee or
his or her representative, as the case may be, written notice of its election to
purchase the Purchased Shares within 180 days of the date of termination of
Employee's employment; and upon receipt of such written notice, Employee shall
be obligated to sell his or her Purchased Shares to the Company and shall sell
such shares, on the terms and conditions contained in this Paragraph 8.
b. REPURCHASE PRICE. The per share price to be paid by the Company
for the Purchased Shares shall be the greater of:
- The per share exercise price for the Purchased Shares
(adjusted, if applicable, for all stock splits, stock dividends and
reorganizations); or
- The per share fair market value of the Purchased Shares,
with Fair Market Value determined in a manner consistent with Paragraph 4(b) of
this Agreement, and the following:
i. At any time, and from time to time, the Board of
Directors of the Company (or a committee thereof) may, but shall not be
obligated to, determine, by a majority vote, the per share fair market value of
the Common Stock of the Company as of the end of the most recently ended fiscal
year of the Company, and, if this determination is made, shall cause written
notice of such valuation to be sent to Employee. In the absence of fraud, the
valuation so determined shall become conclusive and binding upon Employee unless
he or she delivers a written notice of disagreement to the Company within 15
days following receipt of a notice of valuation. Any determination of value
made pursuant to this Paragraph 8(b)(1) shall remain effective for a period of
15 months from the date of the mailing of the notice to Employee or until a
subsequent determination of value shall be made by the Board of Directors (or a
committee thereof), whichever first occurs. During this period, the per share
fair market value for all Purchased Shares owned by Employee (unless Employee
has filed a notice of disagreement) shall be the valuation determined pursuant
to this Paragraph 8(b)(1), plus the net after-tax earnings, or minus the net
after-tax losses, per share of Common Stock of the Company for the period
commencing with the first day of the first month following the month which was
used as the determining date for valuation and ending upon the last day of the
fiscal quarter ending prior to the month in which the Company exercises its
option to repurchase under this Paragraph 8, less all cash dividends paid or
payable with respect to the Purchased Shares during such period and during the
period from the end of such quarter to the closing of the purchase and sale of
the Purchased Shares.
ii. If Employee has filed a notice of disagreement to a
valuation in effect under Paragraph 8(b)(1), or if there is no valuation in
effect under Paragraph 8(b)(1) at such time as the Company exercises its option
to purchase Purchased Shares from Employee, the
-4-
Company shall submit to Employee an estimate of the per share fair market value
of the Purchased Shares (which may be the same or different from the most recent
valuation by the Board of Directors (or a committee thereof)). Such valuation
shall be conclusive unless Employee responds in a like manner within 30 days
following receipt of the Company's estimate. If Employee and the Company do not
reach agreement as to the per share fair market value within 45 days following
the Company's exercise of its option to repurchase, the determination of the per
share fair market value shall be made by arbitration in Los Angeles County,
California. To institute arbitrationon proceedings, the Company shall appoint
an independent qualified appraiser and notify Employee of its appointment. If
Employee does not deliver written notice of appointment of another independent
qualified appraiser within 10 days after receipt of the Company's notice, the
Company's appraiser shall determine the per share fair market value. If
Employee does deliver a notice of appointment, the two appraisers shall appoint
a third independent qualified appraiser who shall determine the per share fair
market value of the Purchased Shares; the determination of the per share fair
market value completed in the manner provided in this Paragraph 8(b)(2) shall be
conclusive and binding upon Employee and the Company; in no event, however,
shall the per share fair market value determined by such appraiser or appraisers
be outside of the range of estimates of the per share fair market value
submitted by the Company and Employee. The cost of the appraiser(s) shall be
paid by the party whose estimate of the per share fair market value most varies
from the value determined by the appraiser(s), unless the parties' estimates
vary equally, in which event the cost of the appraiser(s) shall be borne equally
between them.
c. PAYMENT OF REPURCHASE PRICE. Within 30 days of the later to
occur of (1) the exercise by the Company of its option to repurchase, or (2) the
determination of the per share fair market value pursuant to Paragraph 8(b)(2)
of this Agreement, the Company shall pay the repurchase price for Purchased
Shares against Employee's delivery to the Company of certificates representing
the Purchased Shares, together with collateral instruments of transfer executed
in blank.
