Professional Documents
Culture Documents
2020 Employee Stock Incentive Plan ADTRAN
2020 Employee Stock Incentive Plan ADTRAN
ARTICLE I
Plan Information
1.1 Background. ADTRAN, Inc. (the “Company”) hereby adopts this new equity
incentive plan for the benefit of its employees to replace certain Prior Plans; provided,
however, that notwithstanding that replacement, the Prior Plans shall remain in effect
with respect to outstanding awards as long as the awards thereunder are outstanding.
This new plan shall be known as the ADTRAN, Inc. 2020 Employee Stock Incentive Plan
(the “Plan”).
1.2 General Purpose. The purpose of the Plan is to further the growth and
development of the Company by offering employees and key service providers and
advisors of the Company and its Subsidiaries the opportunity to own a proprietary
interest in the Company. The Company intends that the Plan will provide such individuals
with an added incentive to continue in the employ and/or service, promote the growth,
efficiency and profitability, and help to attract outstanding individuals to the service, of
the Company and its Subsidiaries.
1.3 Types of Awards Available Under the Plan. The Plan permits Awards of
Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock, and Restricted
Stock Units (“RSUs”). The types of Stock Options permitted under the Plan are incentive
stock options (“ISOs”) and nonqualified stock options (“NQSOs”).
1.4 Intended Tax Effects of Awards. The Company intends that ISOs granted
under the Plan qualify as incentive stock options under Code Section 422. Restricted
Stock Awards are subject to taxation under Code Section 83. Nonqualified Stock Options
and Stock Appreciation Rights are subject to taxation when the Nonqualified Stock
Option or Stock Appreciation Right is exercised. Restricted Stock Units are subject to
taxation when the underlying shares of Common Stock are issued to the Participant.
1.5 Effective Date of the Plan. The Plan shall be effective on the date of its
approval by the shareholders of the Company at the 2020 annual meeting of
shareholders (the “Effective Date”) in accordance with applicable law (including, without
limitation, approvals required under Rule 16b-3 and Code Section 422) and any
registration or stock exchange rule. Notwithstanding the above, any Stock Option that is
designated as an Incentive Stock Option shall automatically be treated as a Nonqualified
Stock Option if the Plan is not approved by the shareholders of the Company within
twelve (12) months after the Effective Date of the Plan and no Restricted Stock Award
shall be granted prior to approval by the Company’s shareholders.
1.6 Term. Unless earlier terminated by the Board pursuant to the provisions of
1
Rev 05/13/20
Article IX hereof, the Plan shall remain in effect until the tenth (10th) anniversary of the
Effective Date; provided, however, that notwithstanding its termination, the Plan shall
remain in effect with respect to outstanding Awards as long as any Awards are
outstanding.
1.8 Legal Compliance. The Plan is intended to comply with (a) the requirements
for ISOs under Code Section 422, (b) Code Section 409A, to the extent any Awards are
treated as nonqualified deferred compensation under Code Section 409A, and (c) the
exemption of Awards under the provisions of Rule 16b-3.
ARTICLE II
Plan 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:
2.2 “Award” means any award or benefit granted to Participant under the Plan,
including, without limitation, the grant of Stock Options, Stock Appreciation Rights,
Restricted Stock and/or Restricted Stock Units.
2.3 “Award Agreement” means the written (or electronic) agreement issued by
the Company to the Participant that sets forth the terms and provisions of the Award
granted under the Plan.
2.4 “Base Value” means the per share base price of a Stock Appreciation Right.
Rev 05/13/20
term) or, if no such agreement exists or such agreement does not contain a definition of
cause (or a like term), then Cause means:
(a) willful and continued failure to substantially perform his duties with the
Company or any Affiliate within ten (10) business days after a written
demand for substantial performance is delivered to the Participant which
identifies the manner in which the Company or such Affiliate believes that
the Participant has not substantially performed his duties;
(b) unlawful or willful misconduct which is economically injurious to the
Company or to any Affiliate;
(c) commission of, or a plea of guilty or nolo contendere to, a felony charge
(other than a traffic violation);
(d) habitual drug or alcohol abuse that impairs the Participant’s ability to
perform the essential duties of his position;
(f) competition with the business of the Company or an Affiliate, either directly
or indirectly; or
2.8 “Change of Control” means the occurrence of any of the following events
on or after the Effective Date of this Plan:
Rev 05/13/20
the Company acquires its stock in exchange for property, will be treated as
an acquisition of stock for purposes of this Section. This applies only when
there is a transfer of stock of the Company (or issuance of stock of the
Company) and stock in the Company remains outstanding after the
transaction.
