<PAGE>
As filed with the Securities and Exchange Commission on May 28, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
APPLIED DIGITAL ACCESS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 68-0132939
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
9855 SCRANTON ROAD, SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip Code)
1994 STOCK OPTION/STOCK ISSUANCE PLAN
1998 EMPLOYEE STOCK PURCHASE PLAN
1998 EMPLOYEE STOCK PURCHASE PLAN FOR ADA CANADA
(Full title of the plans)
---------------
Peter P. Savage
President and Chief Executive Officer
APPLIED DIGITAL ACCESS, INC.
9855 SCRANTON ROAD, SAN DIEGO, CALIFORNIA 92121
(Name and address of agent for service)
(619) 623-2200
(Telephone number, including area code, of agent for service)
---------------
This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will thereafter be effected upon option exercises, share issuances or purchases
effected under the plans.
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Title of Proposed Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price Fee
---------- ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
1994 STOCK OPTION/STOCK ISSUANCE PLAN
Common Stock, par value $0.001 300,000 $ 5.41 $ 1,623,000
1998 EMPLOYEE STOCK PURCHASE PLAN
Common Stock, par value $0.001 300,000 $ 4.60 $ 1,380,000
1998 EMPLOYEE STOCK PURCHASE PLAN FOR
ADA CANADA
Common Stock, par value $0.001 100,000 $ 4.60 $ 460,000
TOTAL 700,000 $ 3,463,000 $ 1,021.59
</TABLE>
- -------------------------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the plans listed above by reason
of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results in
an increase in the number of the Company's outstanding shares of Common
Stock.
(2) Estimated solely for the purpose of computing the amount of the
registration fee under Rules 457(h) and 457(c) of the Securities Act of
1933, as amended. The employee stock purchase plans establish a
purchase price equal to 85% of the fair market value of the Company's
Common Stock and, therefore, the price for shares issuable under these
plans is based on 85% of the average of the high and low prices of the
Common Stock on May 22, 1998. As to shares issuable under the 1994 Stock
Option/Stock Issuance Plan, the price is based on the average of the
high and low prices of the Common Stock on May 22, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Applied Digital Access, Inc. (the "Company") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
(b) The Company's Reports on Form 8-K and Form 8-K/A, filed on
December 23, 1997 and January 12, 1998, respectively, as File No.
0-23698.
(c) The Form 8-A filed by the Company on March 28, 1994 with the
Commission as Registration No. 0-23698 (and all amendments
thereto), in which there is described the terms, rights and
provisions applicable to the Company's outstanding Common Stock.
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 (the "1934 Act") prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits indemnification
of officers and directors of the Company under certain conditions and subject to
certain limitations. Section 145 of the Delaware General Corporation Law also
provides that a corporation has the power to purchase and maintain insurance on
behalf of its officers and directors against any liability asserted against such
person and incurred by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under the provisions of Section 145 of the
Delaware General Corporation Law.
Article VII, Section 1 of the Bylaws of the Company provides that the
Company shall indemnify its directors and executive officers to the fullest
extent not prohibited by the Delaware General Corporation Law. The rights to
indemnity thereunder continue as to a person who has ceased to be a director,
officer, employee or agent and inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director or
executive officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of the Company (or was serving at the Company's
request as a director or officer of another corporation) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company as authorized by the relevant section
of the Delaware General Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
Article V, Section (A) of the Company's Certificate of Incorporation provides
that a director of the Company shall not be personally liable for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or acts or omissions that involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law or (iv) for any transaction from which the
director derived any improper personal benefit.
II-1
<PAGE>
The Company has entered into indemnification agreements with each of its
directors and executive officers. Generally, the indemnification agreements
attempt to provide the maximum protection permitted by Delaware law as it may be
amended from time to time. Moreover, the indemnification agreements provide for
certain additional indemnification. Under such additional indemnification
provisions, however, an individual will not receive indemnification for
judgments, settlements or expenses if he or she is found liable to the Company
(except to the extent the court determines he or she is fairly and reasonably
entitled to indemnity for expenses), for settlements not approved by the Company
or for settlements and expenses if the settlement is not approved by the court.
