Document:

exv10w14

 

Exhibit 10.14

Veraz Networks, Inc.

2001 Equity Incentive Plan

Adopted: November 26, 2001

Approved By Stockholders: November 26, 2001

Amended by the Board of Directors: December 31, 2002

Approved By Stockholders As Amended: December 31, 2002

Amended by the Board of Directors: March 4, 2003 

Approved By Stockholders As Amended: March 4, 2003

Amended by the Board of Directors: October 21, 2003

Amended by the Board of Directors: January 10, 2005

Approved By Stockholders as Amended: May 6, 2005

Amended by the Board of Directors: May 8, 2006

Approved By Stockholders as Amended: August 4, 2006

Termination Date: November 25, 2011

1. Purposes.

     (a) Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are the
Employees, Directors and Consultants of the Company and its Affiliates.

     (b) Available Stock Awards. The purpose of the Plan is to provide a means by which eligible
recipients of Stock Awards may be given an opportunity to benefit from increases in value of the
Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

     (c) General Purpose. The Company, by means of the Plan, seeks to retain the services of the
group of persons eligible to receive Stock Awards, to secure and retain the services of new members
of this group and to provide incentives for such persons to exert maximum efforts for the success
of the Company and its Affiliates.

2. Definitions.

     (a) “Affiliate” means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.

     (b) “Board” means the Board of Directors of the Company.

     (c) “Capitalization Adjustment” has the meaning ascribed to that term in Section 11(a).

     (d) “Change in Control” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

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          (i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%)of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because the
level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated
percentage threshold of the outstanding voting securities as a result of a repurchase or other
acquisition of voting securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such share acquisition, the Subject
Person becomes the Owner of any additional voting securities that, assuming the repurchase or other
acquisition had not occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a Change in Control
shall be deemed to occur;

          (ii) there is consummated a merger, consolidation or similar transaction involving (directly
or indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly
or indirectly, outstanding voting securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving Entity in such merger, consolidation or similar
transaction or more than fifty percent (50%) of the combined outstanding voting power of the parent
of the surviving Entity in such merger, consolidation or similar transaction;

          (iii) the stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company
shall otherwise occur; or

          (iv) there is consummated a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease,
license or other disposition of all or substantially all of the consolidated assets of the Company
and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of
the voting securities of which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the Company immediately prior to such sale, lease, license or
other disposition.

     Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company or any
Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards
subject to such agreement (it being understood, however, that if no definition of Change in Control
or any analogous term is set forth in such an individual written agreement, the foregoing
definition shall apply).

     (e) “Code” means the Internal Revenue Code of 1986, as amended.

     (f) “Committee” means a committee of one or more members of the Board appointed by the Board
in accordance with Section 3(c).

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     (g) “Common Stock” means the common stock of the Company.

     (h) “Company” means Veraz Networks, Inc., a Delaware corporation.

     (i) “Consultant” means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or
(ii) serving as a member of the Board of Directors of an Affiliate and who is compensated for such
services. However, the term “Consultant” shall not include Directors who are not compensated by
the Company for their services as Directors, and the payment of a director’s fee by the Company for
services as a Director shall not cause a Director to be considered a “Consultant” for purposes of
the Plan.

     (j) “Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A
change in the capacity in which the Participant renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity for which the Participant renders
such service, provided that there is no interruption or termination of the Participant’s service
with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. For
example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a
Director shall not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a
leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award
only to such extent as may be provided in the Company’s leave of absence policy or in the written
terms of the Participant’s leave of absence.

     (k) “Corporate Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

          (i) a sale or other disposition of all or substantially all, as determined by the Board in its
discretion, of the consolidated assets of the Company and its Subsidiaries;

          (ii) a sale or other disposition of at least eighty percent (80%) of the outstanding
securities of the Company;

          (iii) a merger, consolidation or similar transaction following which the Company is not the
surviving corporation; or

          (iv) a merger, consolidation or similar transaction following which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately preceding the merger,
consolidation or similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of securities, cash
or otherwise.

     (l) “Director” means a member of the Board of Directors of the Company.

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     (m) “Disability” means the inability of a person, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of that person’s position with the Company
or an Affiliate because of the sickness or injury of the person.

     (n) “Employee” means any person employed by the Company or an Affiliate. Service as a
Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an Affiliate.

     (o) “Entity” means a corporation, partnership or other entity.

     (p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (q) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include
(A) the Company or any Subsidiary of the Company, (B) any employee benefit plan of the Company or
any Subsidiary of the Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or (D) an Entity Owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their Ownership of stock of the Company.

     (r) “Fair Market Value” means, as of any date, the value of the Common Stock determined in
good faith by the Board, and in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations.

     (s) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (t) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.

     (u) “Officer” means any person designated by the Company as an officer.

     (v) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.

     (w) “Option Agreement” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.

     (x) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

     (y) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have acquired “Ownership” of

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securities if such person or Entity, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares voting power, which includes
the power to vote or to direct the voting, with respect to such securities.

     (z) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.

     (aa) “Plan” means this Veraz Networks, Inc. 2001 Equity Incentive Plan.

     (bb) “Securities Act” means the Securities Act of 1933, as amended.

     (cc) “Stock Award” means any right granted under the Plan, including an Option, a stock bonus
and a right to acquire restricted stock.

     (dd) “Stock Award Agreement” means a written agreement between the Company and a holder of a
Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock
Award Agreement shall be subject to the terms and conditions of the Plan.

     (ee) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time, stock
of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company,
and (ii) any partnership in which the Company has a direct or indirect interest (whether in the
form of voting or participation in profits or capital contribution) of more than fifty percent
(50%).

     (ff) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its Affiliates.

3. Administration.

     (a) Administration by Board. The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in Section 3(c).

     (b) Powers of Board. The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

          (i) To determine from time to time which of the persons eligible under the Plan shall be
granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of
types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not
be identical), including the time or times when a person shall be permitted to receive Common Stock
pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock
Award shall be granted to each such person.

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          (ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish,
amend and revoke rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

          (iii) To amend the Plan or a Stock Award as provided in Section 12.

          (iv) To terminate or suspend the Plan as provided in Section 13.

          (v) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in conflict with the
provisions of the Plan.

     (c) Delegation to Committee. The Board may delegate administration of the Plan to a Committee
or Committees of one (1) or more members of the Board, and the term “Committee” shall apply to any
person or persons to whom such authority has been delegated. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in this Plan to the
Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may abolish the Committee at any time and revest in the Board the administration of the
Plan.

     (d) Delegation to an Officer. The Board may delegate to one or more Officers of the Company
the authority to do one or both of the following: (i) designate Officers and Employees of the
Company or any of its Subsidiaries to be recipients of Stock Awards and (ii) determine the number
of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees
of the Company; provided, however, that the Board resolutions regarding such delegation shall
specify the total number of shares of Common Stock that may be subject to the Stock Awards granted
by such Officer and that such Officer may not grant a Stock Award to himself or herself.
Notwithstanding the foregoing, the Board may not delegate authority to an Officer to determine the
Fair Market Value of the Common Stock.