Rev 05/13/20
extent required by Rule 16b-3, a “non-employee director” as defined in Rule 16b-3, and
(b) satisfy the applicable requirements of any stock exchange or national market system
on which the Common Stock may then be listed.
2.11 “Common Stock” means the common stock of the Company, par value
$0.01 per
share.
2.14 “Effective Date” means the effective date of this Plan, subject to
shareholder approval as provided in Section 1.5.
2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.17 “Exercise Price” means the purchase price of the shares of Common Stock
underlying a Stock Option.
(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 Exchange
Act) or on the NASDAQ National Market System 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 National Market System on the business day immediately
preceding 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
closing price of a share on the business day immediately preceding the
date of determination.
Rev 05/13/20
(b) Stock Listed But No Shares Traded. If the Common Stock is listed on a
national securities exchange or on the NASDAQ National Market System
but 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 a share 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 but 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 a
share of the Common Stock on the most recent date before the date of
determination on which trading occurred.
(c) Stock Not Listed. If the Common Stock is not listed on a national securities
exchange or on the NASDAQ National Market System and is not regularly
traded in the over-the-counter market, then the Committee shall determine
the Fair Market Value of the Common Stock in a manner consistent with the
requirements of Code Section 409A, and in the case of an ISO, in
compliance with Code Section 422.
In any event, the determination of Fair Market Value should be consistent with the
requirements of Code Section 409A and in the case of an ISO, in compliance with Code
Section 422. 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.
2.19 “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law,
father-in- law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Participant, any person sharing the Participant’s
household (other than a tenant or employee), a trust in which any one or more of these
persons have more than fifty percent (50%) of the beneficial interest, a foundation in
which any one or more of these persons (or the Participant) control the management of
assets, and any other entity in which one or more of these persons (or the Participant)
own more than fifty percent (50%) of the voting interests.
Rev 05/13/20
2.22 “Officer” means “officer” as defined in Rule 16a-1(f) under Section 16(a) of
the Exchange Act.
(a) ADTRAN, Inc. 1986 Employee Incentive Stock Option Plan (expired
on February 14, 1996);
(b) ADTRAN, Inc. 1996 Employees Incentive Stock Option Plan (expired
on February 14, 2006);
Rev 05/13/20
(d) ADTRAN, Inc. 2015 Employee Stock Incentive Plan (terminated upon
the Effective Date of this Plan).
2.30 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act, as
then in effect or any successor provision.
Rev 05/13/20
2.34 “Stock Option” means an ISO or NQSO, as applicable, granted to an
Employee or service provider under the Plan.
2.36 “Ten Percent Shareholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding stock of
the Company, its parent (as defined in Code Section 424(e)), or any of its Subsidiaries. In
determining stock ownership, the attribution rules of Code Section 424(d) shall apply.
ARTICLE III
Plan Administration
3.2 Appointment of Committee. The Board shall appoint the Committee from
among its non-employee 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.
3.3 Organization. The Committee may select one of its members as its
chairman and shall hold its meetings at such times and at such places as it shall deem
advisable. A majority of the Committee shall constitute a quorum, and such majority shall
determine its actions. The Committee shall keep minutes of its proceedings and shall
report the same to the Board at least annually.
3.4 Individuals Eligible for Awards. The individuals eligible to receive Awards
shall be (a) active Employees of the Company or its Subsidiaries, including Employees
who are also members of the Board and (b) key service providers and advisors of the
Company. Only Employees of the Company or any Subsidiary shall be eligible to receive
ISOs.
3.5 Powers of Committee. The Committee may make one or more Awards
under the Plan. The Committee shall decide which eligible Employees and service
providers shall receive an Award and when to grant an Award, the type of Award that it shall
grant and the number of shares of Common Stock covered by the Award, subject to the terms of
the Plan. The Committee shall also decide the terms, conditions, performance criteria, restrictions
9
Rev 05/13/20
and other provisions of the Award. The Committee shall act by a majority of its then members, at
a meeting of the Committee or by unanimous written consent. The Committee shall keep
adequate records concerning the Plan and the Committee’s proceedings and acts in such form
and detail as the Committee may decide.
