Exhibit 10.1
ADTRAN, INC.
2005 DIRECTORS STOCK OPTION
PLAN
ARTICLE I
Purpose
1.1 General Purpose . The
purpose of this Plan is to further the growth and development of
the Company by encouraging Directors who are not employees of the
Company to obtain a proprietary interest in the Company by owning
its stock. The Company intends that the Plan will provide such
persons with an added incentive to continue to serve as Directors
and will stimulate their efforts in promoting the growth,
efficiency and profitability of the Company. The Company also
intends that the Plan will afford the Company a means of attracting
persons of outstanding quality to service on the Board.
1.2 Intended Tax Effects of
Options . It is intended that the tax effects of any Option
granted hereunder should be determined under Code
§83.
ARTICLE II
Definitions
The following words and phrases as
used in this Plan shall have the meanings set forth in this Article
unless a different meaning is clearly required by the
context:
2.1 1933 Act shall mean the
Securities Act of 1933, as amended.
2.2 1934 Act shall mean the
Securities Exchange Act of 1934, as amended.
2.3 Beneficiary shall mean,
with respect to an Optionee, the Person or Persons to whom the
Optionee’s Option shall be transferred upon the
Optionee’s death ( i.e. , the Optionee’s
Beneficiary).
(a) Designation of
Beneficiary. An Optionee’s Beneficiary shall be the
Person who is last designated in writing by the Optionee as such
Optionee’s Beneficiary hereunder. An Optionee shall designate
his or her original Beneficiary in writing on his or her Option
Agreement. Any subsequent modification of the Optionee’s
Beneficiary shall be in a written executed letter addressed to the
Company and shall be effective when it is received and
accepted by the Committee, determined in the Committee’s sole
discretion.
(b) No Designated
Beneficiary. If, at any time, no Beneficiary has been validly
designated by an Optionee, or the Beneficiary designated by the
Optionee is no longer living or in existence at the time of the
Optionee’s death, then the Optionee’s Beneficiary shall
be deemed to be the Optionee’s spouse, or if none, the
Optionee’s estate.
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(c) Designation of Multiple
Beneficiaries. An Optionee may, consistent with subsection (a)
above, designate more than one Person as a Beneficiary if, for each
such Beneficiary, the Optionee also designates a percentage of the
Optionee’s Options to be transferred to such Beneficiary upon
the Optionee’s death. Unless otherwise specified by the
Optionee, any designation by the Optionee of multiple Beneficiaries
shall be interpreted as a designation by the Optionee that each
such Beneficiary (to the extent such Beneficiary is alive or in
existence as of the Optionee’s date of death) should be
entitled to an equal percentage of the Optionee’s Options.
Each Beneficiary shall have complete and non-joint rights with
respect to the portion of an Optionee’s Options to be
transferred to such Beneficiary upon the Optionee’s
death.
(d) Contingent Beneficiaries.
An Optionee may designate one or more contingent Beneficiaries to
receive all or a portion of the Optionee’s Option in the
event that one or more of the Optionee’s original
Beneficiaries should predecease the Optionee; otherwise, in the
event that one or more Beneficiaries predeceases the Optionee, then
the individual or individuals specified above shall take the place
of each such deceased Optionee’s Beneficiary.
2.4 Board shall mean the
Board of Directors of the Company.
2.5 Cause shall mean an act
or acts by an individual involving personal dishonesty,
incompetence, willful misconduct, moral turpitude, intentional
failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar
offenses), the use for profit or disclosure to unauthorized persons
of confidential information or trade secrets of the Company or its
parents or subsidiaries, the breach of any contract with the
Company or its parents or subsidiaries, the unlawful trading in the
securities of the Company or of another corporation based on
information gained as a result of the performance of services for
the Company or its parents or subsidiaries, a felony conviction or
the failure to contest prosecution for a felony, embezzlement,
fraud, deceit or civil rights violations, any of which acts cause
the Company or any subsidiary liability or loss, as determined by
the Committee in its sole discretion.
2.6 Change of Control shall
mean the occurrence of any one of the following events:
(a) Acquisition By Person of
Substantial Percentage. The acquisition by a Person (including
“affiliates” and “associates” of such
Person, but excluding the Company, any “parent” or
“subsidiary” of the Company, or any employee benefit
plan of the Company or of any “parent” or
“subsidiary” of the Company) of a sufficient number of
shares of the Common Stock, or securities convertible into the
Common Stock, and whether through direct acquisition of shares or
by merger, consolidation, share exchange, reclassification of
securities or recapitalization of or involving the Company or any
“parent” or “subsidiary” of the Company, to
constitute the Person the actual or beneficial owner of greater
than 50% of the Common Stock; or
(b) Disposition of Assets.