     (e) Effect of Board’s Decision. All determinations, interpretations and constructions made by
the Board in good faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

     (e) Arbitration. Any dispute or claim concerning any Stock Awards granted (or not granted)
pursuant to the Plan or any disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding arbitration conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association in Santa Clara, California. The Company
shall pay all arbitration fees. In addition to any other relief, the arbitrator may award to the
prevailing party recovery of its attorneys’ fees and costs. By

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accepting a Stock Award, Participants and the Company waive their respective rights to have
any such disputes or claims tried by a judge or jury.

4. Shares Subject to the Plan.

     (a) Share Reserve. Subject to the provisions of Section 11(a) relating to Capitalization
Adjustments, the Common Stock that may be issued pursuant to Stock Awards shall not exceed in the
aggregate Nineteen Million Eight Hundred Ninety-Seven Thousand Seven Hundred Seventy-Two
(19,897,772) shares of Common Stock (the “Share Reserve Limit”), provided however, that the Share
Reserve Limit shall be reduced by that number of shares of Common Stock issued from or subject to
outstanding options granted under the Company’s 2003 Israeli Share Option Plan.

     (b) Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in full, or if any
shares of Common Stock issued to a Participant pursuant to a Stock Award are forfeited back to or
repurchased by the Company because of or in connection with the failure to meet a contingency or
condition required to vest such shares in the Participant, the shares of Common Stock not acquired,
forfeited or repurchased under such Stock Award shall revert to and again become available for
issuance under the Plan; provided, however, that subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that
may be issued as Incentive Stock Options shall be Five Million Seven Hundred Forty Thousand Fifty
Eight (5,740,058) shares of Common Stock.

     (c) Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.

     (d) Share Reserve Limitation. To the extent required by Section 260.140.45 of Title 10 of the
California Code of Regulations, the total number of shares of Common Stock issuable upon exercise
of all outstanding Options and the total number of shares of Common Stock provided for under any
stock bonus or similar plan of the Company shall not exceed the applicable percentage as calculated
in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the
California Code of Regulations, based on the shares of Common Stock of the Company that are
outstanding at the time the calculation is made.

5. Eligibility.

     (a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors
and Consultants.

     (b) Ten Percent Stockholders.

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          (i) A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the
exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock on the date of grant and the Option is not exercisable after the expiration of
five (5) years from the date of grant.

          (ii) A Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option unless the
exercise price of such Option is at least (i) one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant or (ii) such lower percentage of the Fair Market
Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of Title 10 of
the California Code of Regulations at the time of the grant of the Option.

          (iii) A Ten Percent Stockholder shall not be granted a restricted stock award unless the
purchase price of the restricted stock is at least (i) one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date of grant or (ii) such lower percentage of the Fair
Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of
Title 10 of the California Code of Regulations at the time of the grant of the restricted stock
award.

     (c) Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, either the offer or the sale of the Company’s securities to such Consultant is not
exempt under Rule 701 of the Securities Act (“Rule 701”) because of the nature of the services that
the Consultant is providing to the Company, because the Consultant is not a natural person, or
because of some other provision of Rule 701, unless the Company determines that such grant need not
comply with the requirements of Rule 701 and will satisfy another exemption under the Securities
Act as well as comply with the securities laws of all other relevant jurisdictions.

6. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates shall be issued for shares of Common Stock purchased on exercise of
each type of Option. The provisions of separate Options need not be identical, but each Option
shall include (through incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

     (a) Term. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, no
Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

     (b) Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5(b)
regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the

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foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set
forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of the Code.

     (c) Exercise Price of a Nonstatutory Stock Option. Subject to the provisions of Section 5(b)
regarding Ten Percent Stockholders, the exercise price of each Nonstatutory Stock Option shall be
not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

     (d) Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the
time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the
Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the Company
of other Common Stock, (2) according to a deferred payment or other similar arrangement with the
Optionholder or (3) in any other form of legal consideration that may be acceptable to the Board.
Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired
pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired,
directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the
Company that have been held for more than six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes). At any time that the
Company is incorporated in Delaware, payment of the Common Stock’s “par value,” as defined in the
Delaware General Corporation Law, shall not be made by deferred payment.

     In the case of any deferred payment arrangement, interest shall be compounded at least
annually and shall be charged at the minimum rate of interest necessary to avoid (1) the treatment
as interest, under any applicable provisions of the Code, of any amounts other than amounts stated
to be interest under the deferred payment arrangement and (2) the treatment of the Option as a
variable award for financial accounting purposes.

     (e) Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

     (f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution and, to the extent provided
in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10
of the California Code of Regulations at the time of the grant of the Option, and shall be
exercisable during the lifetime of the Optionholder only by the

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Optionholder. If the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the Option.

     (g) Vesting Generally. The total number of shares of Common Stock subject to an Option may,
but need not, vest and therefore become exercisable in periodic installments that may, but need
not, be equal. The Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The provisions of this
Section 6(g) are subject to any Option provisions governing the minimum number of shares of Common
Stock as to which an Option may be exercised.

     (h) Minimum Vesting. Notwithstanding the foregoing Section 6(g), to the extent that the
following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the
California Code of Regulations at the time of the grant of the Option, then:

          (i) Options granted to an Employee who is not an Officer, Director or Consultant shall provide
for vesting of the total number of shares of Common Stock at a rate of at least twenty percent
(20%) per year over five (5) years from the date the Option was granted, subject to reasonable
conditions such as continued employment; and

          (ii) Options granted to Officers, Directors or Consultants may be made fully exercisable,
subject to reasonable conditions such as continued employment, at any time or during any period
established by the Company.

     (i) Termination of Continuous Service. In the event that an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination) but only within such period of time ending on the earlier of (i) the date
three (3) months following the termination of the Optionholder’s Continuous Service (or such longer
or shorter period specified in the Option Agreement, which period shall not be less than thirty
(30) days unless such termination is for cause), or (ii) the expiration of the term of the Option
as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option shall terminate.

     (j) Extension of Termination Date. An Optionholder’s Option Agreement may also provide that
if the exercise of the Option following the termination of the Optionholder’s Continuous Service
(other than upon the Optionholder’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in Section 6(a) or (ii) the expiration of a

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period of three (3) months after the termination of the Optionholder’s Continuous Service
during which the exercise of the Option would not be in violation of such registration
requirements.

     (k) Disability of Optionholder. In the event that an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than six (6) months) or (ii) the expiration of the term
of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option shall terminate.

     (l) Death of Optionholder. In the event that (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death or (ii) the Optionholder dies within the period
(if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous
Service for a reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s
estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionholder’s death pursuant to Section 6(e) or
6(f), but only within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the Option Agreement,
which period shall not be less than six (6) months) or (2) the expiration of the term of such
Option as set forth in the Option Agreement. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate.

     (m) Early Exercise. The Option may, but need not, include a provision whereby the
Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to
exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior
to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 10(h), any
unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be appropriate. Provided that the
“Repurchase Limitation” in Section 10(h) is not violated, the Company will not exercise its
repurchase option until at least six (6) months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of
the Option unless the Board otherwise specifically provides in the Option.