The indemnification agreements provide for the Company to advance to the
individual any and all reasonable expenses (including legal fees and expenses)
incurred in investigating or defending any such action, suit or proceeding. In
order to receive an advance of expenses, the individual must submit to the
Company copies of invoices presented to him or her for such expenses. Also, the
individual must repay such advances upon a final judicial decision that he or
she is not entitled to indemnification.
The Company has purchased directors' and officers' liability insurance.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
-------- -------
<C> <S>
4.1 Certificate of Incorporation*
4.2 Bylaws*
5 Opinion and Consent of Company Counsel
23.1 Consent of Company Counsel is contained in Exhibit 5
23.2 Consent of Independent Accountants, Coopers & Lybrand
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Second Amendment to 1994 Stock Option/Stock Issuance Plan
99.2 1998 Employee Stock Purchase Plan
99.3 Form of Stock Purchase Agreement
99.4 1998 Employee Stock Purchase Plan for ADA Canada
99.5 Form of Stock Purchase Agreement
</TABLE>
* Filed as an Exhibit to the Company's Report on Form 8-K filed on
December 23, 1997 (File No. 000-23698) and incorporated herein by
reference.
Item 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) shall not apply if the
information required to be in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to Section 13 or
II-2
<PAGE>
Section 15(d) of the 1934 Act that are incorporated by reference into this
registration statement.
(b) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof; and
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold upon the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the 1934 Act) that is incorporated by reference in
this registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on this 28th day
of May, 1998.
APPLIED DIGITAL ACCESS, INC.
By /s/ Peter P. Savage
--------------------------------
Peter P. Savage
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Applied Digital Access,
Inc., a Delaware corporation, do hereby constitute and appoint Peter P. Savage
and James L. Keefe, and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and either one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on May 28, 1998.
Signature Title
--------- -----
/s/ Peter P. Savage President and Chief
--------------------------- Executive Officer and
Peter P. Savage Director (Principal
Executive Officer)
/s/ James L. Keefe Vice President, Finance and
--------------------------- Administration, Chief
James L. Keefe Financial Officer (Principal
Financial and Accounting
Officer)
/s/ Christopher B. Paisley Director
---------------------------
Christopher B. Paisley
/s/ Edward F. Tuck Director
---------------------------
Edward F. Tuck
/s/ Kenneth E. Olson Director
---------------------------
Kenneth E. Olson
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
-------- -------
<C> <S>
4.1 Certificate of Incorporation*
4.2 Bylaws*
5 Opinion and Consent of Company Counsel
23.1 Consent of Company Counsel is contained in
Exhibit 5.
23.2 Consent of Independent Accountants, Coopers &
Lybrand
24 Power of Attorney. Reference is made to page II-4
of this Registration Statement.
99.1 Second Amendment to 1994 Stock Option/Stock Issuance
Plan
99.2 1998 Employee Stock Purchase Plan
99.3 Form of Stock Purchase Agreement
99.4 1998 Employee Stock Purchase Plan for ADA Canada
99.5 Form of Stock Purchase Agreement
</TABLE>
* Filed as an Exhibit to the Company's Report on Form 8-K
filed on December 23, 1997 (File No. 000-23698) and
incorporated herein by reference.
<PAGE>
Exhibit 5
Opinion and Consent of Company Counsel
May 28, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
As legal counsel for Applied Digital Access, Inc., a Delaware corporation
(the "Company"), we are rendering this opinion in connection with the
registration under the Securities Act of 1933, as amended, of up to 700,000
shares of the Common Stock of the Company which may be issued pursuant to the
Applied Digital Access, Inc. 1994 Stock Option/Stock Issuance Plan, 1998
Employee Stock Purchase Plan and 1998 Employee Stock Purchase Plan for ADA
Canada (the "Plans"). We have examined all instruments, documents and records
which we deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to the originals of all documents submitted to us as copies.
We are admitted to practice only in the State of California and we express
no opinion concerning any law other than the law of the State of California, the
corporation laws of the State of Delaware and the federal law of the United
States. As to matters of Delaware corporation law, we have based our opinion
solely upon our examination of such laws and the rules and regulations of the
authorities administering such laws, all as reported in standard, unofficial
compilations. We have not obtained opinions of counsel licensed to practice in
jurisdictions other than the State of California. Based on such examination, we
are of the opinion that the 700,000 shares of Common Stock which may be issued
pursuant to the Plans are duly authorized shares of the Company's Common Stock,
and, when issued against payment of the purchase price therefor in accordance
with the provisions of the Plans, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears therein.