3.8 Deferral Arrangement. The Committee may permit or require the deferral of
payment of any Award, subject to such rules and procedures as it may establish and in
accordance with Code Section 409A. Unless otherwise provided in an Award
Agreement, any such deferral will not include provisions for the payment or crediting of
interest or dividend equivalents.
Rev 05/13/20
judgment in any such action, suit or proceeding, except in relation to such matters as to
which it is adjudged in such action, suit or proceeding that such Committee member or
members (or their designees) did not act in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Company.
ARTICLE IV
Stock Subject to the Plan
4.1 Common Stock Subject to Awards. Common Stock subject to Awards and
other provisions of the Plan shall consist of the following: (a) authorized but unissued
shares of Common Stock; (b) authorized and issued shares of Common Stock held by the
Company in its treasury which have been reacquired by the Company; and (c) shares of
Common Stock purchased by the Company in the open market.
(a) Each Award of Stock Options, Restricted Stock or Restricted Stock Units
granted under this Plan will reduce the number of authorized shares
available under the Plan by one (1) share of Common Stock for each share
underlying such Award.
(b) Shares of Common Stock underlying an Award under this Plan or Prior
Plans that is cancelled, terminated, expires without exercise, is forfeited, or
lapses, for any reason shall again be available for issuance pursuant to
Awards under this Plan (in the case of Restricted Stock or RSUs granted
under the 2015 Employee Stock Incentive Plan, at the 2.5 share multiple
provided by such Prior Plan).
(c) Notwithstanding anything to the contrary herein, the following shares shall
not again become available for issuance under the Plan: (1) shares of
Common Stock withheld by, or otherwise remitted to, the Company as full
or partial payment of the Exercise Price to the Company upon exercise of
Stock Options granted under the Plan; (2) shares of Common Stock
reserved for issuance under the Plan upon the grant of SARs to the extent
the number of reserved shares exceeds the number of shares actually
issued upon exercise of the SARs; and (3) shares of Common Stock
withheld by, or otherwise remitted to, the Company to satisfy a Participant’s
tax withholding obligations upon the lapse of restrictions on Restricted
Stock or RSUs or upon the exercise of Stock Options or SARs or upon any
other payment or issuance under the Plan.
11
Rev 05/13/20
The Committee shall establish appropriate methods for determining the number of
shares available for issuance under the Plan and the number of shares that have been
actually issued under the Plan at any time. In no event shall fractional shares of Common
Stock be issued under the Plan.
Rev 05/13/20
(2) upon reasonable prior written notice to the Participant, providing
that: (i) the Stock Options and/or SARs held by such Participant, to
the extent then exercisable, must be exercised within a specified
number of days after the date of such notice, at the end of which
period the Stock Options and/or SARs shall terminate without
payment, and/or (ii) a grant of Restricted Stock and/or RSUs Stock
must be accepted (to the extent then subject to acceptance) within a
specified number of days after the date of such notice, at the end of
which period the offer of the Restricted Stock and/or RSUs shall
terminate;
(3) terminating an Award, whether vested or unvested, in exchange for
a payment equal to (i) for Restricted Stock and RSUs, the Fair Market
Value of the shares of Common Stock subject to the Award or (ii) for
Stock Options and SARs, the excess of the Fair Market Value of the
shares of Common Stock subject to the Award over the Exercise
Price or Base Value, as applicable;
(4) providing that an Award shall become (as applicable) fully vested
and exercisable, and any vesting period or restrictions shall lapse,
immediately prior to the Change of Control; and/or
(c) Limits on Adjustments. Any issuance by the Company of stock of any class
other than the Common Stock, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of the Common Stock
subject to any Award, except as specifically provided otherwise in this Plan.
The grant of Awards under the Plan shall not affect in any way the right or
authority of the Company to make adjustments, reclassifications,
13
Rev 05/13/20
reorganizations or changes of its capital or business structure or to merge,
consolidate or dissolve, or to liquidate, sell or transfer all or any part of its
business or assets. No fractional shares or other securities shall be issued
pursuant to any such adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding downward to the
nearest whole share with no cash payment due therefor. If the Company
issues any rights to subscribe for additional shares pro rata to holders of
outstanding shares of the class or classes of stock then set aside for the
Plan, then each Participant shall be entitled to the same rights on the same
basis as holders of outstanding shares with respect to such portion of the
Participant’s Award as is exercised on or prior to the record date for
determining shareholders entitled to receive or exercise such rights. All
adjustments the Committee makes under this Plan shall be final and
conclusive.