     (n) Right of Repurchase. Subject to the “Repurchase Limitation” in Section 10(h), the Option
may, but need not, include a provision whereby the Company may elect to repurchase all or any part
of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the
Option. Provided that the “Repurchase Limitation” in Section 10(h) is not violated, the Company
will not exercise its repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically provides in the
Option.

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     (o) Right of First Refusal. The Option may, but need not, include a provision whereby the
Company may elect to exercise a right of first refusal following receipt of notice from the
Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon
the exercise of the Option. Except as expressly provided in this Section 6(o), such right of first
refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company.

7. Provisions of Stock Awards other than Options.

     (a) Stock Bonus Awards. Each stock bonus agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. The terms and conditions of stock
bonus agreements may change from time to time, and the terms and conditions of separate stock bonus
agreements need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

          (i) Consideration. A stock bonus may be awarded in consideration for past services actually
rendered to the Company or an Affiliate for its benefit.

          (ii) Vesting. Subject to the “Repurchase Limitation” in Section 10(h), shares of Common Stock
awarded under the stock bonus agreement may, but need not, be subject to a share repurchase option
in favor of the Company in accordance with a vesting schedule to be determined by the Board.

          (iii) Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation”
in Section 10(h), in the event that a Participant’s Continuous Service terminates, the Company may
reacquire any or all of the shares of Common Stock held by the Participant that have not vested as
of the date of termination under the terms of the stock bonus agreement.

          (iv) Transferability. Rights to acquire shares of Common Stock under the stock bonus
agreement shall not be transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Participant only by the Participant.

     (b) Restricted Stock Awards. Each restricted stock purchase agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate. The terms and
conditions of the restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following provisions:

          (i) Purchase Price. Subject to the provisions of Section 5(b) regarding Ten Percent
Stockholders, the purchase price of restricted stock awards shall not be less than eighty-

12

 

five percent (85%) of the Common Stock’s Fair Market Value on the date such award is made or
at the time the purchase is consummated.

          (ii) Consideration. The purchase price of Common Stock acquired pursuant to the restricted
stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the
discretion of the Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be acceptable to the Board
in its discretion; provided, however, that at any time that the Company is incorporated in
Delaware, then payment of the Common Stock’s “par value,” as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.

          (iii) Vesting. Subject to the “Repurchase Limitation” in Section 10(h), shares of Common
Stock acquired under the restricted stock purchase agreement may, but need not, be subject to a
share repurchase option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.

          (iv) Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation”
in Section 10(h), in the event that a Participant’s Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant
that have not vested as of the date of termination under the terms of the restricted stock purchase
agreement.

          (v) Transferability. Rights to acquire shares of Common Stock under the restricted stock
purchase agreement shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant only by the
Participant.

8. Covenants of the Company.

     (a) Availability of Shares. During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy such Stock Awards.

     (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant
Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards;
provided, however, that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and
until such authority is obtained.

9. Use of Proceeds from Stock.

13

 

     Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds
of the Company.

10. Miscellaneous.

     (a) Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during which it will vest.

     (b) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award
unless and until such Participant has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.

     (c) No Employment or other Service Rights. Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate or (iii) the
service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the Affiliate is incorporated,
as the case may be.

     (d) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionholder during any calendar year (under all
plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof that exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of
an Stock Award Agreement.

     (e) Investment Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing the Common Stock.
The foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered

14

 

under a then currently effective registration statement under the Securities Act or (2) as to
any particular requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer of the Common
Stock.

     (f) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement,
the Participant may satisfy any federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under a Stock Award by any of the following means (in
addition to the Company’s right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to
the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award;
provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid
variable award accounting); or (iii) delivering to the Company owned and unencumbered shares of
Common Stock.

     (g) Information Obligation. To the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall deliver financial statements to Participants at
least annually. This Section 10(g) shall not apply to key Employees whose duties in connection
with the Company assure them access to equivalent information.

     (h) Repurchase Limitation. The terms of any repurchase option shall be specified in the Stock
Award and may be either at Fair Market Value at the time of repurchase or at not less than the
original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of
Title 10 of the California Code of Regulations at the time a Stock Award is made, any repurchase
option contained in a Stock Award granted to a person who is not an Officer, Director or Consultant
shall be upon the terms described below:

          (i) Fair Market Value. If the repurchase option gives the Company the right to repurchase the
shares of Common Stock upon termination of employment at not less than the Fair Market Value of the
shares of Common Stock to be purchased on the date of termination of Continuous Service, then (i)
the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness
for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in
the case of shares of Common Stock issued upon exercise of Stock Awards after such date of
termination, within ninety (90) days after the date of the exercise) or such longer period as may
be agreed to by the Company and the Participant (for example, for purposes of satisfying the
requirements of Section 1202(c)(3) of the Code regarding “qualified small business stock”) and (ii)
the right terminates when the shares of Common Stock become publicly traded.

          (ii) Original Purchase Price. If the repurchase option gives the Company the right to
repurchase the shares of Common Stock upon termination of Continuous Service at the

15

 

original purchase price, then (i) the right to repurchase at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the shares of Common Stock per year over five
(5) years from the date the Stock Award is granted (without respect to the date the Stock Award was
exercised or became exercisable) and (ii) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days
of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise
of Options after such date of termination, within ninety (90) days after the date of the exercise)
or such longer period as may be agreed to by the Company and the Participant (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified
small business stock”).

     (i) Cancellation and Re-Grant of Options; Authority to Reprice. The Board shall have the
authority to effect, at any time and from time to time, with the consent of any adversely affected
Optionholders, (1) the reduction in the exercise price of any outstanding Options under the Plan
and/or (2) the cancellation of any outstanding Options under the Plan and the grant in substitution
therefor of new Options under the Plan covering the same or a different numbers of shares of Common
Stock. The exercise price per share of Common Stock shall be not less than that specified under
the Plan for newly granted Stock Awards except that the Board may grant an Option with a lower
exercise price if such Option is granted as part of a transaction to which Section 424(a) of the
Code applies.

11. Adjustments upon Changes in Stock.

     (a) Capitalization Adjustments. If any change is made in, or other event occurs with respect
to, the Common Stock subject to the Plan or subject to any Stock Award without the receipt of
consideration by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company (each a “Capitalization
Adjustment”), the Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum number of
securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities and price per share
of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments,
and its determination shall be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a transaction “without receipt of consideration”
by the Company).

     (b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,
then all outstanding Stock Awards shall terminate immediately prior to the completion of such
dissolution or liquidation.