Respectfully submitted,
/s/ GRAY CARY WARE & FREIDENRICH LLP
<PAGE>
Exhibit 23.2
Consent of Independent Accountants, Coopers & Lybrand
We consent to the incorporation by reference in the Registration Statement of
Applied Digital Access, Inc. on Form S-8 of our report dated April 14, 1998
on our audits of the financial statements and financial statement schedule of
Applied Digital Access, Inc. as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996 and 1995, which report is included in the
Annual Report on Form 10-K/A of Applied Digital Access, Inc. for the year
ended December 31, 1997.
/s/ COOPERS & LYBRAND LLP
San Diego, California
May 28, 1998
<PAGE>
Exhibit 99.1
Second Amendment to 1994 Stock Option/Stock Issuance Plan
SECOND AMENDMENT TO THE
APPLIED DIGITAL ACCESS, INC.
1994 STOCK OPTION/STOCK ISSUANCE PLAN
The Board of Directors of Applied Digital Access, Inc. ("Corporation") make
this Second Amendment to the Corporation's 1994 Stock Option/Stock Issuance Plan
(the "Plan") pursuant to Article Five, Section V of the Plan, which Amendment
has been approved by the stockholders of the Corporation as of May 21, 1998.
1. Article One, Section VI.A of the Plan is amended and restated in its
entirety to read as follows:
A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 4,100,000 shares, subject to adjustment
from time to time in accordance with the provisions of this Section VI. Such
authorized number of shares is comprised of (i) 327,153 shares issued under the
Predecessor Plans, (ii) 1,734,290 shares reserved for issuance under the option
granted under the Predecessor Plans, (iii) 213,424 shares which would have been
available for future option grant or share issuance under the Predecessor Plans
as last approved by the shareholders, plus (iv) an additional increase of
1,825,025. The number of shares of Common Stock available for issuance under
the Plan as of March 20, 1998 (before any adjustments required under Paragraphs
B or C of this Section VI and exclusive of shares reserved for issuance under
options outstanding as of such date) is 139,225 shares of Common Stock.
2. Article Three, Section 1.A of the Plan is amended and restated in its
entirety to read as follows:
A. Grant of Options. Option grants will be made automatically to each
non-employee Board member who has not otherwise been in the prior employ of the
Corporation during the preceding two years, on the Effective Date and each time
such person is elected, re-elected, appointed or reappointed to the Board after
the Effective Date. Each such person shall automatically be granted a
nonstatutory option to purchase (i) 7,500 shares on the Effective Date if such
person is a non-employee Board member on such Date ("Effective Date Grants");
(ii) 15,000 shares if such person is first elected or appointed as a
non-employee Board member after the Effective Date on the date of such first
election or appointment ("First Election Grants"); and (iii) 10,000 shares to
each such person each time he or she is reelected to the Board after the
Effective Date on the date of such reelection ("Reelection Grants"). The number
of shares granted pursuant to this Automatic Grant Program shall be subject to
periodic adjustment pursuant to the applicable provisions of Section VI.C of
Article One.
3. Except as specifically modified herein, the Plan as previously adopted
remains in full force and effect.
<PAGE>
Exhibit 99.2
1998 Employee Stock Purchase Plan
APPLIED DIGITAL ACCESS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
PURPOSE
This Applied Digital Access, Inc. 1998 Employee Stock Purchase Plan
(the "Plan") is intended to provide Qualifying Employees with the opportunity to
acquire a proprietary interest in the Company by accumulating amounts for the
Employee's Account through payroll deductions and the periodic application of
such amounts to the purchase of shares of the Company's Common Stock.
DEFINITIONS
For purposes of plan administration, the following terms shall have
the meanings indicated:
ACT shall mean the Securities Act of 1933 (as amended).
ACCOUNT means the amount held for the benefit of a Participant
hereunder which Account will be increased by any payroll deductions from the
Participant and will be decreased by amounts applied to the purchase of shares
or refunded to or for the benefit of the Participant hereunder.
BOARD means the Company's Board of Directors.
CODE means the Internal Revenue Code of 1986, as amended from time to
time.
