Exhibit 4.3
ADTRAN, INC.
2010 DIRECTORS STOCK PLAN
amended and restated effective January 1, 2010
ADTRAN, INC.
2010 DIRECTORS STOCK PLAN
ARTICLE I
Purpose
1.1
Background.
ADTRAN, Inc. (the “Company”) maintains the ADTRAN, Inc. 2005 Directors Stock
Option Plan under a plan document adopted by the Board of Directors of the Company on January 24,
2005 and effective May 18, 2005. The Company now wishes to amend and restate the ADTRAN, Inc. 2005
Directors Stock Option Plan, effective January 1, 2010, to be known as the ADTRAN, Inc. 2010
Directors Stock Plan (the “Plan”), to add the ability to issue restricted stock and restricted
stock units under the Plan and to make other minor changes. This amendment and restatement is
contingent upon the approval of the shareholders of the Company at the annual meeting on May 5,
2010.
1.2
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.
1.3
Intended Tax Effects of Awards.
It is intended that the tax effects of any Award 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
Award
shall mean any Option, Restricted Stock, or Restricted Stock Unit granted to a
Participant under the Plan.
2.4
Award Agreement
shall mean an agreement entered into by the Company and a Participant
setting forth the terms and provisions applicable to an Award granted under the Plan.
2.5
Beneficiary
shall mean, with respect to a Participant, the Person or Persons to whom the
Participant’s Award shall be transferred upon the Participant’s death (
i.e.
, the Participant’s
Beneficiary).
(a)
Designation of Beneficiary.
A Participant’s Beneficiary shall be the Person who is
last designated in writing by the Participant as such Participant’s Beneficiary hereunder.
A Participant shall designate his or her original Beneficiary in writing on the form
provided by the Committee. Any subsequent modification of the Participant’s Beneficiary
shall be on the form provided by the Committee. A designation of beneficiary shall be
effective when the properly completed form is received
and
accepted by the Committee, as
determined in the Committee’s sole discretion.
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(b)
No Designated Beneficiary.
If no Beneficiary has been validly designated by a
Participant, or the Beneficiary designated by the Participant is no longer living or in
existence at the time of the Participant’s death, then the Participant’s Beneficiary shall
be deemed to be the Participant’s spouse, or if none, the Participant’s estate.
(c)
Designation of Multiple Beneficiaries.
A Participant may, consistent with
subsection (a) above, designate more than one Person as a Beneficiary if, for each such
Beneficiary, the Participant also designates a percentage of the Participant’s Award to be
transferred to such Beneficiary upon the Participant’s death. Unless otherwise specified by
the Participant, any designation by the Participant of multiple Beneficiaries shall be
interpreted as a designation by the Participant that each such Beneficiary (to the extent
such Beneficiary is alive or in existence as of the Participant’s date of death) should be
entitled to an equal percentage of the Participant’s Award. Each Beneficiary shall have
complete and non-joint rights with respect to the portion of a Participant’s Award to be
transferred to such Beneficiary upon the Participant’s death.
(d)
Contingent Beneficiaries.
A Participant may designate one or more contingent
Beneficiaries to receive all or a portion of the Participant’s Award in the event that all
of the Participant’s original Beneficiaries should predecease the Participant; otherwise, in
the event that one or more original Beneficiaries predeceases the Participant, then the
remaining original Beneficiaries specified above shall be entitled to the share of such
deceased Beneficiary in direct proportion to their designated shares.
2.6
Board
shall mean the Board of Directors of the Company.
2.7
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.
2.8
Change of Control
shall mean the occurrence of any one of the following events:
(a)
Acquisition of Substantial Percentage
. The acquisition by an individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
50% or more of either (i) the then outstanding shares of common stock of the Company (the
“Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”); provided, however, that the following acquisitions shall
not constitute a Change of Control:
(1) any acquisition directly from the Company;
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(2) any acquisition by the Company or any of its affiliates; or
(3) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its affiliates;
provided further, that if any such individual, entity or group subsequently becomes required
to or does report its ownership of Outstanding Common Stock and Outstanding Voting
Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section,
such individual, entity or group shall be deemed to have first acquired, on the first date
on which such individual, entity or group becomes required to or does so file, beneficial
ownership of all of the Outstanding Common Stock and Outstanding Voting Securities
beneficially owned by it on such date; or
(b)
Change of Majority of Board Members
. During any consecutive twelve (12)
month period, individuals who, as of the beginning of that period, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents; or
(c)
Reorganization, Merger or Consolidation.