Any sale, lease, transfer, exchange, mortgage, pledge or other
disposition, in one transaction or a series of transactions, of all
or substantially all of the assets of the Company or of any
“subsidiary” of the Company to a
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Person (including
“affiliates” and “associates” of such
Person, but excluding the Company, any “parent” or
“subsidiary” of the Company, or any employee benefit
plan of the Company or of any “parent” or
“subsidiary” of the Company).
For purposes of this Section, the
terms “affiliate,” “associate,”
“parent” and “subsidiary” shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
Section 12 of the 1934 Act.
2.7 Code shall mean the
Internal Revenue Code of 1986, as amended.
2.8 Committee shall mean the
committee appointed by the Board to administer and interpret the
Plan in accordance with Article III below.
2.9 Common Stock shall mean
the common stock, par value $0.01 per share, of the
Company.
2.10 Company shall mean
ADTRAN, Inc.
2.11 Director shall mean an
individual who is serving as a member of the Board ( i.e. ,
a director of the Company).
2.12 Disability shall mean,
with respect to an individual, the total and permanent disability
of such individual as determined by the Committee in its sole
discretion.
2.13 Effective Date shall
mean May 18, 2005, subject to shareholder approval. See
Article IX herein .
2.14 Fair Market Value of the
Common Stock as of a date of determination shall mean the
following:
(a) Stock Listed and Shares
Traded. If the Common Stock is listed and traded on a national
securities exchange (as such term is defined by the 1934 Act) or on
The Nasdaq Stock Market (“Nasdaq”) on the date of
determination, the Fair Market Value per share shall be the closing
price of a share of the Common Stock on said national securities
exchange or Nasdaq on the date of determination. If the Common
Stock is traded in the over-the-counter market, the Fair Market
Value per share shall be the average of the closing bid and asked
prices on the date of determination.
(b) Stock Listed But No Shares
Traded. If the Common Stock is listed on a national securities
exchange or on Nasdaq and no shares of the Common Stock are traded
on the date of determination but there were shares traded on dates
within a reasonable period before the date of determination, the
Fair Market Value shall be the closing price of the Common Stock on
the most recent date before the date of determination. If the
Common Stock is regularly traded in the over-the-counter market and
no shares of the Common Stock are traded on the date of
determination (or if records of such trades are unavailable or
burdensome to obtain) but there were shares traded on dates within
a reasonable period before the date of determination, the Fair
Market Value shall be the average of the closing bid and asked
prices of the Common Stock on the most recent date before the date
of determination.
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(c) Stock Not Listed. If the
Common Stock is not listed on a national securities exchange or on
Nasdaq and is not regularly traded in the over-the-counter market,
then the Committee shall determine the Fair Market Value of the
Common Stock from all relevant available facts, which may include
the average of the closing bid and ask prices reflected in the
over-the-counter market on a date within a reasonable period either
before or after the date of determination or opinions of
independent experts as to value and may take into account any
recent sales and purchases of such Common Stock to the extent they
are representative.
The Committee’s determination
of Fair Market Value, which shall be made pursuant to the foregoing
provisions, shall be final and binding for all purposes of this
Plan.
2.15 Option shall mean
options to which Code §421 (relating generally to certain
incentive stock options and other options) does not apply,
granted to individuals pursuant to the terms and provisions of this
Plan.
2.16 Option Agreement shall
mean a written agreement, executed and dated by the Company and an
Optionee, evidencing an Option granted under the terms and
provisions of this Plan, setting forth the terms and conditions of
such Option, and specifying the name of the Optionee and the number
of shares of stock subject to such Option.
2.17 Option Price shall mean
the purchase price of the shares of Common Stock underlying an
Option.
2.18 Optionee shall mean an
individual who is granted an Option pursuant to the terms and
provisions of this Plan.
2.19 Person shall mean any
individual, organization, corporation, partnership, trust or other
entity.
2.20 Plan shall mean this
ADTRAN, Inc. 2005 Directors Stock Option Plan.