COMMON STOCK means shares of the Company's Common Stock.
COMPANY means Applied Digital Access, Inc., a Delaware corporation,
and any successor corporation thereto.
CORPORATE AFFILIATE means any company which is a parent or subsidiary
corporation of the Company (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Date.
EFFECTIVE DATE means May 21, 1998. However, for any Corporate
Affiliate which becomes a Participating Company in the Plan after the first day
of the initial option period, a
<PAGE>
subsequent Effective Date shall be designated with respect to participation
by its Qualifying Employees.
EMPLOYEE means any person treated as an employee (including an officer
or a director who is also an employee) in the records of a Participating
Company; provided, however, that neither service as a director nor payment of a
directors' fee shall be sufficient to constitute employment for purposes of the
Plan.
ENTRY DATE means the date on which a Participant first joins the
option period in effect under the Plan.
PARTICIPANT means any Qualifying Employee of a Participating Company
who has enrolled and is actively participating in the Plan.
PARTICIPATING COMPANY means the Company and any Corporate Affiliate
designated from time to time by the Board.
QUALIFYING EMPLOYEE means any Employee who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per calendar year; provided, however, that neither of the
following may be a Qualifying Employee, provided that no person who owns (within
the meaning of Code Section 424(d)) or holds outstanding options or other rights
to purchase stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or any of its
Corporate Affiliates shall be a Qualifying Employee.
QUARTER means a calendar quarter and (except for the first Quarter of
the initial option period or as otherwise designated by the Plan Administrator),
each Quarter shall begin on the first business day of the Quarter and shall end
on the last business day of such Quarter. The first Quarter of the initial
option period under this Plan shall commence on the Effective Date and shall end
on June 30, 1998.
REGULAR COMPENSATION means the basic earnings paid to a Participant by
Participating Companies plus (i) any pre-tax contributions made by the
Participant to any Code Section 401(k) salary deferral plan or any Code
Section 125 cafeteria benefit program (now existing or hereafter established),
(ii) commissions, and (iii) bonuses payable to pursuant to any formal bonus plan
which has been approved and adopted by the Board. Regular Compensation shall
not include (I) overtime payments, profit-sharing distributions and other
incentive-type payments or (II) contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf under any
employee benefit or welfare plan (now existing or hereafter established).
SERVICE means the period during which an individual remains a
Qualifying Employee and all periods of Service shall be measured from such
individual's most recent date of hire by the Company or such Corporate
Affiliate.
<PAGE>
ADMINISTRATION
The Plan shall be administered by a committee comprised of two (2) or
more non-employee Board members appointed from time to time by the Board (the
"Plan Administrator"). The Plan Administrator shall have full authority to
administer the Plan, including authority to interpret and construe any provision
of the Plan. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Plan.
OPTION PERIODS
Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive option periods during the term of the Plan until
the maximum number of shares of Common Stock available for issuance under the
Plan shall have been issued.
The initial option period will begin on the Effective Date and will
end on the last business day in June 1999. Subsequent option periods will
commence on or about July 1 of each year and will end on the next following
June 30.
Each Participant will have purchase rights as set forth in Article VII
for each option period, the purchase price for which shall be collected through
payroll deductions and which purchase rights shall be exercised in successive
installments each Quarter within the option period.
The acquisition of Common Stock through participation in the Plan for
any option period shall neither limit nor require the acquisition of Common
Stock by the Participant in any subsequent option period.
ELIGIBILITY AND PARTICIPATION
Each Qualifying Employee shall be eligible to participate in an option
period under the Plan in accordance with the following provisions:
- A Qualifying Employee with at least three (3) months of
Service on the Effective Date or the first day of any subsequent
option period may enter that option period on the Effective Date or
such first day, respectively, by enrolling in accordance with
Section V.C below.
- A Qualifying Employee who was not previously eligible to
enter an option period may enter that option period on the first day
of the Quarter next following the date such Qualifying Employee has at
least three (3) months of Service by enrolling in accordance with
Section V.C below.
A Qualifying Employee who does not enroll for an option period on the
first date such Qualifying Employee is permitted to enroll hereunder may not
subsequently enroll in that option period.