There is consummated a
reorganization, merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately
prior to such reorganization, merger or consolidation, beneficially own, directly or
indirectly, less than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting
from such reorganization, merger or consolidation (or any parent thereof) in substantially
the same proportions as their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Common Stock and the Outstanding Voting Securities, as the
case may be; or
(d)
Disposition of Assets
. Consummation of the 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.
For purposes of this Section, the terms “affiliate” means an entity that, directly or
indirectly, controls, is controlled by, or is under common control with the Company, pursuant to
the provisions of Rule 12b-2 of the 1934 Act.
2.9
Code
shall mean the Internal Revenue Code of 1986, as amended and all regulations and
formal guidance issued thereunder.
2.10
Committee
shall mean the committee appointed by the Board to administer and interpret the
Plan in accordance with Article III below.
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2.11
Common Stock
shall mean the common stock, par value $0.01 per share, of the Company.
2.12
Company
shall mean ADTRAN, Inc.
2.13
Director
shall mean an individual who is not an employee of the Company and who is
serving as a member of the Board (
i.e.
, a director of the Company), including as a director
emeritus providing advisory services to the Board.
2.14
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.
2.15
Effective Date
shall mean May 18, 2005.
2.16
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
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 average of the closing bid and asked prices of a share
on the business day immediately preceding the date of determination.
(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 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 and in accordance with Code §409A, 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.
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2.17
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.
2.18
Option Price
shall mean the purchase price of the shares of Common Stock underlying an
Option.
2.19
Participant
shall mean an individual who is granted an Award pursuant to the terms and
provisions of this Plan; provided that, if the Participant dies, the term “Participant” shall mean
the Participant’s Beneficiary or the legal guardian or other legal representative acting in a
fiduciary capacity on behalf of the Participant under applicable state law and court supervision.
2.20
Person
shall mean any individual, organization, corporation, partnership, trust or other
entity.
2.21
Plan
shall mean this ADTRAN, Inc. 2010 Directors Stock Plan.
2.22
Restatement Effective Date
shall mean January 1, 2010, subject to shareholder approval.
See
Article IX
herein
.
2.23
Restricted Stock
shall mean an Award of Common Stock subject to such conditions,
restrictions and contingencies as the Committee determines and sets forth in the applicable Award
Agreement.
2.24
Restricted Stock Unit
or
RSU
shall mean an Award of a unit representing one share of
Common Stock, subject to such conditions, restrictions and contingencies as the Committee
determines and sets forth in the applicable RSU Agreement and upon satisfaction of such specified
restrictions, shall result in the issuance of one share of Common Stock.
2.25
Total Remuneration
shall mean the total annual compensation (including Awards under the
Plan) which may be paid to a Director for a given calendar year, as may be modified from time to
time, excluding any additional retainer for acting in certain capacities such as committee chair or
lead director, and any additional meeting fees.
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 Award Agreements by which Awards 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 Awards 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; Eligibility and Annual Grants
4.1
Authorized Shares.
The stock subject to Awards 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
Awards may be granted to persons participating in the Plan shall not exceed in the aggregate
500,000 shares of Common Stock. Notwithstanding the foregoing, shares of Common Stock allocable to
the unexercised portion of any expired, terminated or otherwise forfeited Award again may become
subject to Awards under the Plan.
4.2
Individuals Eligible for Awards.
The individuals eligible to receive Awards 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.
4.3
Award of Grants.
All Awards granted under this Section shall comply in all respects with
the terms and conditions of this Plan.
(a)
Initial Grants.
Upon initially becoming a Director, an individual shall be
automatically entitled to receive an Award with a Fair Market Value (in the case of Options,
as such value is determined by the Board in its sole discretion) on the date of grant equal
to (i) 50% of the annual grant detailed below in subsection (b) for the calendar year prior
to the calendar year in which the individual initially becomes a Director or (ii) such other
lesser amount as determined in the discretion of the Board. A Director who has previously
served as a Director and who again becomes a Director shall not be entitled to an initial
grant pursuant to this subsection (a). Only a Director who has never served as a Director
shall be entitled to an initial grant pursuant to this subsection (a). An individual who
receives an initial grant hereunder shall also be entitled to receive an annual grant under
subsection (b) for the calendar year in which he initially becomes a Director.