ARTICLE III
Administration
3.1 General Administration .
The Plan shall be administered and interpreted by the Committee.
Subject to the express provisions of the Plan, the Committee shall
have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine
the terms and provisions of the Option Agreements by which Options
shall be evidenced (which shall not be inconsistent with the terms
of the Plan), and to make all other determinations necessary or
advisable for the administration of the Plan, all of which
determinations shall be final, binding and conclusive.
3.2 Appointment . The Board
shall appoint the Committee from among its members to serve at the
pleasure of the Board. The Board from time to time may remove
members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed of
two or more directors.
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3.3 Indemnification . In
addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the
Committee, to the extent permitted by applicable law, shall be
indemnified by the Company against reasonable expenses (including,
without limitation, attorneys’ fees) actually and necessarily
incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal, 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 the Plan or any Options granted
hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent
required by and in the manner provided by the articles or
certificate of incorporation or the bylaws of the Company relating
to indemnification of directors) or paid by them in satisfaction of
a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Committee member or members
did not act in good faith and in a manner he or they reasonably
believed to be in or not opposed to the best interest of the
Company.
ARTICLE IV
Stock
The stock subject to the Options and
other provisions of the Plan shall be authorized but unissued or
reacquired shares of Common Stock. Subject to readjustment in
accordance with the provisions of Article VII, the total number of
shares of Common Stock for which Options may be granted to persons
participating in the Plan shall not exceed in the aggregate 400,000
shares of Common Stock. Notwithstanding the foregoing, shares of
Common Stock allocable to the unexercised portion of any expired or
terminated Option again may become subject to Options under the
Plan.
ARTICLE V
Eligibility to Receive and Grant
of Options
5.1 Individuals Eligible for
Grants of Options. The individuals eligible to receive Options
hereunder shall be solely those individuals who are Directors and
who are not employees of the Company or any parent or subsidiary
corporation of the Company. Such Directors shall receive Options
hereunder in accordance with the provisions of Section 5.2
below.
5.2 Grant of Options .
Options shall be granted to those Directors who are eligible under
Section 5.1 above in accordance with the following
formulas:
(a) Option Upon Initially
Becoming a Director. Upon initially becoming a Director, an
individual shall be granted an Option to purchase 10,000 shares of
Common Stock, with such Option subject to the provisions of Article
VI below. Options granted under this subsection (a) shall be
evidenced by the Option Agreement shown in Appendix A. The Options
granted under this subsection (a) shall not be granted to a
Director who has previously served as a Director and who is again
becoming a Director, but shall only be granted upon an
individual’s initially becoming a Director.
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(b) Option Upon Commencement of
Term. As of December 31 of each calendar year following the
calendar year in which a Director receives a grant of Options under
subsection (a) above, if such individual is a Director as of such
date and subject to subsection (d) below, such individual shall be
granted an Option to purchase 5,000 shares of Common Stock, with
such Option subject to the provisions of Article VI below. Options
granted under this subsection (b) shall be evidenced by the Option
Agreement shown in Appendix B.
(c) Transitional Rules.
Notwithstanding anything in subsections (a) and (b) to the
contrary, no individual who is serving as a Director as of the
Effective Date of this Plan shall be entitled to any Options until
the December 31 next following the Effective Date.
(d) Rules Against Double Granting
of Options for Simultaneous Service. Notwithstanding any
provision of this Section to the contrary, an individual shall not
be granted an Option to purchase more than 5,000 shares as of any
December 31 under the provisions of subsection (b)
above.
ARTICLE VI
Terms and Conditions of
Options
Options granted hereunder and Option
Agreements shall comply with and be subject to the following terms
and conditions:
6.1 Requirement of Option
Agreement . Upon the grant of an Option hereunder, the
Committee shall prepare (or cause to be prepared) an Option
Agreement. The Committee shall present such Option Agreement to the
Optionee. Upon execution of such Option Agreement by the Optionee,
such Option shall be deemed to have been granted effective as of
the date of grant. The failure of the Optionee to execute the
Option Agreement within 30 days after the date of the receipt of
same shall render the Option Agreement and the underlying Option
null and void ab initio .
6.2 Optionee and Number of
Shares . Each Option Agreement shall state the name of the
Optionee and the total number of shares of the Common Stock to
which it pertains, the Option Price, the Beneficiary of the
Optionee and the date as of which the Option was granted under this
Plan.
