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Exhibit 4.4    
  


 
 

ELASTIC NETWORKS INC.
  
    1999 Stock Incentive Plan    
  


1. Purpose  


    The purpose of this 1999 Stock Incentive Plan (the "Plan") of Elastic Networks Inc., a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such
persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's stockholders. Except where the
context otherwise requires, the term "Company" shall include any present or future subsidiary corporations of Elastic Networks Inc. as defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the "Code"). 


2. Eligibility  


    All of the Company's employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock, or other stock-based awards
(each, an "Award") under the Plan. Any person who has been granted an Award under the Plan shall be deemed a "Participant." 


3. Administration, Delegation  


    a.  Administration by Board of Directors.  The Plan will be administered by the Board of Directors of the
Company (the "Board"). The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem
advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into
effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under
the Plan made in good faith. 


    b.  Delegation to Executive Officers.  To the extent permitted by applicable law, the Board may delegate
to one or more executive officers of the Company the power to make Awards and exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one Participant to be made by such executive officers. 


    c.  Appointment of Committees.  To the extent permitted by applicable law, the Board may delegate any or
all of its powers under the Plan to one or more committees or subcommittees of the Board (a "Committee"). If and when the common stock, $0.01 par value per share, of the Company (the "Common Stock")
is registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the Board shall appoint one such Committee of not less than two members, each member of which shall be an "outside
director" within the meaning of Section 162(m) of the Code and a "non-employee director" as defined in Rule 16b-3 promulgated under the Exchange Act. All
references in the Plan to the "Board" shall mean the Board or a Committee of the Board or the executive officer referred to in Section 3(b) to the extent that the Board's powers or authority
under the Plan have been delegated to such Committee or executive officer. 






4. Stock Available for Awards  


    a.  Number of Shares.  Subject to adjustment under Section 4(c), Awards may be made under the Plan
for up to 7,661,766 shares of Common Stock. If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part or results in any
Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined), to any limitation required under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. 


    b.  Per-Participant Limit.  Subject to adjustment under Section 4(c), for Awards
granted after the Common Stock is registered under the Exchange Act, the maximum number of shares with respect to which an Award may be granted to any Participant under the Plan shall be 2,000,000 per
calendar year. The per-participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code. 


    c.  Adjustment to Common Stock.  In the event of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common
Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the number and class of security and exercise price per share subject to
each outstanding Option, (iii) the repurchase price per security subject to each outstanding Restricted Stock Award and (iv) the terms of each other outstanding stock-based Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent the Board shall determine, in good faith, that such an adjustment (or substitution) is
necessary and appropriate. If this Section 4(c) applies and Section 8(e)(i) also applies to any event, Section 8(e)(i) shall be applicable to such event, and this
Section 4(c) shall not be applicable. 


5. Stock Options  


    a.  General.  The Board may grant options to purchase Common Stock (each, an "Option") and determine the
number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be
designated a "Nonstatutory Stock Option." 


    b.  Incentive Stock Options.  An Option that the Board intends to be an "incentive stock option" as
defined in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of the Company and shall be subject to and shall be construed consistently with the
requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) which is intended to be an Incentive Stock
Option is not an Incentive Stock Option. 


    c.  Exercise Price.  The Board shall establish the exercise price at the time each Option is granted and
specify it in the applicable option agreement. 


    d.  Duration of Options.  Each Option shall be exercisable at such times and subject to such terms and
conditions as the Board may specify in the applicable option agreement. 


    e.  Exercise of Option.  Options may be exercised only by delivery to the Company of a written notice of
exercise signed by the proper person together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. 