(b)
Annual Grants.
As of December 31 of each calendar year in which an individual is a
Director, and provided such individual is a Director as of such date, such individual shall
be automatically entitled to receive an Award with a Fair Market Value (in the case of
Options, as such value is determined by the Board in its sole discretion) on the date of
grant equal to (i) 50% of the Director’s Total Remuneration for such calendar year (rounded
to the nearest whole share as of such date) or (ii) such other lesser amount as determined
in the discretion of the Board; but in no event shall any Award have a Fair Market Value
greater than $120,000.
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(c)
Form of Grants.
All Awards shall be in the form of Restricted Stock unless the Board,
upon recommendation by the Committee, determines that Awards shall be in the form of Options
or Restricted Stock Units. Any determination to grant Awards in a form other than
Restricted Stock shall be made, in the case of initial grants under subsection (a), prior to
the date the Director becomes entitled to the Award, and, in the case of annual grants under
subsection (b), before December 31 for Awards for the calendar year ending that December 31.
ARTICLE V
Stock Options
5.1
Award Agreement
. Upon the grant of an Option hereunder, the Committee shall prepare (or
cause to be prepared) an Award Agreement. The Committee shall present such Award Agreement to the
Participant. Upon receipt of such Award Agreement by the Participant, such Option shall be deemed
to have been granted effective as of the date of grant.
5.2
Participant and Number of Shares
. Each Award Agreement shall state the name of the
Participant and the total number of shares of the Common Stock to which it pertains, the Option
Price, the Beneficiary of the Participant and the date as of which the Option was granted under
this Plan.
5.3
Vesting
. Unless otherwise provided in a Participant’s Award Agreement, 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 and, prior to said date, the Option
shall be unexercisable in its entirety. Notwithstanding the foregoing, all Options granted to a
Participant shall become immediately vested and exercisable for 100% of the number of shares
subject to the Options upon the Participant’s becoming Disabled or upon his death or upon a Change
of Control. Other than as provided in the preceding sentences, if a Participant ceases to be a
Director, his rights with regard to all non-vested Options shall cease immediately.
5.4
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.
5.5
Term of Options
. The 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.
5.6
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.
5.7
Method of Exercise
. All Options granted hereunder shall be exercised by written notice on
a form prescribed by the Committee and 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 Participant 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
(electronically or in paper form) 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.
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5.8
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 multiplied by the per share Option Price.
Payment, at the election of the Participant (or his Beneficiary, if applicable), shall be
(A) in cash; (B) by delivery to the Company of shares of the Common Stock that are owned by
the Participant, guaranteed or notarized, with such documentation as the Committee may
require, or in such other manner as the Committee may require; (C) if permitted by all
applicable laws and regulations, by broker-assisted cashless exercises executed through a
same day sale on the public market; or (D) any combination of the above forms or any other
form of payment permitted by the Committee.
(b) If the Participant delivers Common Stock with a value that is less than the total
Option Price, then such Participant shall pay the balance of the total Option Price in cash,
as provided in subsection (a) above.
5.9
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 Participant 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 a Participant ceases to be a Director for any
reason other than death or Disability, any Option or unexercised portion thereof granted to
him shall terminate on and shall not be exercisable after the earliest to occur of the
following: (i) the expiration date of the Option; (ii) three months after the date the
Participant ceases to be a Director (except as provided in subsection (c)); or (iii) the
date on which the Company gives notice to such Participant of termination of his service as
a Director if service is terminated by the Company or by its shareholders for Cause (a
Participant’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 a Participant’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 Participant 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 a Participant’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
the following: (i) the expiration date of such Option; or (ii) one year after the date on
which such Participant 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
Participant’s service as a Director ceases due to Disability.
(c)
Death.
In the event of the death of the Participant (i) while he is a Director,
(ii) within three months after the date on which such Participant’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 Participant’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 Participant’s Beneficiary at any time prior to
the expiration of one year from the date of death of such Participant, 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 Participant.
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The Committee shall have the power to extend the period of time described above in which an
Option may be exercised to the extent permitted by Code §409A and the Treasury regulations
issued thereunder, but not beyond the end of the term set forth in Section 5.5 above.
5.10
Restrictions on Transfer and Exercise of Options
. No Option shall be assignable or
transferable by the Participant except by transfer to a Beneficiary upon the death of the
Participant, and any purported transfer (other than as excepted above) shall be null and void.