     (c) Corporate Transaction. In the event of a Corporate Transaction, any surviving corporation
or acquiring corporation may assume any or all Stock Awards outstanding under the

16

 

Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (it
being understood that similar stock awards include, but are not limited to, awards to acquire the
same consideration paid to the stockholders or the Company, as the case may be, pursuant to the
Corporate Transaction). In the event that any surviving corporation or acquiring corporation does
not assume any or all such outstanding Stock Awards or substitute similar stock awards for such
outstanding Stock Awards, then with respect to Stock Awards that have been neither assumed nor
substituted and that are held by Participants whose Continuous Service has not terminated prior to
the effective time of the Corporate Transaction, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the
effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective
time of such Corporate Transaction as the Board shall determine (or, if the Board shall not
determine such a date, to the date that is five (5) days prior to the effective time of the
Corporate Transaction), and the Stock Awards shall terminate if not exercised (if applicable) at or
prior to such effective time. With respect to any other Stock Awards outstanding under the Plan
that have been neither assumed nor substituted, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Award may be exercised) shall not be accelerated unless
otherwise provided in a written agreement between the Company or any Affiliate and the holder of
such Stock Award, and such Stock Awards shall terminate if not exercised (if applicable) prior to
the effective time of the Corporate Transaction.

     (d) Change in Control. A Stock Award held by any Participant whose Continuous Service has not
terminated prior to the effective time of a Change in Control may be subject to additional
acceleration of vesting and exercisability upon or after such event as may be provided in the Stock
Award Agreement for such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant, but in the absence of such provision, no such
acceleration shall occur.

12. Amendment of the Plan and Stock Awards.

     (a) Amendment of Plan. The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11(a) relating to Capitalization Adjustments, no amendment
shall be effective unless approved by the stockholders of the Company to the extent stockholder
approval is necessary to satisfy the requirements of Section 422 of the Code.

     (b) Stockholder Approval. The Board, in its sole discretion, may submit any other amendment
to the Plan for stockholder approval.

     (c) Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

     (d) No Impairment of Rights. Rights under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent
of the Participant and (ii) the Participant consents in writing.

17

 

     (e) Amendment of Stock Awards. The Board at any time, and from time to time, may amend the
terms of any one or more Stock Awards; provided, however, that the rights under any Stock Award
shall not be impaired by any such amendment unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.

13. Termination or Suspension of the Plan.

     (a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the
Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier.
No Stock Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

     (b) No Impairment of Rights. Suspension or termination of the Plan shall not impair rights
and obligations under any Stock Award granted while the Plan is in effect except with the written
consent of the Participant.

14. Effective Date of Plan.

     The Plan shall become effective as determined by the Board, but no Stock Award shall be
exercised (or, in the case of a stock bonus, shall be granted) unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

15. Choice of Law.

     The law of the State of California shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

18

 

Veraz Networks, Inc.

2001 Equity Incentive Plan

Stock Option Agreement

(Incentive Stock Option or Nonstatutory Stock Option)

      Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement,
Veraz Networks, Inc. (the “Company”) has granted you an option under its 2001 Equity
Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock
indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.

      The details of your option are as follows:

      1. Vesting. Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.

      2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.

      3. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:

          (a) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.

          (b) Provided that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock either
that you have held for the period required to avoid a charge to the Company’s reported earnings
(generally six (6) months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security interests, and that
are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the
sole discretion of the Company at the time you exercise your option, shall include delivery to the
Company of your attestation of ownership of such shares of Common Stock in a form approved by the
Company. Notwithstanding the foregoing, you may not exercise your option by tender to the Company
of Common Stock to the extent such tender

1.

 

would violate the provisions of any law, regulation or agreement restricting the redemption of
the Company’s stock.

      4. Whole Shares. You may exercise your option only for whole shares of Common Stock.

      5. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.

      6. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:

          (a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death, provided that if during any part of such three (3) month period your
option is not exercisable solely because of the condition set forth in Section 6, your option shall
not expire until the earlier of the Expiration Date or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of your Continuous Service;

          (b) twelve (12) months after the termination of your Continuous Service due to your
Disability;

          (c) eighteen (18) months after your death if you die either during your Continuous Service or
within three (3) months after your Continuous Service terminates;

          (d) the Expiration Date indicated in your Grant Notice; or

          (e) the day before the tenth (10th) anniversary of the Date of Grant.

      If your option is an Incentive Stock Option, note that to obtain the federal income tax
advantages associated with an Incentive Stock Option, the Code requires that at all times beginning
on the date of grant of your option and ending on the day three (3) months before the date of your
option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of
your death or Disability. The Company has provided for extended exercisability of your option
under certain circumstances for your benefit but cannot guarantee that your option will necessarily
be treated as an Incentive Stock Option if you continue to provide services to the Company or an
Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise
your option more than three (3) months after the date your employment with the Company or an
Affiliate terminates.

2.

 

      7. Exercise.

          (a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Secretary
of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.

          (b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.

          (c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.

          (d) By exercising your option you agree that the Company (or a representative of the
underwriter(s)) may, in connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that you not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any shares of Common Stock or other
securities of the Company held by you, for a period of time specified by the underwriter(s) (not to
exceed one hundred eighty (180) days) following the effective date of the registration statement of
the Company filed under the Securities Act. You further agree to execute and deliver such other
agreements as may be reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect thereto. In order to
enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to
your shares of Common Stock until the end of such period. The underwriters of the Company’s stock
are intended third party beneficiaries of this Section 8(d) and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto.

      8. Transferability. Your option is not transferable, except by will or by the laws
of descent and distribution, and is exercisable during your life only by you. Notwithstanding the
foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you
may designate a third party who, in the event of your death, shall thereafter be entitled to
exercise your option.

      9. Right of First Refusal. Shares of Common Stock that you acquire upon exercise of
your option are subject to any right of first refusal that may be described in the Company’s bylaws
in effect at such time the Company elects to exercise its right; provided, however, that if your
option is an Incentive Stock Option and the right of first refusal described

3.

 

in the Company’s bylaws in effect at the time the Company elects to exercise its right is more
beneficial to you than the right of first refusal described in the Company’s bylaws on the Date of
Grant, then the right of first refusal described in the Company’s bylaws on the Date of Grant shall
apply. The Company’s right of first refusal shall expire on the Listing Date. For purposes of
this Agreement, Listing Date shall mean the first date upon which any security of the Company is
listed (or approved for listing) upon notice of issuance on a national securities exchange or on
the National Market System of the Nasdaq Stock Market (or any successor to that entity).

      10. Right of Repurchase. To the extent provided in the Company’s bylaws in effect at
such time the Company elects to exercise its right, the Company shall have the right to repurchase
all or any part of the shares of Common Stock you acquire pursuant to the exercise of your option.

      11. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees
to continue any relationship that you might have as a Director or Consultant for the Company or an
Affiliate.

      12. Withholding Obligations.

          (a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if
any, which arise in connection with the exercise of your option.

          (b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of the Code, covering
the aggregate number of shares of Common Stock acquired upon such exercise with respect to which
such determination is otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined
as of the date of exercise of your option

4.

 

that are otherwise issuable to you upon such exercise. Any adverse consequences to you
arising in connection with such share withholding procedure shall be your sole responsibility.

          (c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.

      13. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.

      14. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.

5.

 

Veraz Networks, Inc.

Stock Option Grant Notice

(2001 Equity Incentive Plan)

Veraz Networks, Inc. (the “Company”), pursuant to its 2001 Equity Incentive Plan (the “Plan”),
hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common
Stock set forth below. This option is subject to all of the terms and conditions as set forth
herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety.