6.3 Vesting . Each Option
shall first become exercisable ( i.e. , vested) with respect
to 100% of the shares subject to such Option as of the first
anniversary of the date the Option is granted. Prior to said date,
the Option shall be unexercisable in its entirety. Notwithstanding
the foregoing, all Options granted to an Optionee shall become
immediately vested and exercisable for 100% of the number of shares
subject to the Options upon the Optionee’s becoming Disabled
or upon his death or upon a Change of Control. Other than as
provided in the preceding sentences, if an Optionee ceases to be a
Director, his rights with regard to all non-vested Options shall
cease immediately.
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6.4 Option Price . The Option
Price of the shares of Common Stock underlying each Option shall be
the Fair Market Value of the Common Stock on the date the Option is
granted. Upon execution of an Option Agreement by both the Company
and Optionee, the date as of which the Option was granted under
this Plan as noted in the Option Agreement shall be considered the
date on which such Option is granted.
6.5 Terms of Options . Terms
of Options granted under the Plan shall commence on the date of
grant and shall expire ten years from the date the Option is
granted.
6.6 Terms of Exercise . The
exercise of an Option may be for less than the full number of
shares of Common Stock subject to such Option, but such exercise
shall not be made for less than (i) 100 shares or (ii) the total
remaining shares subject to the Option, if such total is less than
100 shares. Subject to the other restrictions on exercise set forth
herein, the unexercised portion of an Option may be exercised at a
later date.
6.7 Method of Exercise . All
Options granted hereunder shall be exercised by written notice
directed to the Secretary of the Company at its principal place of
business or to such other person as the Committee may direct. Each
notice of exercise shall identify the Option that the Optionee is
exercising (in whole or in part) and shall be accompanied by
payment of the Option Price for the number of shares specified in
such notice and by any documents required by Section 8.1. The
Company shall make delivery of such shares within a reasonable
period of time; provided, if any law or regulation requires the
Company to take any action (including, but not limited to, the
filing of a registration statement under the 1933 Act and causing
such registration statement to become effective) with respect to
the shares specified in such notice before the issuance thereof,
then the date of delivery of such shares shall be extended for the
period necessary to take such action.
6.8 Medium and Time of
Payment .
(a) The Option Price shall be
payable upon the exercise of the Option in an amount equal to the
number of shares then being purchased times the per share Option
Price. Payment, at the election of the Optionee (or his Beneficiary
as provided in subsection (c) of Section 6.9), shall be (A) in
cash; (B) by delivery to the Company of shares of the Common Stock
that have been owned by the Optionee for at least six months,
guaranteed or notarized, with such documentation as the Committee
may require, or in such other manner as the Committee may require;
or (C) by a combination of (A) and (B).
(b) If the Optionee delivers Common
Stock with a value that is less than the total Option Price, then
such Optionee shall pay the balance of the total Option Price in
cash, as provided in subsection (a) above.
6.9 Effect of Termination of
Service, Disability or Death . Except as provided in
subsections (a), (b) and (c) below, no Option shall be exercisable
unless the Optionee thereof shall have been a Director from the
date of the granting of the Option until the date of
exercise.
(a) Termination of Service.
In the event an Optionee ceases to be a Director for any reason
other than death or Disability, any Option or unexercised portion
thereof
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granted to him shall terminate on
and shall not be exercisable after the earliest to occur of (i) the
expiration date of the Option, (ii) three months after the date the
Optionee ceases to be a Director (except as provided in subsection
(c)) or (iii) the date on which the Company gives notice to such
Optionee of termination of his service as a Director if service is
terminated by the Company or by its shareholders for Cause (an
Optionee’s resignation in anticipation of termination of
service by the Company or by its shareholders for Cause shall
constitute a notice of termination by the Company). Notwithstanding
the foregoing, in the event that an Optionee’s service as a
Director terminates for a reason other than death or Disability at
any time after a Change of Control, the term of all Options of that
Optionee shall be extended through the end of the three-month
period immediately following the date of such termination of
service. Prior to the earlier of the dates specified in the
preceding sentences of this subsection (a), the Option shall be
exercisable only in accordance with its terms and only for the
number of shares exercisable on the date of termination of service
as a Director.
