Document:

exv10w31

 

Exhibit 10.31

AMENDMENT NO. 1

TO THE

TERAYON COMMUNICATION SYSTEMS, INC. 1997 EQUITY INCENTIVE PLAN

Pursuant to Section 13(a) of the Terayon Communication Systems, Inc. 1997 Equity Incentive Plan
(the “Plan”), the Plan is hereby amended (this “Amendment”) as follows:

A new Section 8 of the Plan shall be created to provide for the following:

	 	8.	 	NON-EMPLOYEE DIRECTOR STOCK AWARDS

     The Board may grant Stock Awards to Non-Employee Directors, subject to
the limitations of the Plan, pursuant to a written non-discretionary formula
established by the Board or the Committee, or any successor committee
thereto carrying out its responsibilities on the date of grant of any such
Stock Award (the “Non-Employee Director Equity Compensation
Policy”). The Non-Employee Director Equity Compensation Policy shall
set forth the type of Stock Award(s) to be granted to Non-Employee
Directors, the number of shares of the Company’s Common Stock to be subject
to Non-Employee Director Stock Awards, the conditions on which such Stock
Awards shall be granted, become exercisable and/or payable and expire, and
such other terms and conditions as the Committee (or such other successor
committee as described above) shall establish.

The section of the Plan identified as Section 8 of the Plan prior to giving effect
to this Amendment (the “Former Section 8”) shall be amended to reflect a
new section number and all other sections of the Plan making reference to the
Former Section 8 shall be revised accordingly to give effect to this Amendment.

This Amendment to the Plan shall be effective as of Wednesday, May 3, 2006

IN WITNESS WHEREOF, Terayon Communication Systems, Inc. has executed this Amendment to the Plan
this 3rd day of May, 2006.

	 	 	 	 	 
	 	 	TERAYON COMMUNICATION SYSTEMS, INC.
	 
	 	 	 	 
	 

	 	By: 	 	 
	 

	 	 	 
	 

	 	Title:exv10w32

 

Exhibit 10.32

TERAYON COMMUNICATION SYSTEMS, INC.

Non-Employee Director Equity Compensation Policy

Adopted by the Board of Directors May 3, 2006

     1. General. This Non-Employee Director Equity Compensation Policy (the
“Policy”) is hereby adopted by the Board of Directors (the “Board”) of Terayon
Communication Systems, Inc., a Delaware corporation (the “Company”), in accordance with
Section 8 of the Company’s 1997 Equity Incentive Plan (the “1997 Plan”). Capitalized but
undefined terms used herein shall have the meanings ascribed to them in the 1997 Plan.

     2. Board Authority. Pursuant to Section 8 of the 1997 Plan, the Board hereby
establishes a policy for the grant of Stock Awards under the 1997 Plan to Non-Employee Directors
pursuant to a written, non-discretionary formula, and which policy shall provide the types of Stock
Awards to be granted to Non-Employee Directors, the number of shares of the Company’s Common Stock
(the “Common Stock”) subject to such Stock Awards, and also specify, with respect to any
Stock Awards, the conditions on which the Stock Awards shall be granted, become exercisable and/or
payable, and expire, and such other terms and conditions as the Board determines in its discretion.
Stock Awards granted under the authority of the 1997 Plan pursuant to the provisions of this
Policy, including the Options granted pursuant to the provisions of Sections 3 and 4 hereof, are
hereinafter referred to in this Policy as “Director Awards.”

     3. Non-Discretionary Stock Option Grants. During the term of the 1997 Plan, the
following Options shall be granted automatically to Non-Employee Directors:

          (a) Each person who is first elected or appointed to the Board as a Non-Employee Director
automatically shall be granted, on the date of such initial election or appointment, a Nonstatutory
Stock Option to purchase sixty thousand (60,000) shares of Common Stock on the terms and conditions
set forth herein (an “Initial Option”).

          (b) Each Non-Employee Director who is serving as a Non-Employee Director immediately following
each annual meeting of shareholders of the Company, commencing with the annual meeting of
shareholders occurring in calendar year 2006, automatically shall be granted on such date a
Nonstatutory Stock Option to purchase twenty-five thousand (25,000) shares of Common Stock, which
number shall be pro-rated for any Non-Employee Director who has not continuously served as a
Non-Employee Director for the twelve (12)-month period prior to the date of such annual meeting of
shareholders, on the terms and conditions set forth herein (an “Annual Option”).

          (c) Each Non-Employee Director who is serving as a member of a committee of the Board
immediately following each annual meeting of shareholders of the Company, commencing with the
annual meeting of shareholders occurring in calendar year 2006, automatically shall be granted,
for each such committee, a Nonstatutory Stock Option to purchase six thousand (6,000) shares of
Common Stock, which number shall be pro-rated for

 

 

any Non-Employee Director who has not continuously served as a Non-Employee Director for the
twelve (12)-month period prior to the date of such annual meeting of shareholders, on the terms and
conditions set forth herein.