	 	 	 	 	 
	Optionholder:
	 	 	 	 
	 
	 	 	 
	Date of Grant:
	 	 	 	 
	 
	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 
	 	 	 
	Number of Shares Subject to Option:
	 	 	 	 
	 
	 	 	 
	Exercise Price (Per Share):
	 	$	 	 
	 
	 	 	 
	Total Exercise Price:
	 	$	 	 
	 
	 	 	 
	Expiration Date:
	 	 	 	 
	 
	 	 	 

	 	 	 	 	 	 	 	 	 
	Type of Grant:

	 	 ̈
	 	Incentive Stock Option1
	 	 ̈
	 	Nonstatutory Stock Option
	 
	 	 	 	 	 	 	 	 
	Exercise Schedule:	 	Early exercise is permitted per the Attachments
	 
	 	 	 	 	 	 	 	 
	Vesting Schedule:	 	1/4th of the Shares shall vest on the one-year anniversary of the
Vesting Commencement Date.
	 	 	1/48th of the Shares shall vest monthly thereafter over the following
three years.
	 
	 	 	 	 	 	 	 	 
	Payment:	 	By one or a combination of the following items (described in the Stock Option Agreement):
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By cash or check
	 	 	 	 	Pursuant to a Regulation T Program if the Shares are publicly traded
	 	 	 	 	By delivery of already-owned shares if the Shares are publicly traded

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and
understands and agrees to, this Grant Notice, the Stock Option Agreement and the Plan.
Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option
Agreement and the Plan set forth the entire understanding between Optionholder and the Company
regarding the acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted and delivered to
Optionholder under the Plan, and (ii) the following agreements only:

	 	 	 	 	 
	 

	 	Other Agreements:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Veraz Networks, Inc.	 	 	 	Optionholder:
	 

	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Signature
	 	 	 	Signature

	 
	 	 	 	 	 	 	 	 	 	 
	Title:	 	 	 	 	 	Date:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:	 	 	 	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 

Attachments: Stock Option Agreement, 2001 Equity Incentive Plan and Notice of Exercise

 

			
	1	 	If this is an incentive stock option, it
(plus your other outstanding incentive stock options) cannot be first
exercisable for more than $100,000 in any calendar year. Any excess
over $100,000 is a nonstatutory option.

 

NOTICE OF EXERCISE

	 	 	 	 	 
	Veraz Networks, Inc.
	 	 	 	 
	926 Rock Ave.
	 	 	 	 
	San Jose, CA 95131

	 	Date of Exercise:	 	 
	 

	 	 	 	 

Ladies and Gentlemen:

     This constitutes notice under my stock option that I elect to purchase the number of shares
for the price set forth below.

	 	 	 	 	 
	Type of option (check one):
	 	Nonstatutory
	 
	 	 	 	 
	Stock option dated:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Number of shares as
to which option is
exercised:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Certificates to be
issued in name of:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Total exercise price:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	Cash payment delivered
herewith:
	 	$	 	 
	 
	 	 	 

     By this exercise, I agree (i) to provide such additional documents as you may require pursuant
to the terms of the 2001 Equity Incentive Plan, (ii) to provide for the payment by me to you (in
the manner designated by you) of your withholding obligation, if any, relating to the exercise of
this option, and (iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any of the shares of Common
Stock issued upon exercise of this option that occurs within two (2) years after the date of grant
of this option or within one (1) year after such shares of Common Stock are issued upon exercise of
this option.

     I hereby make the following certifications and representations with respect to the number of
shares of Common Stock of the Company listed above (the “Shares”), which are being acquired by me
for my own account upon exercise of the Option as set forth above:

     I acknowledge that the Shares have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule 701
and “control securities” under Rule 144 promulgated under the Securities Act. I warrant and
represent to the Company that I have no present intention of distributing or selling said Shares,
except as permitted under the Securities Act and any applicable state securities laws.

1.

 

     I further acknowledge that I will not be able to resell the Shares for at least ninety days
(90) after the stock of the Company becomes publicly traded (i.e., subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that
more restrictive conditions apply to affiliates of the Company under Rule 144.

     I further acknowledge that all certificates representing any of the Shares subject to the
provisions of the Option shall have endorsed thereon appropriate legends reflecting the foregoing
limitations, as well as any legends reflecting restrictions pursuant to the Company’s Certificate
of Incorporation, Bylaws and/or applicable securities laws.

     I further agree that, if required by the Company (or a representative of the underwriters) in
connection with the first underwritten registration of the offering of any securities of the
Company under the Securities Act, I will not sell or otherwise transfer or dispose of any shares of
Common Stock or other securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date of the registration statement of the Company filed
under the Securities Act as may be requested by the Company or the representative of the
underwriters. I further agree that the Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such period.

	 	 	 
	 

	 	Very truly yours,
	 

	 	 
	 

	 	 
	 

	 	 

2.exv10w15

 

Exhibit 10.15

VERAZ NETWORKS, INC.

2003 ISRAELI SHARE OPTION PLAN

A. NAME AND PURPOSE

     1. Name: This plan, as amended from time to time, shall be known as the “Veraz Networks, Inc.
2003 Israeli Share Option Plan” (the “Plan”).

     2. Purpose: The purpose and intent of the Plan is to provide incentives to employees,
directors, consultants and contractors of Veraz Networks, Inc., a company incorporated under the
laws of the State of Delaware (the “Company”), or any subsidiary or affiliate thereof (where
applicable in this Plan, the term “Company” shall include any subsidiary or affiliate of the
Company), by providing them with opportunities to purchase shares of common stock, par value of USD
0.001 each (the “Shares”) of the Company, pursuant to a plan approved by the Board of Directors of
the Company (the “Board”) which is designed to benefit from, and is made pursuant to, the
provisions of either Section 102 or Section 3(9) of the Israeli Income Tax Ordinance [New Version]
1961 (the “Ordinance”), as applicable, and the rules and regulations promulgated thereunder.

B. GENERAL TERMS AND CONDITIONS OF THE PLAN

     3. Administration:

          3.1 The Board may appoint a Share Incentive Committee, which will consist of such number of
Directors of the Company, as may be fixed from time to time by the Board. The Board shall appoint
the members of the committee, may from time to time remove members from, or add members to, the
Committee and shall fill vacancies in the Committee however caused. The Plan will be administered
by the Share Incentive Committee or other committee of the Board, and until the Board delegates
administration to such committee, by the Board (collectively — the “Committee”).

          3.2 The Committee shall select one of its members as its Chairman and shall hold its meetings
at such times and places, as it shall determine. Actions taken by a majority of the members of the
Committee, at a meeting at which a majority of its members is present, or acts reduced to, or
approved in, writing by all members of the Committee, shall be the valid acts of the Committee.
The Committee may appoint a Secretary, who shall keep records of its meetings and shall make such
rules and regulations for the conduct of its business, as it shall deem advisable.