<PAGE>
To enroll in the Plan, a Qualifying Employee must complete the
enrollment forms prescribed by the Plan Administrator and file such forms with
the Plan Administrator (or its designate) on or before the date such Qualifying
Employee is first permitted to enter the Option Period.
The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Regular Compensation paid to the Participant during each
Quarter of the option period, up to maximum of fifteen percent (15%) of Regular
Compensation. The deduction rate so authorized shall continue in effect for the
remainder of the option period, except to the extent such rate is changed in
accordance with the following guidelines:
- The Participant may, at any time during a Quarter, reduce
the rate of payroll deduction. Such reduction shall become effective
as soon as possible after filing of the requisite reduction form with
the Plan Administrator (or its designate), but the Participant may not
effect more than one such reduction during the same Quarter.
- The Participant may, prior to the commencement of any new
Quarter within the option period, increase or decrease the rate of
payroll deduction for the new Quarterly by filing the appropriate form
with the Plan Administrator (or its designate). The new rate shall
become effective as of the first day of the next Quarter.
Payroll deductions will automatically cease upon the termination
of the Participant's purchase right in accordance with the applicable provisions
of Section VII below.
STOCK SUBJECT TO PLAN
The maximum number of shares of Common Stock which may be issued under
the Plan shall be 300,000 shares of Common Stock (subject to adjustment under
Section VI.B below).
In the event any change is made to the Company's outstanding Common
Stock by reason of any stock dividend, stock split, combination of shares or
other change affecting such outstanding Common Stock as a class without receipt
of consideration, then appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number shares issuable over the term
of the Plan, (ii) the class and maximum number of shares purchasable per
Participant during any one option period and (iii) the class and number of
shares and the price per share in effect under each purchase right at the time
outstanding under the Plan. Such adjustments shall be designed to preclude the
dilution or enlargement of rights and benefits under the Plan.
PURCHASE RIGHTS
<PAGE>
Each Participant in a particular option period shall have the right to
purchase shares of Common Stock in a series of successive quarterly installments
during such option period on the terms and conditions set forth below (the
"Purchase Rights"). Each Participant shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may require.
PURCHASE PRICE. The Purchase Rights shall be exercised at the
end of each Quarter at a purchase price equal to eighty-five percent (85% of the
LOWER of (i) the fair market value per share of the Common Stock on the
Participant's Entry Date or (ii) the fair market value per share of the Common
Stock on the last business day of the Quarter. However, for each Participant
whose Entry Date is other than the first day of the option period, the amount
determined under clause (i) shall not be less than the fair market value of the
Common Stock on the first day of such option period.
VALUATION. For purposes of determining the fair market value per
share of Common Stock on any relevant date, the following procedures shall be in
effect:
- If, as of any date, there is a public market for the Common
Stock, then the fair market value shall be the closing selling price
on that date, as officially quoted on the Nasdaq National Market
System (or such other national or regional securities exchange
constituting the primary market for the Common Stock), or if there is
no quoted selling price for such date, then the closing selling price
on the next preceding day for which there does exist such a quotation.
- If there is the no public market for the Common Stock, then
the fair market value of the Common Stock on such date shall be
determined by the Plan Administrator after taken into account such
factors as the Plan Administrator deems appropriate.
NUMBER OF PURCHASABLE SHARES. The number of shares purchasable
by a Participant each Quarter shall be the number of whole shares obtained by
dividing the amount in Participant's Account at the end of such Quarter by the
purchase price in effect for the Quarter.
Notwithstanding the above, no Participant shall have the right to
purchase shares of Common Stock to the extent that, immediately after the grant,
such Participant would own (within the meaning of Code Section 424(d)) or hold
outstanding options or other rights to purchase, stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or any of its Corporate Affiliates.
PAYMENT. Payment for the Common Stock purchased under the Plan
shall be effected by means of the Participant's authorized payroll deductions.
Such deductions shall begin on the first pay day coincident with or immediately
following the Participant's Entry Date into the option period and shall (unless
sooner terminated by the Participant) continue through the pay day ending with
or immediately prior to the last day of the option period. The amounts so
collected shall be credited to the Participant's Account under the Plan but no
interest shall be
<PAGE>
paid on the balance from time to time outstanding in such Account. The amounts
collected from a Participant may be commingled with the general assets of the
Company and may be used for general corporate purposes.