ARTICLE V
Rules Applicable to Awards
5.2 Transferability.
(b) A Participant may transfer not for value any Award other than an ISO to any
Family Member of the Participant using such form and subject to such
additional administrative procedures as approved by the Committee from
time to time; provided, however, that any such Award shall remain subject
to all vesting, forfeiture, and other restrictions provided herein and in the
Award Agreement to the same extent as if it had not been transferred. For
purposes of this subsection (b), a “not for value” transfer is a transfer which
is (1) a gift, (2) a transfer under a domestic relations order in settlement of
14
Rev 05/13/20
marital property rights; or (3) a transfer to an entity in which more than fifty
percent (50%) of the voting interests are owned by Family Members (or the
Participant) in exchange for an interest in that entity. Subsequent transfers
of transferred Awards are prohibited except to Family Members of the
Participant in accordance with this subsection (b) or by will or the laws of
descent and distribution.
5.3 Accelerated Exercisability and Vesting. The Committee (or the Company’s
Chief Executive Officer, in the case of Awards granted to employees and service
providers who are not Officers) shall always have the discretionary power to accelerate
the exercisability or vesting of, any Award granted under the Plan, or to permit the
continued vesting of any such Award according to its original vesting schedule,
notwithstanding the Participant’s Separation from Service for any reason. Unless
otherwise determined by the Committee and set forth in the applicable Award
Agreement, in the event of one of the following events, any outstanding Awards shall
immediately become fully exercisable or vested: (1) the Participant’s death; (2) the
Participant’s Separation from Service due to Disability; or (3) a Change of Control of the
Company; provided, however, if an outstanding Award of Restricted Stock or RSUs
remains subject to any performance-based vesting schedule, then upon one of the
above events, a proportion of the shares subject to such Award shall become vested and
nonforfeitable, equal to the proportion of the time completed through the date of the applicable
event to the performance measurement period for the Award, with target performance level
deemed to be achieved as of the date of the applicable event, and in the event the Restricted
Stock or RSU Award was originally scheduled without a designated target performance level
(e.g., a single performance level or minimum and maximum performance levels), then the
performance level that, if met, would have resulted in the least number of shares becoming
vested shall be treated as the target level.
5.4 Separation From Service. Unless the Committee decides otherwise, all
Awards (or portions thereof) that remain unexercisable or unvested upon the
Participant’s Separation from Service for any reason other than the events listed in
Section 5.3 shall be forfeited by the Participant immediately upon the date of such
Separation from Service.
5.5 Waiver of Restrictions. The Committee (or the Company’s CEO, as provided
in Section 5.3 above) may elect, in its sole discretion, to waive any or all restrictions with
respect to any Award under the Plan.
Rev 05/13/20
ARTICLE VI
Stock Options
6.1 Grant of Stock Options. The Committee may grant Stock Options for shares
of Common Stock in such amounts as it may determine and subject to the provisions of
the Plan. A Stock Option shall constitute an ISO only if the Participant is an Employee and
the Stock Option is specifically designated as an Incentive Stock Option in the applicable
Award Agreement.
6.3 Exercise Price. The per share Exercise Price of a Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock as of the date of
grant (or, in the case of an ISO granted to a Ten Percent Shareholder, 110% of the Fair
Market Value of a share of Common Stock as of the date of grant).
6.4 Exercisability.
(a) General Schedule. Subject to paragraph (b) below, each Stock Option shall
become exercisable according to the following schedule, measured from
the date of grant:
Anniversary of Vested
the date of percentage:
grant:
One-year anniversary 25%
Two-year anniversary 25%
Three-year 25%
anniversary
Four-year 25%
anniversary
Rev 05/13/20
Fractional shares shall be disregarded for exercise.
(b) Other Vesting Requirements. The Committee may specify another vesting
schedule in the Award Agreement, whether time-based or performance-
based and with any other conditions, restrictions and contingencies as it
determines, in its sole discretion, provided that such schedule may not
result in vesting of any portion of the Stock Option before the one (1) year
anniversary of its date of grant, except in the event of the Participant’s
death or Disability or pursuant to Committee action taken in connection
with a Change of Control as described in Section 4.3(b). The Committee
may designate a single goal criterion or multiple goal criteria for
performance measurement purposes. Notwithstanding the foregoing, the
Committee (or the CEO pursuant to the delegation described in Section
3.6) may in its discretion in connection with a Participant’s Separation from
Service, accelerate the vesting of any Stock Option held by the Participant
or permit the continued vesting of such Award on the vesting schedule set
forth in the Participant’s Award Agreement. Other than as provided in the
preceding sentences, if a Participant Separates from Service, his or her
rights to all non- vested Stock Options shall cease immediately.