          3.3 Subject to the general terms and conditions of this Plan and applicable law, the Committee
shall have the full authority in its discretion, from time to time and at any time, to determine
(i) the persons (“Grantees”) to whom options to purchase Shares (the “Options”) shall be granted,
(ii) the number of Shares subject to each Option, (iii) the time or times at which the same shall
be granted, (iv) the schedule and conditions on which such Options may be exercised and on which
such Shares shall be paid for, and/or (v) any other matter which is necessary or desirable for, or
incidental to, the administration of the Plan. In determining the number of Shares subject to the
Options to be granted to each Grantee, the Committee may

1.

 

consider, among other things, the Grantee’s salary and the duration of the Grantee’s
employment by the Company.

          3.4 Subject to the general terms and conditions of the Plan and the Ordinance, the Committee
shall have the full authority in its discretion, from time to time and at any time, to determine:

               (a) with respect to the grant of 102 Options (as defined in Section 5.1(a)(i) below) — whether
the Company shall elect the “Ordinary Income Route” under Section 102(b)(1) of the Ordinance (the
“Ordinary Income Route”) or the “Capital Gains Route” under Section 102(b)(2) of the Ordinance (the
“Capital Gains Route”) (the Ordinary Income Route and the Capital Gains Route together — the
“Taxation Routes”) for the grant of 102 Options, and the identity of the trustee who shall be
granted such 102 Options in accordance with the provisions of this Plan and the then prevailing
Taxation Route; or — whether 102 Options will not be granted to a trustee, as detailed in Section
102(c) of the Ordinance;

                    In the event the Committee determines that the Company shall elect one of the Taxation Routes
for the grant of 102 Options, the Company shall be entitled to change such election only following
the lapse of one year from the end of the tax year in which 102 Options are first granted under the
then prevailing Taxation Route; and

               (b) with respect to the grant of 3(9) Options (as defined in Section 5.1(a)(ii) below) -
whether or not 3(9) Options shall be granted to a trustee in accordance with the terms and
conditions of this Plan, and the identity of the trustee who shall be granted such 3(9) Options in
accordance with the provisions of this Plan.

          3.5 The Committee may, from time to time, adopt such rules and regulations for carrying out
the Plan as it may deem necessary. No member of the Board or of the Committee shall be liable for
any act or determination made in good faith with respect to the Plan or any Option granted
thereunder.

          3.6 The interpretation and construction by the Committee of any provision of the Plan or of
any Option thereunder shall be final and conclusive and binding on all parties who have an interest
in the Plan or any Option or Share issuance thereunder unless otherwise determined by the Board.

     4. Eligible Grantees:

          4.1 The Committee, at its discretion, may grant Options to any employee, director, consultant
or contractor of the Company.

          4.2 The grant of an Option to a Grantee hereunder, shall neither entitle such Grantee to
participate, nor disqualify him from participating, in any other grant of options pursuant to this
Plan or any other share option plan of the Company.

2.

 

     5. Grant of Options, Issuance of Shares, Dividends and Shareholder Rights:

          5.1 Grant of Options and Issuance of Shares.

               (a) Subject to the provisions of the Ordinance and applicable law,

                    (i) all grants of Options to employees, directors and office holders of the Company, other
than to a Controlling Shareholder of the Company (i.e., “Baal Shlita”, as such term is defined in
the Ordinance), shall be made only pursuant to the provisions of Section 102 of the Ordinance and
the rules and regulations promulgated thereunder (“102 Options”), or any other section of the
Ordinance that will be relevant for such issuance in the future; and

                    (ii) all grants of Options to consultants, contractors or Controlling Shareholders of the
Company shall be made only pursuant to the provisions of Section 3(9) of the Ordinance and the
rules and regulations promulgated thereunder (“3(9) Options”), or any other section of the
Ordinance that will be relevant for such issuance in the future.

               (b) Subject to Sections 7.1 and 7.2 hereof, the effective date of the grant of an Option (the
“Date of Grant”) shall be the date specified by the Committee in its determination relating to the
award of such Option. The Committee shall promptly give the Grantee written notice (the “Grant
Notice”) of the grant of an Option and a written agreement between the Company and the Grantee
evidencing the terms and conditions of an individual Option grant shall be entered into (the
“Option Agreement”). Each Option Agreement shall be subject to the terms and conditions of the
Plan.

               (c) Trust. In the event Options are granted under the Plan to a trustee designated by
the Committee in accordance with the provisions of Section 3.4 hereof and, with respect to 102
Options, approved by the Israeli Commissioner of Income Tax (the “Trustee”), the Trustee shall hold
each such Option and the Shares issued upon exercise thereof in trust (the “Trust”) for the benefit
of the Grantee in respect of whom such Option was granted (the “Beneficial Grantee”).

                    In accordance with Section 102 of the Ordinance and the rules and regulations promulgated
thereunder, the tax treatment of 102 Options (and any Shares received upon exercise of such
Options) in accordance with the Ordinary Income Route or Capital Gains Route, as applicable, shall
be contingent upon the Trustee holding such 102 Options for a period of at least (i) one year from
the end of the tax year in which the 102 Options are granted, if the Company elects the Ordinary
Income Route, or (ii) two years from the end of the tax year in which the 102 Options are granted,
if the Company elects the Capital Gains Route, or (iii) such other period as shall be available
under applicable law or as shall be approved by the Israeli Commissioner of Income Tax.

                    All certificates representing Shares issued to the Trustee under the Plan shall be deposited
with the Trustee, and shall be held by the Trustee until such time that such Shares are released
from the Trust as herein provided.

3.

 

               (d) Subject to the terms hereof, and specifically subject to the provisions of Section 9.4
below, at any time after the options have vested, upon the written request of any Beneficial
Grantee, the Trustee shall release from the Trust the Options granted, and/or the Shares issued, on
behalf of such Beneficial Grantee, by executing and delivering to the Company such instrument(s) as
the Company may require, giving due notice of such release to such Beneficial Grantee,
provided, however, that the Trustee shall not so release any such Options and/or
Shares to such Beneficial Grantee unless the latter, prior to, or concurrently with, such release,
provides the Trustee with evidence, satisfactory in form and substance to the Trustee, that all
taxes, if any, required to be paid upon such release have, in fact, been paid.

          5.2 Dividend. All Shares issued upon the exercise of Options granted under the Plan
shall entitle the Beneficial Grantee thereof to receive dividends with respect thereto. For so
long as Shares issued to the Trustee on behalf of a Beneficial Grantee are held in the Trust, the
dividends paid or distributed with respect thereto shall be remitted to the Trustee for the benefit
of such Beneficial Grantee or distributed directly to such Beneficial Grantee, as shall be solely
determined by the Committee prior to each such distribution or payment.

          5.3 Shareholder Rights. The holder of an Option shall have no shareholder rights with
respect to the Shares subject to the Option until such person shall have exercised the Option, paid
the exercise price and become the recordholder of the purchased Shares.

     6. Reserved Shares: The Board may increase or decrease the number of Shares to be reserved
under the Plan. The Committee shall have full authority in its discretion to determine that the
Company may issue, for the purposes of this Plan, unissued Shares or previously issued Shares that
shall have been or may be reacquired by the Company. All Shares under the Plan, in respect of
which the right hereunder of a Grantee to purchase the same shall, for any reason, terminate,
expire or otherwise cease to exist, shall again be available for grant through Options under the
Plan.