9. RIGHT OF FIRST REFUSAL.
a. Prior to such time as the Company shall issue and sell any shares
of any class of securities of the Company pursuant to an effective registration
statement filed with the Securities and Exchange Commission under the Act,
- Employee shall not have the right or power to pledge or
hypothecate any of the Purchased Shares, and
- Without complying with the provisions of this Paragraph 9,
Employee shall not have the right or power to sell, transfer, assign or
otherwise dispose of any of the Purchased Shares to any person or entity other
than the Company.
If Employee desires to sell, transfer, assign or otherwise dispose of any
of the Purchased Shares in any transaction, Employee shall first give the
Company a written offer (the "Offer") to
-5-
purchase such Purchased Shares for the same price and on the same terms as in
the proposed transaction, and such offer:
i. Shall remain open for at least 30 days from the date of
its transmittal;
ii. Shall state its exact termination date;
iii. Shall name the person or persons with whom the proposed
transaction is to be effected;
iv. Shall state the price, closing date, and all other
terms and conditions of the proposed transaction; and
v. Shall make reference to this Paragraph 9.
If the proposed transaction provides for consideration other than cash or
promissory notes, the Offer shall be deemed an offer for cash to the extent of
the fair market value of such other consideration and the notice shall state
Employee's estimate of such fair market value, which estimate shall be
conclusive and binding upon Employee, but not on the Company. If the Company
and the Employee cannot reach agreement with respect to the fair market value of
such other consideration prior to the expiration of the Offer, the question
shall be submitted to arbitration under the procedure set forth in Paragraph 8
of this Agreement and the Offer shall be deemed to remain open until ten days
after the fair market value of such other consideration has been determined by
arbitration.
b. The Company may accept the Offer by delivering written notice of
acceptance to Employee prior to the expiration of the Offer; and Employee shall
thereupon transfer such Purchased Shares to the Company on the terms and
conditions set forth in the Offer (as the same may be modified by arbitration).
c. If the Company does not accept the Offer prior to its expiration,
the Offer shall terminate, and Employee shall be free to transfer such Shares in
the manner and in the time period disclosed in the Offer. If the transaction
has not been so effected within 90 days following termination of the Offer, such
Purchased Shares shall again be subject to all of the provisions of this
Paragraph 9.
10. METHOD OF PAYMENT UPON REPURCHASE. Payment for all Shares repurchased
under Paragraphs 8 or 9 of Agreement shall be made by check or cash; however, if
the Board of Directors of the Company determines, on advice of counsel, that the
Company cannot then legally purchase such Shares by payment of check or cash,
and if the Company has not assigned its rights to purchase such Shares pursuant
to Paragraph 18(c) of this Agreement, the Company may make a written offer to
pay for such Shares with its non-negotiable notes, subordinated to all other
creditors of the
-6-
Company and maturing at such time as the Company may legally be able to pay for
such Shares, and Employee, or his or her representative, as the case may be, may
accept such offer in writing within fifteen days from the date of receipt
thereof. If such offer is not accepted, the Company shall have no further
obligation to purchase such Purchased Shares under Paragraphs 8 or 9 of this
Agreement.
11. ADJUSTMENTS UPON RECAPITALIZATION. Subject to any required action by
the stockholders of the Company:
a. If the outstanding shares of the Common Stock shall be divided
into a greater number of shares, or a dividend in Common Stock shall be paid in
respect of the Common Stock, the Exercise Price in effect immediately prior to
such subdivision or at the record date of such dividend shall, simultaneously
with the effectiveness of such subdivision or immediately after the record date
of such dividend, be proportionately reduced, and conversely, if the outstanding
shares of the Common Stock shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased.
b. When any adjustment is required to be made in the Exercise Price,
the number of Shares purchasable upon the exercise of the Option shall be
changed to that number of Shares determined by:
i. Multiplying an amount equal to the number of Shares
purchasable on the exercise of the Option immediately prior to such adjustment
by the Exercise Price in effect immediately prior to such adjustment, and then
ii. Dividing that product by the Exercise Price in effect
immediately after such adjustment.