After the death of a Participant and upon the death of the Participant’s Beneficiary, an Option
shall be transferable only by will or by the laws of descent and distribution. During the lifetime
of a Participant, the Option shall be exercisable only by him; provided, however, that in the event
the Participant is incapacitated and unable to exercise Options, such Options may be exercised by
such Participant’s legal guardian, legal representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and circumstances.
5.11
Rights as a Shareholder
. A Participant 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.
5.12
No Obligation to Exercise Option
. The granting of an Option shall impose no obligation
upon the Participant to exercise such Option.
ARTICLE VI
Restricted Stock and Restricted Stock Units
6.1
Award Agreement
. When the Committee awards Restricted Stock or Restricted Stock Units
under the Plan, it shall prepare (or cause to be prepared) an Award Agreement, effective as of the
date of grant, that shall specify the number of Shares subject to the Award, any vesting or
restrictions that apply to the Award, and such other provisions as the Committee may determine,
which are not inconsistent with the terms and provisions of the Plan.
6.2
Vesting
. Unless otherwise provided in a Participant’s Award Agreement, each Award of
Restricted Stock or Restricted Stock Units shall become vested (i.e., all restrictions shall lapse)
on the first anniversary of the date of grant; provided, if the Director ceases to be a Director,
his rights with regard to all non-vested Restricted Stock or Restricted Stock Units shall cease
immediately. Notwithstanding the foregoing, the Restricted Stock or Restricted Stock Units shall
become 100% vested immediately upon the death or Disability of the Director or upon a Change of
Control of the Company.
6.3
Delivery
.
(a)
Issuance
. The Company shall issue the shares of Restricted Stock within a
reasonable period of time after execution of the Award Agreement and shall issue shares of
Common Stock within a reasonable period of time after vesting of the Restricted Stock Units;
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 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. During the period of restriction, the Company will hold the Restricted
Stock in uncertificated form in a restricted account. As soon as practicable after the
lapse of the period of restriction, the Company shall deliver the stock certificates (or an
electronic version thereof) to the Participant.
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(b)
Legend for Restricted Stock
. 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. 2010
Director Stock 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.
(c)
Restricted Stock Deposited with Custodian
. As an alternative to delivering a stock
certificate to the Participant, the Committee may deposit or transfer such shares
electronically to a custodian designated by the Committee. The Committee shall cause the
custodian to issue a receipt for the shares to the Participant for any Restricted Stock so
deposited. The custodian shall hold the shares and deliver the same to the Participant in
whose name the Restricted Stock evidenced thereby is registered only after such shares
become nonforfeitable.
6.4
Restrictions on Transfer
. No Restricted Stock or Restricted Stock Unit shall be
assignable or transferable by the Participant except by transfer to a Beneficiary upon the death of
the Participant, and any purported transfer (other than as excepted above) shall be null and void.
After the death of a Participant and upon the death of the Participant’s Beneficiary, the
Restricted Stock or Restricted Stock Unit (as applicable) shall be transferable only by will or by
the laws of descent and distribution.
6.5
Shareholder Rights.
No shareholder rights shall inure to a Participant who has been
awarded Restricted Stock or Restricted Stock Units until the restrictions on the Restricted Stock
lapse or actual shares of Common Stock are issued upon vesting of the Restricted Stock Units, as
applicable.
6.6
Dividend Credits
. Any cash dividends paid on Common Stock underlying the Participant’s
Restricted Stock or Restricted Stock Units during the period of restriction shall be credited to a
bookkeeping account which shall be hypothetically invested in whole shares of Common Stock. Upon
the lapse of restrictions on the Restricted Stock or Restricted Stock Units, the Company will
immediately pay the Participant the accumulated value of the bookkeeping account in the form of
whole shares of Common Stock, plus any remaining cash.
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ARTICLE VII
Adjustments
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 Awards under the Plan and in the number and kind of shares
granted as part of the annual grants.
(b) The Committee also shall make an appropriate adjustment in the number and kind of
shares underlying outstanding Awards, or portions thereof, that remain unexercised or
subject to restriction; 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 Awards 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 Participant 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 Award for which shares
have not yet been issued in his or her name on or prior to the record date or which portion
is otherwise not included in the determination of 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 outstanding Award granted under the
Plan 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 Award would have been entitled. If such agreement does not so provide: (i)
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 Participants to whom such Options have been granted
and (ii) any or all unvested Awards of Restricted Stock or Restricted Stock Units hereunder shall
become immediately fully vested, nonforfeitable and/or payable.