(b) Disability. Upon the
termination of an Optionee’s service as a Director due to
Disability, any Option or unexercised portion thereof granted to
him which is otherwise exercisable shall terminate on and shall not
be exercisable after the earlier to occur of (i) the expiration
date of such Option, or (ii) one year after the date on which such
Optionee ceases to be a Director due to Disability (except as
provided in subsection (c)). Prior to the earlier of such dates,
such Option shall be exercisable only in accordance with its terms
and only for the number of shares exercisable on the date such
Optionee’s service as a Director ceases due to
Disability.
(c) Death. In the event of
the death of the Optionee (i) while he is a Director, (ii) within
three months after the date on which such Optionee’s service
as a Director is terminated (for a reason other than Cause) as
provided in subsection (a) above, or (iii) within one year after
the date on which such Optionee’s service as a Director
terminated due to his Disability, any Option or unexercised portion
thereof granted to him which is otherwise exercisable may be
exercised by the Optionee’s Beneficiary at any time prior to
the expiration of one year from the date of death of such Optionee,
but in no event later than the date of expiration of the Option.
Such exercise shall be effected pursuant to the terms of this
Section as if such Beneficiary is the named Optionee.
6.10 Restrictions on Transfer and
Exercise of Options . No Option shall be assignable or
transferable by the Optionee except by transfer to a Beneficiary
upon the death of the Optionee, and any purported transfer (other
than as excepted above) shall be null and void. After the death of
an Optionee and upon the death of the Optionee’s Beneficiary,
an Option shall be transferred only by will or by the laws of
descent and distribution. During the lifetime of an Optionee, the
Option shall be exercisable only by him; provided, however, that in
the event the Optionee is incapacitated and unable to exercise
Options, such Options may be exercised by such Optionee’s
legal guardian, legal representative, fiduciary or other
representative whom the Committee deems appropriate based on
applicable facts and circumstances.
6.11 Rights as a Shareholder
. An Optionee shall have no rights as a shareholder with respect to
shares covered by his Option until date of the issuance of the
shares to him and only after the Option Price of such shares is
fully paid. Unless specified in Article VII, no adjustment will be
made for dividends or other rights for which the record date is
prior to the date of such issuance.
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6.12 No Obligation to Exercise
Option . The granting of an Option shall impose no obligation
upon the Optionee to exercise such Option.
ARTICLE VII
Adjustments Upon Changes in
Capitalization
7.1 Recapitalization . In the
event that the outstanding shares of the Common Stock of the
Company are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other
securities of the Company by reason of a recapitalization,
reclassification, stock split, combination of shares or dividend
payable in shares of the Common Stock, the following rules shall
apply:
(a) The Committee shall make an
appropriate adjustment in the number and kind of shares available
for the granting of Options under the Plan, and in the number and
kind of shares granted under Section 5.2.
(b) The Committee also shall make an
appropriate adjustment in the number and kind of shares as to which
outstanding Options, or portions thereof then unexercised, shall be
exercisable; any such adjustment in any outstanding Options shall
be made without change in the total price applicable to the
unexercised portion of such Option and with a corresponding
adjustment in the Option Price per share. No fractional shares
shall be issued or optioned in making the foregoing adjustments,
and the number of shares available under the Plan or the number of
shares subject to any outstanding Options shall be the next lower
number of shares, rounding all fractions downward.
(c) If any rights or warrants to
subscribe for additional shares are given pro rata to
holders of outstanding shares of the class or classes of stock then
set aside for the Plan, each Optionee shall be entitled to the same
rights or warrants on the same basis as holders of the outstanding
shares with respect to such portion of his Option as is exercised
on or prior to the record date for determining shareholders
entitled to receive or exercise such rights or warrants.
7.2 Reorganization . Subject
to any required action by the shareholders, if the Company shall be
a party to any reorganization involving merger, consolidation,
acquisition of the stock or acquisition of the assets of the
Company which does not constitute a Change of Control, and if the
agreement memorializing such reorganization so provides, any Option
granted but not yet exercised shall pertain to and apply, with
appropriate adjustment as determined by the Committee, to the
securities of the resulting corporation to which a holder of the
number of shares of the Common Stock subject to such Option would
have been entitled. If such agreement does not so provide, any or
all Options granted hereunder shall become immediately
nonforfeitable and fully exercisable or vested (to the extent
permitted under federal or state securities laws) and are to be
terminated after giving at least 30 days’ notice to the
Optionees to whom such Options have been granted.
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7.3 Dissolution and
Liquidation . If the Board ad