     7. Grant of Options:

          7.1 The implementation of the Plan and the granting of any Option under the Plan shall be
subject to the Company’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Options granted under it and the Shares issued
pursuant to it.

          7.2 Without derogating from the foregoing, the Committee in its discretion may, subject to the
provisions of the Ordinance, award to Grantees Options available under the Plan, provided however,
that 102 Options granted under one of the Taxation Routes may be granted to the Trustee only
following the fulfillment of any procedure required by the Ordinance or any rules or regulations
promulgated thereunder.

          7.3 The Grant Notice and/or Option Agreement shall include, inter alia, the number of Shares
subject to each Option, the vesting schedule, the dates when the Options may be exercised, the
exercise price, whether the Options granted thereby are 102 Options or 3(9) Options, and such other
terms and conditions as the Committee at its discretion may prescribe, including but not limited to
right of repurchase and/or right of first refusal provisions, provided

4.

 

that they are consistent with this Plan. Each Grant Notice and Option Agreement evidencing a
102 Option shall, in addition, be subject to the provisions of the Ordinance applicable to such
options.

          7.4 Vesting. Without derogating from the rights and powers of the Committee under
Section 7.3 hereof, unless otherwise specified by the Committee, the Options shall be for a term of
ten (10) years, and, unless determined otherwise by the Committee, the schedule pursuant to which
such Options shall vest, and the Beneficial Grantee thereof shall be entitled to pay for and
acquire the Shares, shall be such that the Shares subject to each Option shall be fully vested on
the first business day following the passing of four (4) years from the Date of Grant (the “Vesting
Period”) as follows: 25% of the Shares subject to the Options shall vest on the first anniversary
of the Adoption Date and 1/36 of the remaining Shares subject to such Options shall vest on the
last day of each month, during thirty six (36) months following the first anniversary of the
Adoption Date (the “Adoption Date” for the purpose of this Plan means the Date of Grant or any
other date determined by the Committee for a given grant of Options).

               “Vesting Period” of an Option means, for the purpose of the Plan and its related instruments,
the period between the Adoption Date and the date on which the holder of an Option may exercise the
rights awarded pursuant to terms of the Option.

          7.5 Acceleration of Vesting. Anything herein to the contrary in this Plan
notwithstanding, the Committee shall have full authority to determine any provisions regarding the
acceleration of the Vesting Period of any Option or the cancellation of all or any portion of any
outstanding restrictions with respect to any Option or Share upon certain events or occurrences,
and to include such provisions in the Grant Notice and Option Agreement on such terms and
conditions as the Committee shall deem appropriate.

     8. Exercise Price: The exercise price per Share subject to each Option shall be determined by
the Committee in its sole and absolute discretion; provided, however, that such exercise price
shall not be less than the par value of the Shares into which such Option is exercisable.

     9. Exercise of Options:

          9.1 Options shall be exercisable pursuant to the teems under which they were awarded and
subject to the terms and conditions of the Plan.

          9.2 The exercise of an Option shall be made by a written notice of exercise (the “Notice of
Exercise”) delivered by the Beneficial Grantee (or, with respect to Options held in the Trust, by
the Trustee upon receipt of written instructions from the Beneficial Grantee) to the Company at its
principal executive office or to the principle office of the Company’s subsidiary, Veraz Networks
Ltd., specifying the number of Shares to be purchased and accompanied by the payment therefor, and
containing such other terms and conditions as the Committee shall prescribe from time to time.

          9.3 Anything herein to the contrary notwithstanding, but without derogating from the
provisions of Section 10 hereof, if any Option has not been exercised and the Shares subject
thereto not paid for within ten (10) years after the Date of Grant (or any shorter period set

5.

 

forth in the Grant Notice or Option Agreement), such Option and the right to acquire such
Shares shall terminate, all interests and rights of the Grantee in and to the same shall ipso facto
expire, and, in the event that in connection therewith any Options are still held in the Trust as
aforesaid, the Trust with respect thereto shall ipso facto expire, and the Shares subject to such
Options shall again be available for grant through Options under the Plan, as provided for in
Section 6 herein.

          9.4 Each payment for Shares shall be in respect of a whole number of Shares, and shall be
effected in cash or by a bank’s check payable to the order of the Company, or such other method of
payment acceptable to the Company.

     10. Termination of Employment:

          10.1 Definitions.

               “Continuous Service” means that the Grantee’s service with the Company, whether as an
employee, director or consultant, is not interrupted or terminated. A change in the capacity in
which the Grantee renders service to the Company as an employee, director or consultant or a change
in the entity for which the Grantee renders such service, provided that there is no interruption or
termination of the Grantee’s service with the Company, shall not terminate a Grantee’s Continuous
Service. For example, a change in status from an employee of the Company to a consultant or a
Director shall not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a
leave of absence shall be treated as Continuous Service for purposes of vesting in an Option only
to such extent as may be provided in the Company’s leave of absence policy or in the written terms
of the Grantee’s leave of absence.

               “Disability” means the inability of a person, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of that person’s position with the Company
because of the sickness or injury of the person.

          10.2 Termination of Continuous Service. In the event that a Grantee’s Continuous
Service terminates (other than upon the Grantee’s death or Disability), the Grantee may exercise
his or her Option (to the extent that the Grantee was entitled to exercise such Option as of the
date of termination) but only within such period of time ending on the earlier of (i) the date
three (3) months following the termination of the Grantee’s Continuous Service (or such longer or
shorter period specified in the Option Agreement, which period shall not be less than thirty (30)
days unless such termination is for cause), or (ii) the expiration of the term of the Option as set
forth in the Grant Notice or Option Agreement. If, after termination, the Grantee does not
exercise his or her Option within the time specified in the Grant Notice or Option Agreement, the
Option shall terminate.

          10.3 Extension of Termination Date. A Grantee’s Option Agreement may also provide
that if the exercise of the Option following the termination of the Grantee’s Continuous Service
(other than upon the Grantee’s death or Disability) would be prohibited at any time solely because
the issuance of Shares would violate registration requirements under any

6.

 

applicable law, then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in Section 9.3 or (ii) the expiration of a period of three (3) months
after the termination of the Grantee’s Continuous Service during which the exercise of the Option
would not be in violation of such registration requirements.

          10.4 Disability of Grantee. In the event that a Grantee’s Continuous Service
terminates as a result of the Grantee’s Disability, the Grantee may exercise his or her Option (to
the extent that the Grantee was entitled to exercise such Option as of the date of termination),
but only within such period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the Option Agreement,
which period shall not be less than six (6) months) or (ii) the expiration of the term of the
Option as set forth in the Grant Notice or Option Agreement. If, after termination, the Grantee
does not exercise his or her Option within the time specified herein, the Option shall terminate.