c. In case of any capital reorganization, any reclassification of
the Common Stock (other than a recapitalization described in Paragraph 11(a) of
this Agreement), or the consolidation or merger of the Company with another
person where the Company is the "surviving corporation," as defined in
Paragraph 11(h) of this Agreement (collectively, "Reorganizations"), Employee
shall thereafter be entitled upon exercise of the Option to purchase the kind
and number of shares of stock or other securities or property of the Company
receivable upon such Reorganization by a holder of the number of shares of the
Common Stock which the Option entitles Employee to purchase from the Company
prior to such Reorganization; and in any such case, appropriate adjustment shall
be made in the application of the provisions set forth in this Agreement with
respect to Employee's rights and interests thereafter, to the end that the
provisions set forth in this Agreement (including the specified changes and
other adjustments to the Exercise Price) shall thereafter be applicable in
relation to any Shares or other property thereafter purchasable upon exercise of
the Option.
-7-
d. If the Company is dissolved or liquidated, or is a party to a
merger or consolidation in which the Company is not the "surviving corporation"
(as defined in Paragraph 11(h) of this Agreement), then the Option will
terminate on the effective date of the dissolution, liquidation, merger or
consolidation; PROVIDED, HOWEVER, that the Employee shall have the right during
a 30-day period ending on the fifth day prior to the dissolution, liquidation,
merger or consolidation, to exercise the Option, TO THE EXTENT THE OPTION THEN
HAS BECOME VESTED, in whole or in part, and without regard to the installment
provisions contained in Paragraph 3(a) of this Agreement.
e. To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board of
Directors of the Company (or a committee thereof), and its determination shall
be final, binding and conclusive.
f. The provisions of this Paragraph 11 are intended to be exclusive,
and Employee shall have no other rights upon the occurrence of any of the events
described in this Paragraph 11.
g. The grant of the Option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure, or to merge, consolidate, dissolve
or liquidate, or to sell or transfer all or any part of its business or assets.
h. The determination as to which party to a Reorganization is the it
"surviving corporation" shall be made on the basis of the relative equity
interests of the shareholders in the corporation existing after the
Reorganization, as follows: if following any Reorganization the holders of
outstanding voting securities of the Company prior to the Reorganization own
equity securities possessing more than 50% of the voting power of the
corporation existing after the Reorganization (excluding any shares in any
collation other than the Company owned by such holders prior to such
Reorganization), then for purposes of this Agreement, the Company shall be the
surviving corporation. In all other cases, the Company shall not be the
surviving corporation.
12. WAIVER OF RIGHTS TO PURCHASE STOCK. By signing this Agreement,
Employee acknowledges and agrees that neither the Company nor any other person
or entity is under any obligation to sell or transfer to Employee any option or
equity security of the Company, other than the shares of Common Stock subject to
the Option and any other right or option to purchase Common Stock which was
previously granted to Employee by the Board of Directors of the Company (or a
committee thereof). By signing this Agreement, Employee specifically waives all
rights which he or she may have had prior to the date of this Agreement to
receive any option or equity security of the Company, other than an option or
equity security granted to the Employee by the Board of Directors of the Company
(or a committee thereof).
13. INVESTMENT INTENT. Employee represents, warrants, and agrees that if
he or she exercises the Option in whole or in part, he or she will acquire the
Shares upon such exercise for the
-8-
purpose of investment and not with a view to the distribution of such Shares,
and that upon each exercise of the Option he or she will furnish to the Company
a written statement to such effect, executed under penalty of perjury under the
laws of the State of California, in the form attached hereto as Exhibit B.
14. LEGENDS ON STOCK CERTIFICATES; SECTION 260.141.11 STATEMENT. Employee
agrees that the Company may place on each certificate representing the Purchased
Shares the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN FOR
INVESTMENT AND ARE EXEMPT FROM REGISTRATION PURSUANT TO SECTION 4(2) OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND SECTION
25102(f) OF THE CALIFORNIA CORPORATIONS CODE. ACCORDINGLY, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAW.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN FIRST
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAW, OR UNLESS SUCH SECURITIES ARE FROM REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAW. IN ADDITION, THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE ISSUER AND
THE REGISTERED HOLDER HEREOF WHICH PROVIDES, AMONG OTHER THINGS, THAT THE
ISSUER HAS A RIGHT OF FIRST REFUSAL ON ANY PROPOSED SALE OR OTHER TRANSFER
OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE. A COPY OF SUCH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION FOR WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
Upon exercise of the Option, the Company shall deliver to Employee a copy of
Section 260.141.11 of the California Corporation Commissioner's Regulations.