     4. Non-Discretionary Stock Option Grant Provisions.

     Each Option granted pursuant to Section 3 hereof shall be subject to the following terms and
conditions:

          (a) The term of each Option shall commence on the date it is granted and, unless sooner
terminated as provided herein, shall expire on the date (“Expiration Date”) ten (10) years
from the date of grant. If the Optionee’s Continuous Status as an Employee, Director or Consultant
terminates for any reason other than for Cause or other than as a result of Optionee’s death or
disability, the Option shall terminate on the earlier of the Expiration Date or the date three (3)
months following the date of such termination; provided, however, that (i) if such termination of
Continuous Status as an Employee, Director or Consultant is due to the Optionee’s death or if the
Optionee dies during the three-month period following the date of such termination, the Option
shall terminate on the earlier of the Expiration Date or eighteen (18) months following the date of
the Optionee’s death or (ii) if the termination of the Optionee’s Continuous Status as Employee,
Director or Consultant is due to the Optionee’s disability, the Option shall terminate on the
earlier of the Expiration Date or twelve (12) months following the date of termination. In any and
all circumstances, an Option may be exercised following termination of the Optionee’s Continuous
Status as Employee, Director or Consultant only as to that number of shares as to which it was
exercisable as of the date of termination during the period set forth in this Section 4(a).

          (b) The exercise price of each Option shall be one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Option on the date such Option is granted.

          (c) The Optionee may elect to make payment of the exercise price under one of the following
alternatives:

               (i) In cash (or check) at the time of exercise;

               (ii) Provided that at the time of the exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, payment by delivery of shares of Common Stock already owned
by the Optionee, held for the period required to avoid a charge to the Company’s reported earnings,
and owned free and clear of any liens, claims, encumbrances or security interest, which Common
Stock shall be valued at its Fair Market Value on the date immediately preceding the date of
exercise;

               (iii) Pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company either prior to the issuance
of shares of the Common Stock or pursuant to the terms of irrevocable instructions issued by the
Optionee prior to the issuance of shares of the Common Stock; or

 

 

               (iv) Payment by a combination of the methods of payment specified in Sections 4 (c)(i) through
4(c)(iii) hereof.

          (d) Each Option shall vest and become exercisable as to thirty-three percent (33%) of the
shares of Common Stock subject to the Option on the first anniversary of the date of grant and
one-thirty-sixth (1/36) of the shares of Common Stock subject to the Option on each subsequent
monthly anniversary thereafter over the next 24 months, such that the Option is fully vested and
exercisable as of the third anniversary of the date of grant, provided that vesting shall cease
upon termination of your Continuous Status as an Employee, Director or Consultant.

     5. Incorporation of the 1997 Plan. All applicable terms of the 1997 Plan shall apply
to this Policy and the Director Awards granted hereunder as if fully set forth herein except to the
extent such other provisions are inconsistent with this Policy, in which case the provisions in
this Policy shall prevail.

     6. Written Grant Agreement. The grant of any Director Award under this Policy shall
be made solely by and subject to the terms set forth in a written agreement in a form to be
approved by the Board or Committee and duly executed by an executive officer of the Company.

     7. Policy Subject to Amendment, Modification and Termination. This Policy may be
amended, modified, suspended or terminated by the Board in the future at its sole discretion.
Unless sooner terminated by the Board, this Policy shall remain in effect until the earlier of (i)
the date that the 1997 Plan terminates or (ii) upon the occurrence of a Change in Control, at which
time in each case this Policy shall terminate automatically. No Director Awards shall be granted
pursuant to this Policy while the Policy is suspended or after it is terminated. No Non-Employee
Director, individually or as a member of a group, and no beneficiary or other person claiming under
or through the Non-Employee Directors, shall have any right, title or interest in or to any
Director Award reserved for the purposes of the Policy or the 1997 Plan except as to such shares of
Common Stock, if any, as shall have been reserved for the Non-Employee Director pursuant to
Director Awards granted to the Non-Employee Director. Without limiting the generality of the
foregoing, the Board hereby expressly reserves the authority to terminate this Policy during any
plan year up and until the election of directors at a given annual meeting of shareholders of the
Company. Rights and obligations under any Director Award granted before any amendment of the Plan
or the agreement documenting such Director Award shall not be impaired by such amendment unless (i)
the Company requests the consent of the Optionee and (ii) the Optionee consents in writing.

     8. Effectiveness. This Policy shall become effective as of the date that this Policy
is adopted by the Board.

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