(a) Expiration Date. The expiration date of any Stock Option shall be the
earliest to occur of the following:
(1) Maximum Term. The date ten (10) years from the date of grant of the
Stock Option (or for an ISO granted to a Ten Percent Shareholder,
five (5) years from the date of grant);
(2) Termination for Cause. The date of the Participant’s Separation from
Service for Cause with the Company and all Affiliates;
(3) Separation from Service due to Death, Disability or Retirement. The
one- year anniversary of the Participant’s Separation from Service
with the Company and all Affiliates due to death, Disability or
Retirement, or such shorter period as determined by the Committee
and set forth in the Award Agreement; and
(4) Separation from Service. The date that is three (3) months following
the date of the Participant’s Separation from Service with the
Company and all Affiliates for any reason other than those specified
elsewhere in this Section 6.5(a), or such shorter period as
determined by the Committee and set forth in the Award
Agreement.
Rev 05/13/20
connection with a Participant’s Separation from Service, permit an Award to
remain exercisable for the full exercise period set forth in the Award
Agreement or the maximum term as described in Section 6.5(a)(1) above so
long as such extension does not violate Code Section 409A or other
applicable laws.
6.7 Payment of Exercise Price. The Participant must pay the full Exercise Price
for shares of Common Stock purchased upon the exercise of any Stock Option, and all
applicable withholding taxes, at the time of such exercise by one of the following forms
of payment:
(c) delivery of shares of Common Stock already owned by the Participant (and
for which the Participant has good title free and clear of any liens and
encumbrances) having a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price and taxes due;
(d) with the Committee’s approval, having the Company withhold shares of
Common Stock that otherwise would be acquired on exercise having a Fair
Market Value equal to the aggregate Exercise Price; or
18
Rev 05/13/20
(e) any combination of the above forms or any other form of payment
permitted by the Committee.
(a) An Award shall qualify as an ISO only to the extent that the aggregate Fair
Market Value (determined at the time the Stock Option is granted) of the
shares of Common Stock with respect to which all ISOs held by such
Participant become exercisable for the first time during any calendar year
(under the Plan, the Prior Plans, and all other plans of the Company, its
parent (as defined in Code Section 424(e)) or a Subsidiary) does not
exceed $100,000. This $100,000 limitation shall be applied by taking ISOs
into account in the order in which they were granted. Any portion of an ISO
in excess of such $100,000 limitation will be treated as a NQSO.
(b) If any Participant shall make any disposition of shares of Common Stock
delivered pursuant to the exercise of an ISO that is a disqualifying
disposition, such Participant shall notify the Company of such disposition
within ten (10) business days thereof. A disqualifying disposition is any
disposition (including any sale) of Common Stock acquired upon exercise
of an ISO before the later of
(1) two (2) years after the grant date of the ISO or (2) one (1) year after the
date the Participant acquired the Common Stock by exercising the ISO.
(c) If all or part of an ISO is not exercised within (1) three (3) months after the
date of the Participant’s Separation from Service for any reason except due
to death or Disability, or (2) within one (1) year following the Participant’s
Separation from Service due to death or Disability, but remains exercisable,
the unexercised portion thereof shall automatically be treated as a NQSO
for the remainder of the term of the Stock Option.
ARTICLE VII
Stock Appreciation Rights
7.1 Grant of SARs. The Committee may grant Stock Appreciation Rights to
Participants in such amounts as it may determine and subject to the provisions of the
Plan.
19
Rev 05/13/20
7.2 SAR Award Agreement. An Award of SARs shall be evidenced by an Award
Agreement that specifies the following terms and any additional terms and conditions
determined by the Committee and not inconsistent with the Plan: (a) the name of the
Participant; (b) the total number of shares of Common Stock to which the SAR pertains;
(c) the Base Value of the SAR;
(d) the date as of which the Committee granted the SAR; (e) the type of SAR granted; (f)
the requirements for the SAR to become exercisable, such as continuous service, time-
based schedule, period and goals for Performance Measures to be satisfied, additional
consideration, etc.; (g) the expiration date of the SAR; and (h) the Beneficiary of the
Participant.