7.3
Dissolution and Liquidation
. If the Board adopts a plan of dissolution and liquidation
that is approved by the shareholders of the Company, the Committee shall give each Participant
written notice of such event at least ten days prior to its effective date, and the rights of all
Participants shall become immediately nonforfeitable and fully exercisable or vested (to the extent
permitted under federal or state securities laws).
7.4
Limits on Adjustments
. Any issuance by the Company of stock of any class, 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 Article. The grant of Awards pursuant
to the Plan shall not affect in any way the right or power of the Company to make adjustments,
reclassifications, 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. All adjustments the Committee makes under this Article shall be conclusive.
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7.5
No Cashouts or Repricings.
Except in connection with a corporate transaction involving the
Company (including, without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination,
or exchange of shares), the terms of outstanding Awards may not be amended to reduce the Option
Price of outstanding Options or cancel outstanding Options in exchange for cash, other Awards or
Options with an Option Price that is less than the Option Price of the original Options without
stockholder approval.”
ARTICLE VIII
Agreement by Participant and Securities Registration
8.1
Agreement
. If, in the opinion of counsel to the Company, such action is necessary or
desirable, no Award shall be granted to any Participant and no Option shall be exercisable by a
Participant unless, at the time of grant or exercise, as applicable, such Participant (i)
represents and warrants that he will acquire the Common Stock for investment only and not for
purposes of resale or distribution, and (ii) makes such further representations and warranties as
are deemed necessary or desirable by counsel to the Company with regard to holding and resale of
the Common Stock. The Participant shall, upon the request of the Committee, execute and deliver to
the Company an agreement or affidavit to such effect. Should the Committee have reasonable cause
to believe that such Participant did not execute such agreement or affidavit in good faith, the
Company shall not be bound by the grant of the Award or by the exercise of an Option. All
certificates representing shares of Common Stock issued pursuant to the Plan shall be marked with
the following restrictive legend or similar legend, if such marking, in the opinion of counsel to
the Company, is necessary or desirable:
The shares represented by this certificate [have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state and] are
held by an “affiliate” (as such term is defined in Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended) of
the Company. Accordingly, these shares may not be sold, hypothecated, pledged or
otherwise transferred except (i) pursuant to an effective registration statement
under the Securities Act of 1933, as amended, and any applicable securities laws or
regulations of any state with respect to such shares, (ii) in accordance with
Securities and Exchange Commission Rule 144, or (iii) upon the issuance to the
Company of a favorable opinion of counsel or the submission to the Company of such
other evidence as may be satisfactory to the Company that such proposed sale,
assignment, encumbrance or other transfer will not be in violation of the Securities
Act of 1933, as amended, or any applicable securities laws of any state or any rules
or regulations thereunder. Any attempted transfer of this certificate or the shares
represented hereby which is in violation of the preceding restrictions will not be
recognized by the Company, nor will any transferee be recognized as the owner
thereof by the Company.
If the Common Stock is (A) held by a Participant who ceases to be an “affiliate,” as that term
is defined in Rule 144 of the 1933 Act, or (B) registered under the 1933 Act and all applicable
state securities laws and regulations as provided in Section 8.2, the Committee, in its discretion
and with the advice of counsel, may dispense with or authorize the removal of the restrictive
legend set forth above or the portion thereof which is inapplicable.
8.2
Registration
. In the event that the Company in its sole discretion shall deem it
necessary or advisable to register, under the 1933 Act or any state securities laws or regulations,
any shares with respect to which Awards have been granted hereunder, then the Company shall take
such action at its own expense before delivery of the certificates representing such shares to a
Participant. In such event, and if the shares of Common Stock of the Company shall be listed on
any national securities exchange or on Nasdaq at the time of the removal of restrictions from an
Award or exercise of any Option, the Company shall make prompt application at its own expense for
the listing on such stock exchange or Nasdaq of the shares of Common Stock to be issued.