    f.  Payment Upon Exercise.  Common Stock purchased upon the exercise of an Option granted under the Plan
shall be paid for as follows: 



    i.  in
cash or by check, payable to the order of the Company; 








    ii.  except as the Board may, in its sole discretion, otherwise provide in an option agreement, by (A) delivery of an irrevocable and unconditional undertaking
by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price or (B) delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price; 



    iii.  when
the Common Stock is registered under the Exchange Act, by delivery of shares of Common Stock owned by the Participant valued at their fair market value as
determined by (or in a manner approved by) the Board in good faith ("Fair Market Value"), which Common Stock was owned by the Participant at least six months prior to such delivery; 


    iv.  to
the extent permitted by the Board, in its sole discretion by (A) delivery of a promissory note of the Participant to the Company on terms determined by
the Board, or (B) payment of such other lawful consideration as the Board may determine; or 


    v.  by
any combination of the above permitted forms of payment. 




6. Restricted Stock  


    a.  Grants.  The Board may grant Awards entitling recipients to acquire shares of Common Stock, subject
to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for
such Award (each, "Restricted Stock Award"). 


    b.  Terms and Conditions.  The Board shall determine the terms and conditions of any such Restricted
Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name
of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of
the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or, if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated
Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 


7. Other Stock-Based Awards  


    The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights. 


8. General Provisions Applicable to Awards  


    a.  Transferability of Awards.  Except as the Board may otherwise determine or provide in an Award,
Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of
descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include
references to authorized transferees. 


    b.  Documentation.  Each Award under the Plan shall be evidenced by a written instrument in such form as
the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. 








    c.  Board Discretion.  Except as otherwise provided by the Plan, each type of Award may be made alone or
in addition or in relation to any other type of Award. The terms of each type of Award need not be identical, and the Board need not treat Participants uniformly. 


    d.  Termination of Status.  The Board shall determine the effect on an Award of the disability, death,
retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's
legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award. 


    e.  Acquisition Events  



    i.  Consequences of Acquisition Events.  Upon the occurrence of an Acquisition Event (as defined below),
each outstanding Option or Award shall be assumed or an equivalent option or award substituted by the successor corporation or a parent or subsidiary of the successor corporation, provided that any
such Options substituted for Incentive Stock Options shall satisfy, in the determination of the Board, the requirements of Section 424(a) of the Code, unless the successor corporation refuses
to assume or substitute for the Option or Award, in which case (i) the Participant shall have the right to exercise the Option in full, including with respect to shares of Common Stock as to
which it would not otherwise be exercisable, (ii) all Restricted Stock Awards then outstanding shall become free of all restrictions prior to the consummation of the Acquisition Event and
(iii) any other stock-based Awards outstanding shall become exercisable, realizable or vested in full, or shall be free of all conditions or restrictions, as applicable to each such Award,
prior to the consummation of the Acquisition Event. If an Option or Award is exercisable in lieu of assumption or substitution in the event of an Acquisition Event, the Board shall notify the
Participant in writing or electronically that the Option or Award shall be fully exercisable for a period of not less than 45 days from the date of such notice, and the Option or Award shall
terminate upon the expiration of such period. 


    Each
Option or other Award assumed or substituted pursuant to the immediately preceding paragraph shall include a provision to the effect that such Option or Award shall become
immediately exercisable (or vested) in full if, on or prior to the first anniversary of the Acquisition Event, the Participant terminates his or her employment for Good Reason or is terminated without
Cause by the surviving or acquiring corporation. "Good Reason" shall mean a reduction of 20% or more in the annual Total Target Cash Compensation for which the Participant is eligible or, with respect
to the Participants who
are employed in the position of Vice President or higher, assignment to responsibilities which are not substantially equivalent in the aggregate to those responsibilities to which they were assigned
prior to the Acquisition Event. "Total Target Cash Compensation" shall mean annual base salary plus target short term incentive compensation payable at 100% Participant performance, whether sales
incentive, bonus or otherwise. "Cause" shall mean any act or omission by the Participant which is or is likely to be injurious to the Company or the business reputation of the Company, failure by the
Participant to perform his or her material responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the Participant and the Company), violation by the Participant of the Company's rules, policies or procedures, or refusal
by the Participant to obey the lawful direction (consistent with the Participant's responsibilities) of the Board or any person to whom the Participant reports. The Participant shall be considered to
have been discharged for "Cause" if the Company determines, within 30 days after the Participant's resignation, that discharge for Cause was warranted, as determined by the Company, which
determination shall be conclusive. 