7.3 Base Value. The per share Base Value of each SAR shall not be less than
100% of the Fair Market Value of a share of Common Stock as of the date of grant.
7.4 Exercisability.
(a) General Schedule. Subject to paragraph (b) below, each SAR shall become
exercisable according to the following schedule, measured from the date of
grant:
Anniversary of Vested
the date of percentage:
grant:
One-year anniversary 25%
Two-year anniversary 25%
Three-year 25%
anniversary
Four-year 25%
anniversary
(b) Other Vesting Requirements. The Committee may specify another vesting
schedule in the Award Agreement, whether time-based or performance-
based and with any other conditions, restrictions and contingencies as it
determines, in its sole discretion, provided that such schedule may not
result in vesting of any portion of the SAR before the one (1) year
anniversary of its date of grant, except in the event of the Participant’s
death or Disability or pursuant to Committee action taken in connection
with a Change of Control as described in Section 4.3(b) above. The
20
Rev 05/13/20
Committee may designate a single goal criterion or multiple goal criteria for
performance measurement purposes. Notwithstanding the foregoing, the
Committee (or the CEO pursuant to the delegation described in Section
3.6) may in its discretion in connection with a Participant’s Separation
from Service, accelerate the vesting of any SAR held by the Participant or permit
the continued vesting of such Award on the vesting schedule set forth in the
Participant’s Award Agreement. Other than as provided in the preceding
sentences, if a Participant Separates from Service, his or her rights to all non-
vested SARs shall cease immediately.
(a) Expiration Date. The expiration date of any SAR shall be the earliest to
occur of the following:
(1) Maximum Term. The date ten (10) years from the date of grant of the
SAR;
(2) Separation from Service for Cause. The date of the Participant’s
Separation from Service for Cause with the Company and all
Affiliates;
(4) Separation from Service. The date that is three (3) months following
the date of the Participant’s Separation from Service with the
Company and all Affiliates for any reason other than those specified
elsewhere in this Section 7.5(a), or such shorter period as
determined by the Committee and set forth in the SAR Agreement.
Rev 05/13/20
due to death or Disability, (2) for Cause, or (3) due to a voluntary
resignation, the term of all SARs held by such Participant shall be extended
to their maximum term as described in Section 7.5(a)(1) above.
7.6 Minimum SAR Exercise Amount. Unless the Committee specifies otherwise
in the SAR Agreement, a Participant may exercise a SAR for less than the full number of
shares of Common Stock subject to the SAR. However, each exercise may not be made
for less than 100 shares or, if less, the total remaining shares subject to the SAR. The
Committee may in its discretion specify other SAR terms, including restrictions on a frequency
of exercise and periods during which SARs may not be exercised.
7.7 Exercise of SARs. SARs may be exercised upon the terms and conditions
determined by the Committee, in its sole discretion.
The payment for SAR exercise may be made in cash, shares of Common Stock or
in some combination thereof at the sole discretion of the Committee. The form of
payment shall be specified in the Award Agreement pertaining to the grant of the SAR.
ARTICLE VIII
Restricted Stock and Restricted Stock Units
8.1 Grants of Restricted Stock and Restricted Stock Units. The Committee may
grant shares of Common Stock as Restricted Stock or may grant Restricted Stock Units to
Participants in such amounts as it may determine and subject to the provisions of the
Plan.
Rev 05/13/20
date as of which the Committee awarded the Restricted Stock or the Restricted Stock
Unit; (d) the manner in which the Restricted Stock or Restricted Stock Units will become
vested, nonforfeitable and transferable and a description of any restrictions applicable to
the Restricted Stock or the Restricted Stock Units; (e) for RSUs, when RSUs will be settled
after they vest; and (f) the Beneficiary of the Participant.
8.3 Vesting.
Anniversary of Vested
the date of percentage:
grant:
One-year anniversary 25%
Two-year anniversary 25%
Three-year 25%
anniversary
Four-year 25%
anniversary
(b) Other Vesting Requirements. The Committee may specify another vesting
schedule in the Award Agreement, whether time-based or performance-
based and with any other conditions, restrictions and contingencies as it
determines, in its sole discretion, provided that such schedule may not
result in vesting of any portion of the Award of Restricted Stock or
Restricted Stock Units before the one
(1) year anniversary of its date of grant, except in the event of the
Participant’s death or Disability or pursuant to Committee action taken in
connection with a Change of Control as described in Section 4.3(b) above.