TERMINATION OF PURCHASE RIGHT. The following provisions shall
govern the termination of outstanding purchase rights:
A Participant may, at any time prior to the last five (5)
business days of the Quarter, terminate his/her outstanding purchase right under
the Plan by filing the prescribed notification form with the Plan Administrator
(or its designate). No further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right, and any payroll
deductions collected for the current Quarter shall at the Participant's
election, be immediately refunded or held for the purchase of shares on the end
of the Quarter. If no such election is made, then such funds shall be refunded
as soon as possible after the close of such Quarter.
After the termination of purchase rights for an option period,
the Participant may not subsequently rejoin that option period. In order to
resume participation in any subsequent option period, such individual must
re-enroll in the Plan for that option period.
If a Participant ceases to be a Qualifying Employee for any
reason whatsoever during an option period then all payroll deductions shall
terminate and all funds held in the Participant's Account will be promptly paid
to the Participant or the Participant's legal representative. No further
purchases of shares hereunder shall occur after the Participant has ceased to be
a Qualifying Employee.
STOCK PURCHASE. Subject to the limitations set forth herein,
funds held in a Participant's Account at the end of a Quarter (and which are not
required to be refunded hereunder) shall be applied to the purchase of whole
shares of Common Stock for the Participant on the last business day of the
Quarter at the purchase price in effect for such Quarter. Any payroll
deductions not applied to such purchase because they are not sufficient to
purchase a whole share shall be held for the purchase of Common Stock in the
next Quarter. Any payroll deductions not applied to the purchase of Common
Stock for any other reason shall be promptly refunded to the Participant.
PRORATION OF PURCHASE RIGHTS. If the total number of shares of
Common Stock which would otherwise be purchased hereunder on any date exceed the
number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares to
Participants on a uniform and nondiscriminatory basis.
RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder
rights with respect to the shares subject to his/her outstanding purchase right
until the shares are actually purchased on the Participant's behalf in
accordance with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase.
<PAGE>
A Participant shall be entitled to receive, as soon as
practicable after purchase hereunder, a stock certificate for the number of
shares purchased for the Participant. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
ASSIGNABILITY. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.
CHANGE IN OWNERSHIP. Should the Company or its stockholders
enter into an agreement to dispose of all or substantially all of the assets or
outstanding capital stock of the Company by means of:
(i) a sale, merger or other reorganization in which the Company
will not be the surviving corporation (other than a reorganization effected
primarily to change the State in which the Company is incorporated), or
(ii) a reverse merger in which the Company is the surviving
corporation but in which more than 50% of the Company's outstanding voting stock
is transferred to holders different from those who hold the stock immediately
prior to the reverse merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the consummation of such sale,
merger, reorganization or reverse merger by applying the amounts in each
Participant's Account to the purchase of whole shares of Common Stock at
eighty-five percent (85%) of the LOWER of (i) the fair market value of the
Common Stock on the Participant's Entry Date into the option period in which
such transaction occurs or (ii) the fair market value of the Common Stock
immediately prior to the consummation of such transaction. However, the
applicable share limitations of Articles VII and VIII shall continue to apply to
any such purchase, and the clause (i) amount above shall not, for any
Participant whose Entry Date for the option period is other than the start date
of such option period, be less than the fair market value of the Common Stock on
such start date.
The Company shall use its best efforts to provide at least
ten (10) days advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.
ACCRUAL LIMITATIONS
No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (I) rights to purchase Common Stock
accrued under any other purchase right outstanding under this Plan and
(II) similar rights accrued under other employee stock purchase
<PAGE>
plans (within the meaning of Section 423 of the Code) of the Company or its
Corporate Affiliates, would otherwise permit such Participant to purchase more
than $25,000 worth of stock of the Company or any Corporate Affiliate
(determined on the basis of the fair market value of such stock on the date or
dates such rights are granted to the Participant) for each calendar year such
rights are at any time outstanding.
For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:
The right to acquire Common Stock under each such purchase right
shall accrue in a series of successive quarterly installments as and when the
purchase right first becomes exercisable for each quarterly installment on the
last business day of each Quarter for which the right remains outstanding.
No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the same
calendar year the right to acquire $25,000 worth of Common Stock (determined on
the basis of the fair market value on the date or dates of grant) pursuant to
one or more purchase rights held by the Participant during such calendar year.