15. NO RIGHTS AS SHAREHOLDER. Employee shall have no rights as a
shareholder with respect to the Shares until the date of the issuance to
Employee of a stock certificate or stock certificates evidencing the Shares.
Except as may be provided in Paragraph 11 of this Agreement, no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
-9-
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued.
16. MODIFICATION. Subject to the terms and conditions and within the
limitations of the Plan and/or this Agreement, the Board of Directors of the
Company (or a committee thereof) may modify and extend or renew the Option, or
accept the surrender of and authorize the grant of a new option in substitution
for the Option (to the extent not previously exercised). No modification of the
Option shall, without the consent of Employee, alter or impair any rights of
Employee under the Option.
17. CHARACTER OF OPTION. The Option is intended to be a non-statutory
stock option, I.E., a stock option which is intended not to be an "incentive
stock option" as that term is defined in Section 422A of the Code.
18. WITHHOLDING. Employee shall make any arrangement required by the
Company (including accepting a lesser number of shares of Stock upon exercise)
to insure the proper withholding of the amount of tax, if any, required to be
withheld by the Company or a Parent or Subsidiary of the Company as a result of
the exercise of the Option.
19. GENERAL PROVISIONS.
a. FURTHER ASSURANCES. Employee shall promptly take all actions and
execute all documents requested by the Company which the Company deems to be
reasonably necessary to effectuate the terms and intent of this Agreement.
b. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if personally delivered or if mailed by first class, certified mail,
return receipt requested, postage prepaid:
i. If to the Company, to:
Netcom Systems, Inc.
Attn: Chief Executive Officer
20500 Nordhoff Street
Chatsworth, California 91311
ii. If to Employee, to the address of Employee set forth in
the records of the Company,
or to such other address or addresses as may have been furnished by either party
in writing to the other party hereto. Any such notice, request, demand or other
communication shall be deemed to have been given two business days following the
date actually set.
-10-
c. TRANSFER OF RIGHTS UNDER THIS AGREEMENT. The Company may at any
time transfer and assign its rights and delegate its obligations under this
Agreement to any other person, corporation, firm or entity, including its
officers, directors and shareholders, with or without consideration.
d. OPTION NON-TRANSFERABLE. Employee may not assign or transfer the
Option except by will or the laws of descent and distribution, and only Employee
may exercise the Option during his or her lifetime.
e. SUCCESSORS. Except to the extent specifically limited by the
term and provisions of this Agreement, this Agreement is binding upon the
parties to this Agreement and their respective successors, assigns, heirs and
personal representatives.
f. CHOICE OF LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, which shall apply in all
respects, including statutes of limitation.
g. ATTORNEYS' FEES. In the event that any action, suit or other
proceeding is instituted upon any breach of this Agreement, the prevailing party
shall be paid by the other party thereto an amount equal to all of the
prevailing party's costs and expenses, including attorneys' fees, in each and
every such action, suit or proceeding (including any and all appeals or
petitions therefrom). As used in this Agreement, "attorneys' fees" shall mean
the full and actual cost of any legal services actually performed in connection
with the matter involved, calculated on the basis of the usual fee customarily
charged by the attorney performing such services, and shall not be limited to
reasonable attorneys' fees as defined in any statute or rule of court.
h. THE PLAN. This Agreement is made pursuant to the Plan, and it is
intended, and shall be interpreted in a manner, to comply therewith. Any
provision of this Agreement inconsistent with the Plan shall be superseded and
governed by the Plan.
i. MISCELLANEOUS. Titles and captions contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof. Except as specifically provided herein, neither this
Agreement nor any right pursuant hereto or interest herein shall be assignable
by any of the parties hereto without the prior written consent of the other
parties hereto.
The Signature Page to this Agreement consists of the last page of the
Certificate.
-11-
EXHIBIT "A"
NOTICE OF EXERCISE
[To be signed only upon exercise of the Option]
TO: Netcom Systems, Inc.