The Committee may designate a single goal criterion or multiple goal
criteria for performance measurement purposes. Notwithstanding the
foregoing, the Committee (or the CEO pursuant to the delegation described
in Section 3.6) may in its discretion in connection with a Participant’s
Separation from Service, accelerate the vesting of any Award of Restricted
Stock or Restricted Stock Units held by the Participant or permit the
continued vesting of such Award of Restricted Stock or Restricted Stock
Units on the vesting schedule set forth in the Participant’s Award
Agreement; provided, however, that any such extension must comply with
Code Section 409A and the Delay Period (as defined in Section 10.16) for
specified employees. Other than as provided in the preceding sentences, if
23
Rev 05/13/20
a Participant Separates from Service, his or her rights to all Restricted Stock
or Restricted Stock Units that have not yet vested shall cease immediately.
(a) Issuance. The Company shall issue the shares of Restricted Stock within a
reasonable period of time after approval of the Restricted Stock Award;
provided, that 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 Securities Act and causing such registration statement to
become effective) with respect to such shares before the issuance thereof,
then the date of delivery of the shares shall be extended for the period
necessary to take such action. As long as any restrictions apply to the
Restricted Stock, the shares of Restricted Stock shall be held by the
Committee in uncertificated form in a restricted account.
(b) Legend. Unless the certificate representing shares of the Restricted Stock
is deposited with a custodian (as described in this Section), each certificate
shall bear the following legend (in addition to any other legend required by
law):
“The transferability of this certificate and the shares
represented hereby are subject to the restrictions,
terms and conditions (including forfeiture and
restrictions against transfer) contained in the
ADTRAN, Inc. 2020 Employee Stock Incentive
Plan and an Award Agreement dated
, , between and
ADTRAN, Inc. The Plan and the Award Agreement
are on file in the office of the Corporate Secretary
of ADTRAN, Inc.”
Such legend shall be removed or canceled from any certificate evidencing shares
of Restricted Stock as of the date that such shares become nonforfeitable.
Rev 05/13/20
Common Stock immediately following the date they vest; provided that the Committee
may specify in the applicable Award Agreement that settlement shall be in cash or in a
combination of Common Stock and cash.
ARTICLE IX
Amendment and Termination of Plan and Plan Awards
9.1 Amendment and Termination By the Board. Subject to Section 9.2 below,
the Board shall have the power at any time to add to, amend, modify or repeal any of the
provisions of the Plan, to suspend the operation of the entire Plan or any of its provisions
for any period or to terminate the Plan in whole or in part. In the event of any such action,
to the extent it determines necessary to administer the Plan, the Committee shall prepare
written procedures which, when approved by the Board, shall govern the administration
of the Plan resulting from such addition, amendment, modification, repeal, suspension or
termination. No Award Agreement may be amended to reprice or constructively reprice
any Award.
Rev 05/13/20
any Award Agreement that it previously has authorized under the Plan that
adversely affects the Participant’s rights or benefits under an Award without
the written (or electronic) consent of the Participant holding such Award.
ARTICLE X
Plan Operation
Rev 05/13/20
in the Committee's (or its delegate’s) sole discretion.
(a) The Company shall not be required to sell or issue any shares of Common
Stock under any Award if the sale or issuance of such shares would
constitute a violation by the Participant or the Company of any provision of
any law or regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations. If at any time
the Company shall determine, in its discretion, that the listing, registration
or qualification of any shares subject to an Award upon any securities
exchange or under any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issuance or purchase
of shares hereunder, no shares of Common Stock may be issued or sold to
the Participant exercising a Stock Option or SAR unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any
delay caused thereby shall in no way affect the date of termination of the
27
Rev 05/13/20
Award.
(b) In connection with the Securities Act, upon the exercise of any Option or
SAR or the delivery of any shares of Common Stock underlying an Award,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Common Stock covered by such Award, the
Company shall not be required to sell or issue such shares unless the
Committee has received evidence satisfactory to it that the Participant or
any other individual exercising a Stock Option may acquire such shares
pursuant to an exemption from registration under the Securities Act.
(c) The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Company
shall not be obligated to take any affirmative action in order to cause the
exercise of a Stock Option or the issuance of shares of Common Stock
pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that a Stock Option or SAR shall not be exercisable until the
shares of Common Stock covered by such Stock Option or SAR are
registered or are exempt from registration, the exercise of such Stock
Option or SAR (under circumstances in which the laws of such jurisdiction
apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
(d) The Company may require a Participant to submit evidence that the
Participant is acquiring shares of Common Stock for investment purposes.