If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Quarter, then the payroll
deductions which the Participant made during that Quarter with respect to such
purchase right shall be promptly refunded.
In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.
STATUS OF PLAN UNDER FEDERAL TAX LAWS
The Plan is designed to qualify as an employee stock purchase plan
under Code Section 423.
AMENDMENT AND TERMINATION
The Board may alter, amend, suspend or discontinue the Plan following
the close of any Quarter. An amendment to the Plan must be approved by the
stockholders of the Company within twelve (12) months of the adoption of such
amendment if such amendment would authorize the sale of more shares than are
authorized for issuance under the Plan or would change the definition of the
corporations that may be designated by the Board as Participating Companies.
The Company shall have the right, exercisable in the sole discretion
of the Plan Administrator, to terminate all outstanding purchase rights under
the Plan immediately following the close of any Quarter. Should the Company
elect to exercise such right, then the Plan shall
<PAGE>
terminate in its entirety. No further purchase rights shall thereafter be
granted or exercised, and no further payroll deductions shall thereafter be
collected, under the Plan.
GENERAL PROVISIONS
The issuance of shares under the Plan shall be subject to compliance
with all applicable requirements of federal, state and foreign law with respect
to such securities. A Purchase Right may not be exercised if the issuance of
shares upon such exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any securities exchange or market system upon which the Common
Stock may then be listed. In addition, no Purchase Right may be exercised
unless (a) a registration statement under the Act shall at the time of exercise
of the Purchase Right be in effect with respect to the shares issuable upon
exercise of the Purchase Right, or (b) in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Purchase Right may be issued
in accordance with the terms of an applicable exemption from the registration
requirements of the Act. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares under the Plan shall relieve the Company of any liability in respect of
the failure to issue or sell such shares as to which such requisite authority
shall not have been obtained. As a condition to the exercise of a Purchase
Right, the Company may require the Participant to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation, and to make any representation or warranty with respect
thereto as may be requested by the Company.
The Plan shall continue in effect until the earlier of its termination
by the Plan Administrator or the date on which all of the shares of Common Stock
available for issuance under the Plan have been issued.
All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.
Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any Corporate Affiliate for any
period, and such person's employment may be terminated at any time, with or
without cause.
<PAGE>
Exhibit 99.3
Form of Stock Purchase Agreement
APPLIED DIGITAL ACCESS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
STOCK PURCHASE AGREEMENT
1. I HEREBY ELECT TO PARTICIPATE IN THE APPLIED DIGITAL ACCESS, INC. 1998
EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN") FOR THE OPTION PERIOD SPECIFIED
BELOW, AND I ACCORDINGLY SUBSCRIBE TO PURCHASE SHARES OF APPLIED DIGITAL
ACCESS, INC. COMMON STOCK AT THE END OF EACH OF MY QUARTERLY PERIODS OF
PARTICIPATION WITHIN SUCH OPTION PERIOD.
2. BY SEPARATE FORM, I HAVE AUTHORIZED PAYROLL DEDUCTIONS FROM EACH OF MY
PAYCHECKS DURING MY PERIOD OF PARTICIPATION IN THE OPTION PERIOD. SUCH
PAYROLL DEDUCTIONS WILL BE ACCUMULATED FOR THE PURCHASE OF SHARES OF
APPLIED DIGITAL ACCESS, INC. COMMON STOCK ON THE LAST BUSINESS DAY OF EACH
QUARTERLY PERIOD OF PARTICIPATION. THE PURCHASE PRICE PER SHARE WILL BE
THE LOWER OF (i) 85% OF THE MARKET PRICE ON THE START DATE OF THE QUARTERLY
PERIOD OF PARTICIPATION IN WHICH I FIRST ENTER THE OPTION PERIOD OR
(ii) 85% OF THE MARKET PRICE ON EACH QUARTERLY PURCHASE DATE. HOWEVER, THE
CLAUSE (i) AMOUNT WILL IN NO EVENT BE LESS THAN 85% OF THE MARKET PRICE ON
THE START DATE OF THE OPTION PERIOD.