The undersigned, the holder of the enclosed Stock Option Agreement
(Non-Statutory Stock Option), hereby irrevocably elects to exercise the purchase
rights represented by the Option and to purchase thereunder shares of Common
Stock of Netcom Systems, Inc. (the "Company"), and herewith encloses payment of
$_______________ in full payment of the purchase price of the Shares.
DATED: ____________________19__.
--------------------------------------------
Signature
[Signature must conform in all respects to
name of holder as specified on the face of
the Option.]
--------------------------------------------
Address
--------------------------------------------
City, State, Zip
--------------------------------------------
No. of Shares
[Insert here the number of shares called for
on the face of the Option (or, in the case of
a partial exercise, the number of shares
being exercised), in either case without any
adjustment for additional Common Stock, other
securities or property which, pursuant to the
adjustment provisions of the Option, may be
deliverable upon exercise.]
-12-
EXHIBIT "B"
REPRESENTATION LETTER
[To be signed only upon exercise of the Option]
[DATE]
Netcom Systems, Inc.
Attn: Marc Hamon, President
20500 Nordhoff Street
Chatsworth, CA 91311
Re: REPRESENTATIONS BY PROPOSED SHAREHOLDER
Gentlemen:
As a proposed stockholder of Netcom Systems, Inc., and in order to assure
you that the proposed issuance of shares with the requirements for exemption
from qualification afforded by Corporations Code, I hereby represent and warrant
to you the following:
19. I have a preexisting personal or business relationship with you,
consisting of contacts of such nature and duration as would enable me to be
aware of your general business and financial circumstances. In addition, by
reason of my own business or financial experience, I have the capacity to
protect my own interests in connection with the transaction.
20. I am acquiring the shares of Netcom Systems, Inc. for my own account,
and not with a view to or for sale in connection with any distribution of those
shares.
I declare under penalty of perjury, under the laws of the State of
California, that the foregoing is true and correct.
Very truly yours,
--------------------------------------------
[SIGNATURE OF OPTIONEE
--------------------------------------------
[NAME OF OPTIONEE]
cc: J. Anthony Vittal
-13-
NETCOM SYSTEMS, INC.
AMENDMENT NO. 1
TO 1993 STOCK OPTION AGREEMENT
This Amendment No. 1 to 1993 Stock Option Agreement is made and entered
into effective as of _____________, 1998 by and between Netcom Systems, Inc.
(the "Company") and the Optionee whose name appears on the last page hereof
(the "Optionee").
Optionee and the Company hereby agree that Section 11 of each Stock
Option Agreement between Optionee and the Company granted under the Company's
1993 Stock Option Plan (the "Agreement(s)") is hereby amended to read in its
entirety as follows:
"11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the number of Shares covered by this
Option, as well as the Exercise Price, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board of Directors
of the Company, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to this Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Company shall notify the
Employee as soon as practicable prior to the effective date of such
proposed transaction. The Board of Directors of the Company, or any
committee thereof, in its discretion may provide for the Employee to
have the right to exercise the Option until ten (10) days prior to such
transaction as to all of the Shares covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition,
the Board of Directors of the Company, or any committee thereof, may
provide that any Company repurchase option applicable to any Shares
purchased upon exercise of the Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not
been previously exercised, the Option will terminate immediately prior
to the consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of
the assets of the Company, the Option shall be assumed or an equivalent
option or right substituted by the successor corporation or a parent or
subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Option,
the Employee shall fully vest in and have the right to exercise the
Option as to all of the Shares, including Shares as to which it would
not otherwise be vested or exercisable. If the Option becomes fully
vested and exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Company shall notify the
Employee in writing or electronically that the Option shall be fully
vested and exercisable for a period of fifteen (15) days from the date
of such notice, and the Option shall terminate upon the expiration of
such period. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share
subject to the Option immediately prior to the merger or sale of assets,
the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its
parent, the Board of Directors of the Company, or any committee thereof,
may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option, for each
Share subject to the Option, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale
of assets."
With the exception of the amendment set forth above, the Agreement(s)
shall remain in full force and effect in accordance with its terms.
___________________________________
Name of Optionee
___________________________________
(Signature)