10.3 Rule 16b-3. During any time when the Company has a class of equity
security registered under Section 12 of the Exchange Act, it is the intent of the Company
that Awards and the vesting, exercise and settlement thereof qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the
Plan or action by the Board or Committee does not comply with the requirements of Rule
16b-3, it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board, and shall not affect the validity of the Plan. In the event that Rule
16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in
any respect necessary to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.
10.4 Tax Withholding. The Company and its Affiliates shall have the power and
the right to deduct or withhold from amounts (including withholding any shares of
Common Stock that otherwise would be issued on exercise or following the vesting of an
Award) to the Participant by the Company or such Affiliate, or require a Participant to
remit to the Company or such Affiliate as a condition of any Award, an amount (in cash or
in kind, subject to the approval of the Company) sufficient to satisfy the minimum Federal,
state and local taxes, domestic or foreign, required by law or regulation to be withheld
28
Rev 05/13/20
with respect to any taxable event arising as a result of the Plan. Notwithstanding the
above, in the case of Stock Options and SARs, such tax withholding shall be
accomplished as set forth in Sections 6.7 and 7.7.
10.6 No Trust or Fund Created. Neither a Participant nor any other person shall,
by reason of the Plan or any Award, acquire any right in or title to any assets, funds or
property, other than the Common Stock of the Company or an Affiliate, including, without
limitation, any specific funds, assets, or other property which the Company or its
Affiliates, in its sole discretion, may set aside in anticipation of a liability under the Plan. A
Participant shall have only a contractual right to the Common Stock underlying Awards
granted under the Plan, unsecured by any assets of the Company or an Affiliate. Nothing
contained in the Plan shall constitute a guarantee that the assets of the Company or its
Affiliates shall be sufficient to pay any benefits to any person.
10.7 Nonexclusively of the Plan. Neither the adoption of the Plan nor the
submission of the Plan to the Company’s shareholders for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular individual or
particular individuals).
29
Rev 05/13/20
10.10 Gender and Number. Words in any gender shall include any other gender,
words in the singular shall include the plural and the plural shall include the singular.
10.11 Headings. The headings in this Plan are for convenience of reference.
Headings are not a part of the Plan and shall not be considered in the construction
hereof.
10.12 Legal References. Any reference in this Plan to a provision of law which is
later revised, modified, finalized or redesignated, shall automatically be considered a
reference to such revised, modified, finalized or redesignated provision of law.
10.14 Unfunded Arrangement. The Plan shall not be funded, and except for
reserving a sufficient number of authorized shares to the extent required by law to meet
the requirements of the Plan, the Company shall not be required to establish any special
or separate fund or to make any other segregation of assets to assure the payment of
any grant under the Plan.
10.16 Code Section 409A. Although the Company does not guarantee to a
Participant any particular tax treatment of an Award, Awards are intended to comply with,
or be exempt from, the requirements of Code Section 409A, to the extent it applies. The
Plan and each Award Agreement will be construed and interpreted in accordance with
such intent, except as otherwise determined in the sole discretion of the Committee. In
30
Rev 05/13/20
no event whatsoever shall the Company or any of its Affiliates be liable for any additional
tax, interest or penalties that may be imposed on a Participant pursuant to or as a result
of Code Section 409A or for any damages for failing to qualify for an exemption from, or
comply with, Code Section 409A. If the Participant is deemed on a Separation from
Service to be a “specified employee” within the meaning of Code Section 409A(a)(2)(B),
then with regard to any Award that is considered nonqualified deferred compensation
under Code Section 409A payable on account of a Separation from Service, such Award
shall be paid at the date which is the earlier of (A) the expiration of the six (6) month
period measured from the date of such a Separation from Service of the Participant, and
(B) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the
Delay Period, all payments delayed pursuant to this Section (whether they would have
otherwise been payable in a single sum or in installments in the absence of such delay)
shall be paid to the Participant in a lump sum and any remaining payments due under the
Award shall be paid in accordance with the normal payment dates specified for them in
the Plan or the applicable Award Agreement.
10.17 International Awards. The Committee may adopt special guidelines and
provisions for Awards with respect to Participants who are employed or reside in any
country other than the United States in order to comply with the applicable laws of such
other country.
*****
31
Rev 05/13/20