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ARTICLE IX
Effective Date
9.1 Adoption of Plan
. The Plan was effective as of the Effective Date, and is being restated
as of the Restatement Effective Date. No Restricted Stock or Restricted Stock Units will be
granted hereunder prior to said Restatement Effective Date. Adoption of the restated Plan shall be
approved by the shareholders of the Company at the annual meeting of the shareholders of the
Company which immediately follows the date of the adoption of the Plan by the Board. Shareholder
approval shall be made by a majority of the votes cast at a duly held meeting at which a quorum
representing a majority of all outstanding voting stock is, either in person or by proxy, present
and voting on the Plan, or by the written consent in lieu of a meeting of the holders of a majority
of the outstanding voting stock or such greater number of shares of voting stock as may be required
by the Company’s articles or certificate of incorporation and bylaws and by applicable law;
provided, however, such shareholder approval, whether by vote or by written consent in lieu of a
meeting, must be solicited substantially in accordance with the rules and regulations in effect
under Section 14(a) of the 1934 Act. Failure to obtain such approval shall render the restatement
of the Plan and any Restricted Stock and Restricted Stock Units granted hereunder null and void
ab
initio
.
ARTICLE X
Amendment and Termination
10.1
Amendment and Termination By the Board
. Subject to Section 10.2 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 periods or to
terminate the Plan in whole or in part. In the event of any such action, 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.
10.2
Restrictions on Amendment and Termination
. Notwithstanding the provisions of Section
10.1 above, the following restrictions shall apply to the Board’s authority under Section 10.1
above:
(a)
Prohibition Against Adverse Effects on Outstanding Awards.
No addition, amendment,
modification, repeal, suspension or termination shall adversely affect, in any way, the
rights of the Participants who have outstanding Awards without the consent of such
Participants;
(b)
Shareholder Approval Required for Certain Modifications.
No modification or
amendment of the Plan may be made without the prior approval of the shareholders of the
Company if such approval is necessary with respect to tax, securities or other applicable
laws or the applicable rules or regulations of any stock exchange or Nasdaq.
10.3
Expiration of Plan
. No Award shall be granted hereunder after ten years from the earlier
of (a) the date the Plan, as amended and restated, is approved by the shareholders, or (b) the date
the Plan, as amended and restated, is adopted by the Board.
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ARTICLE XI
Miscellaneous Provisions
11.1
Application of Funds
. The proceeds received by the Company from the sale of the Common
Stock subject to the Options granted hereunder will be used for general corporate purposes.
11.2
Notices
. All notices or other communications by a Participant to the Committee pursuant
to or in connection with the Plan shall be deemed to have been duly given when received in the form
specified by the Committee at the location, or by the person, designated by the Committee for the
receipt thereof.
11.3
Term of Plan
. Subject to the terms of Article X, the Plan shall terminate upon the
latest of (i) the complete exercise or lapse of the last outstanding Option, (ii) the lapse of
restrictions on the last outstanding Award, other than an Option, or (iii) the last date upon which
an Award may be granted hereunder.
11.4
Compliance with Rule 16b-3
. This Plan is intended to be in compliance with the
requirements of Rule 16b-3 as promulgated under Section 16 of the 1934 Act.
11.5
Governing Law
. The Plan shall be governed by and construed in accordance with the laws
of the State of Alabama.
11.6
Additional Provisions By Committee
. The Award Agreements authorized under the Plan may
contain such other provisions, including, without limitation, restrictions upon the exercise of an
Option, as the Committee shall deem advisable.
11.7
Plan Document Controls
. In the event of any conflict between the provisions of an Award
Agreement and the Plan, the Plan shall control.
11.8
Gender and Number
. Wherever applicable, the masculine pronoun shall include the feminine
pronoun, and the singular shall include the plural.
11.9
Headings
. The titles in this Plan are inserted for convenience of reference; they
constitute no part of the Plan and are not to be considered in the construction hereof.
11.10
Legal References
. Any references in this Plan to a provision of law which is,
subsequent to the Effective Date of this Plan, revised, modified, finalized or redesignated, shall
automatically be deemed a reference to such revised, modified, finalized or redesignated provision
of law.
11.11
No Rights to Perform Services
. Nothing contained in the Plan, or any modification
thereof, shall be construed to give any individual any rights to perform services for the Company
or any parent or subsidiary corporation of the Company.
11.12
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.
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*****
AMENDMENT AND RESTATEMENT ADOPTED BY BOARD
OF DIRECTORS ON JANUARY 19, 2010,
EFFECTIVE AS OF JANUARY 1, 2010
AMENDMENT AND RESTATEMENT APPROVED BY
SHAREHOLDERS ON MAY 5, 2010
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