          10.5 Death of Grantee. In the event that (i) a Grantee’s Continuous Service
terminates as a result of the Grantee’s death or (ii) the Grantee dies within the period (if any)
specified in the Option Agreement after the termination of the Grantee’s Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the Grantee was entitled
to exercise such Option as of the date of death) by the Grantee’s estate, by a person who acquired
the right to exercise the Option by will or by the laws of descent and distribution, but only
within the period ending on the earlier of (1) the date eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement, which period shall not
be less than six (6) months) or (2) the expiration of the term of such Option as set forth in the
Grant Notice or Option Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

     11. Capitalization Adjustments, Liquidation and Corporate Transaction:

          11.1 Definitions:

               “Corporate Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

               (i) a sale or other disposition of all or substantially all, as determined by the Board in its
discretion, of the consolidated assets of the Company and its subsidiaries;

               (ii) a sale or other disposition of at least eighty percent (80%) of the outstanding
securities of the Company;

               (iii) a merger, consolidation or similar transaction following which the Company is not the
surviving corporation; or

               (iv) a merger, consolidation or similar transaction following which the Company is the
surviving corporation but the shares of common stock of the Company outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.

7.

 

          11.2 Capitalization Adjustments. Subject to any required action by the shareholders
of the Company, the number of Shares subject to each outstanding Option, and the number of Shares
which have been authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration of an Option, as
well as the price per share of Shares subject to each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued Shares resulting from
a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares
or the payment of a stock dividend (bonus shares) with respect to the Shares or any other increase
or decrease in the number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares
of any class, or securities convertible into shares of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares subject to an
Option.

          11.3 Liquidation. Unless otherwise provided by the Board, in the event of the
proposed dissolution or liquidation of the Company, all outstanding Options will terminate
immediately prior to the consummation of such proposed action. In such case, the Committee may
declare that any Option shall terminate as of a date fixed by the Committee and give each Grantee
the right to exercise his Option, including any Option which would not otherwise be exercisable.

          11.4 Corporate Transaction. In the event of a Corporate Transaction, any surviving
corporation or acquiring corporation may assume any or all Options outstanding under the Plan or
may substitute similar options for Options outstanding under the Plan (it being understood that
similar options include, but are not limited to, options to acquire the same consideration paid to
the stockholders or the Company, as the case may be, pursuant to the Corporate Transaction). In
the event that any surviving corporation or acquiring corporation does not assume any or all such
outstanding Options or substitute similar options for such outstanding Options, then with respect
to Options that have been neither assumed nor substituted and that are held by Grantees whose
Continuous Service has not terminated prior to the effective time of the Corporate Transaction, the
vesting of such Options (and, if applicable, the time at which such Options may be exercised) shall
(contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date
prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the
Board shall not determine such a date, to the date that is five (5) days prior to the effective
time of the Corporate Transaction), and the Options shall terminate if not exercised (if
applicable) at or prior to such effective time. With respect to any other Options outstanding
under the Plan that have been neither assumed nor substituted, the vesting of such Options (and, if
applicable, the time at which such Options may be exercised) shall not be accelerated unless
otherwise provided in a written agreement between the Company and the holder of such Option, and
such Options shall terminate if not exercised (if applicable) prior to the effective time of the
Corporate Transaction.

          11.5 The grant of Options under the Plan shall in no way affect the right of the Company to
adjust, reclassify, reorganize or otherwise change its capital or business structure or

8.

 

to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business
or assets.

     12. Limitations on Transfer:

          12.1 Non Transferability. No Option shall be assignable or transferable by the
Grantee to whom granted otherwise than by will or the laws of descent and distribution, and an
Option may be exercised during the lifetime of the Grantee only by such Grantee or by such
Grantee’s guardian or legal representative. The terms of such Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of such Grantee.

          12.2 Underwriter’s Lock-up. If requested by any managing underwriter, each Grantee so
requested shall enter into a lock-up agreement pursuant to which he or she will not, for a period
of 120 days following the effective date of a registration statement for any primary or secondary
public offering of Shares (or for a period of 180 days following the initial public offering of
Shares) and for such reasonable period of time prior to the effective date of such registration
statement as such underwriter may specify, offer, sell or otherwise dispose of any Shares, except
any Shares sold pursuant to such registration statement, without the prior consent of such
underwriter.

     13. Term, Approval and Amendment of the Plan:

          13.1 The Plan shall take effect upon its adoption by the Board and shall terminate on the
tenth anniversary of such date. Notwithstanding the foregoing, in the event that approval of the
Plan by the shareholders of the Company is required under applicable law, in connection with the
application of certain tax treatment or pursuant to applicable stock exchange rules or regulations
or otherwise, such approval shall be obtained within the time required under the applicable law.
All Options outstanding at the time of termination of the Plan shall continue to have full force
and effect in accordance with the provisions of the Plan and the documents evidencing such Options.

          13.2 Subject to applicable laws, the Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects, provided, however, that, unless
otherwise determined by the Board, an amendment which requires shareholder approval in order for
the Plan to continue to comply with any law, regulation or stock exchange requirement shall not be
effective unless approved by the requisite vote of shareholders. However, no such amendment or
modification shall adversely affect any rights and obligations with respect to Options at the time
outstanding under the Plan, unless the Grantee consents to such amendment or modification.

     14. Withholding and Tax Consequences: The Company’s obligation to deliver Shares upon the
exercise of any Options granted under the Plan shall be subject to the satisfaction of all
applicable income tax and other compulsory payments withholding requirements. All tax consequences
and obligations regarding any other compulsory payments arising from the grant or exercise of any
Option, from the payment for, or the subsequent disposition of, Shares subject thereto or from any
other event or act (of the Company or the Grantee) hereunder, shall be borne solely by the Grantee,
and the Grantee shall indemnify the

9.

 

Company and/or the Trustee, as applicable, and hold them harmless against and from any and all
liability for any such tax or other compulsory payment, or interest or penalty thereon, including
without limitation, liabilities relating to the necessity to withhold, or to have withheld, any
such tax or other compulsory payment from any payment made to the Grantee.

     15. Miscellaneous:

          15.1 Continuance of Employment. Neither the Plan nor the grant of an Option
thereunder shall impose any obligation on the Company to continue the employment or service of any
Grantee. Nothing in the Plan or in any Option granted thereunder shall confer upon any Grantee any
right to continue in the employ or service of the Company for any period of specific duration, or
interfere with or otherwise restrict in any way the right of the Company to terminate such
employment or service at any time, for any reason, with or without cause.

          15.2 Governing Law. The Plan and all instruments issued thereunder or in connection
therewith, shall be governed by, and interpreted in accordance with, the laws of the State of
Israel.

          15.3 Use of Funds. Any proceeds received by the Company from the sale of Shares
pursuant to the exercise of Options granted under the Plan shall be used for general corporate
purposes of the Company.

          15.4 Multiple Agreements. The terms of each Option may differ from other Options
granted under the Plan at the same time, or at any other time. The Committee may also grant more
than one Option to a given Grantee during the term of the Plan, either in addition to, or in
substitution for, one or more Options previously granted to that Grantee. The grant of multiple
Options may be evidenced by a single Grant Notice/Option Agreement or multiple Notices of
Grant/Option Agreements, as determined by the Committee.

          15.5 Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall not be
construed as amending, modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only in specific cases.

10.

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