    An
"Acquisition Event" shall mean: (a) any merger or consolidation which results in the voting securities of the Company outstanding immediately prior thereto representing
immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding immediately after such merger or 








consolidation; (b) any sale of all or substantially all of the assets of the Company; or (c) the complete liquidation of the Company. 


    Notwithstanding
the foregoing, the election of any Purchaser (as defined in the Right of First Offer and Co-Sale Agreement, dated as of May 1999 and as amended from
time to time, by and among the Company, Nortel Networks Inc. ("Nortel Networks") and the persons and entities listed on Exhibit A thereto (the "Right of First Offer Agreement")) to sell
its Shares (as defined in the Right of First Offer Agreement) to Nortel Networks pursuant to Section 6 of the Right of First Offer Agreement, and the purchase of any such Shares by Nortel
Networks, shall not be deemed to be an Acquisition Event. 


    ii.  Assumption of Options Upon Certain Events.  The Board may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another corporation who become employees of the Company as a result of a merger or consolidation of the employing corporation with
the Company or the acquisition by the Company of property or stock of the employing corporation. The substitute Awards shall be granted on such terms and conditions as the Board considers appropriate
in the circumstances. 




    (f)  Withholding.  Each Participant shall pay to the Company, or make provision satisfactory to the Board
for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise
provide
in an Award, when the Common Stock is registered under the Exchange Act, Participants may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to a Participant. 


    (g)  Amendment of Award.  The Board may amend, modify or terminate any outstanding Award, including but
not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely
affect the Participant. 


    (h)  Conditions on Delivery of Stock.  The Company will not be obligated to deliver any shares of Common
Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements
as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. 


    (i)  Acceleration.  The Board may at any time provide that any Options shall become immediately
exercisable in full or in part, that any Restricted Stock Awards shall be free of all restrictions or that any other stock-based Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the case may be. 


9. Miscellaneous  


    a.  No Right To Employment or Other Status.  No person shall have any claim or right to be granted an
Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company or affecting the ability of the Company or
the Participant to terminate the employment relationship, if any, for any reason, including, but not limited to, without Cause or without Good Reason, as applicable. The Company expressly reserves the
right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. 







    b.  No Rights As Stockholder.  Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. 


    c.  Effective Date and Term of Plan.  The Plan shall become effective on the date on which it is adopted
by the Board, but no Award granted to a Participant designated by the Board as subject to Section 162(m) of the Code by the Board shall become exercisable, vested or realizable, as applicable
to such Award, unless and until the Plan has been approved by the Company's stockholders to the extent stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards shall be granted under the Plan after the completion of ten years from the earlier of (i) the date on
which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company's stockholders, but Awards previously granted may extend beyond that date. 


    d.  Amendment of Plan.  The Board may amend, suspend or terminate the Plan or any portion thereof at any
time, provided that to the extent required by Section 162(m) of the Code, no Award granted to a Participant designated as subject to Section 162(m) by the Board after the date of such
amendment shall become exercisable, realizable or vested, as applicable to such Award (to the extent that such amendment to the Plan was required to grant such Award to a particular Participant),
unless and until such amendment shall have been approved by the Company's stockholders as required by Section 162(m) (including the vote required under Section 162(m)). 


    e.  Governing Law.  The provisions of the Plan and all Awards made hereunder shall be governed by and
interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. 



	 	 	Adopted by the Board of Directors

on March 21, 2001
	

 	
 	

Approved by the Stockholders

on May 9, 2001













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Exhibit 4.4


ELASTIC NETWORKS INC. 1999 Stock Incentive Plan