3. THIS ENROLLMENT WILL BE EFFECTIVE FOR THE DURATION OF THE OPTION PERIOD
SPECIFIED BELOW, AND SHARES WILL AUTOMATICALLY BE PURCHASED ON MY BEHALF AT
THE END OF EACH QUARTERLY PERIOD OF PARTICIPATION, UNLESS I WITHDRAW FROM
THE PLAN OR MY EMPLOYMENT TERMINATES.
4. MY RATE OF PAYROLL DEDUCTION WILL AUTOMATICALLY CONTINUE IN EFFECT FOR EACH
OF MY QUARTERLY PERIODS OF PARTICIPATION WITHIN THE OPTION PERIOD, UNLESS I
CHANGE SUCH RATE OR OTHERWISE WITHDRAW FROM THE PLAN OR MY EMPLOYMENT
TERMINATES.
5. I CAN WITHDRAW FROM THE PLAN AT ANY TIME AND ELECT EITHER TO HAVE THE
COMPANY REFUND ALL MY PAYROLL DEDUCTIONS FOR THE QUARTERLY PERIOD OF
PARTICIPATION IN WHICH I WITHDRAW OR TO HAVE SUCH PAYROLL DEDUCTIONS
APPLIED TO THE PURCHASE OF APPLIED DIGITAL ACCESS, INC. COMMON STOCK AT THE
END OF SUCH PERIOD. HOWEVER, I MAY NOT REJOIN THE PLAN FOR THAT PARTICULAR
OPTION PERIOD AT ANY LATER DATE. UPON MY TERMINATION OF EMPLOYMENT OR
CHANGE TO INELIGIBLE EMPLOYEE STATUS, PAYROLL DEDUCTIONS WILL AUTOMATICALLY
CEASE ON MY BEHALF AND THE COMPANY WILL REFUND MY PAYROLL DEDUCTIONS TO
DATE IN THE QUARTERLY PERIOD OF PARTICIPATION IN WHICH SUCH TERMINATION OR
CHANGE OCCURS.
6. I HAVE A COPY OF, AND AM FAMILIAR WITH, THE OFFICIAL PLAN PROSPECTUS
SUMMARIZING THE OPERATION OF THE PLAN. A COMPLETE COPY OF THE ACTUAL PLAN
DOCUMENT IS ATTACHED AS EXHIBIT A TO THE PROSPECTUS.
7. I AM TO RECEIVE A STOCK CERTIFICATE FOR THE SHARES PURCHASED ON MY BEHALF
AFTER EACH QUARTERLY PURCHASE DATE. THE CERTIFICATE WILL BE ISSUED AS
INDICATED ON MY ENROLLMENT/CHANGE FORM.
8. THE COMPANY HAS THE RIGHT TO AMEND OR TERMINATE THE PLAN AT ANY TIME, WITH
SUCH AMENDMENT OR TERMINATION TO BECOME EFFECTIVE IMMEDIATELY FOLLOWING THE
EXERCISE OF OUTSTANDING PURCHASE RIGHTS AT THE END OF ANY CURRENT QUARTERLY
PERIOD OF PARTICIPATION. SHOULD THE COMPANY ELECT TO TERMINATE THE PLAN, I
WILL HAVE NO FURTHER RIGHTS TO PURCHASE SHARES OF APPLIED DIGITAL ACCESS,
INC. COMMON STOCK PURSUANT TO THIS AGREEMENT.
9. I AM FAMILIAR WITH THE PLAN RESTRICTION PROHIBITING ANY PARTICIPANT FROM
PURCHASING MORE THAN $25,000 WORTH OF COMMON STOCK PER CALENDAR YEAR.
10. I HAVE READ THIS AGREEMENT AND THE PLAN. I HEREBY AGREE TO BE BOUND BY THE
TERMS OF BOTH THIS AGREEMENT AND THE PLAN. THE EFFECTIVENESS OF THIS
AGREEMENT IS DEPENDENT UPON MY ELIGIBILITY TO PARTICIPATE IN THE PLAN.
DATE
--------------------- -------------------------------------
SIGNATURE OF EMPLOYEE
<PAGE>
-------------------------------------
PRINTED NAME
DURATION OF OPTION PERIOD:
FROM: TO
--------- ---------
START DATE OF MY QUARTERLY SUBSEQUENT QUARTERLY PERIODS
PERIOD OF PARTICIPATION: OF PARTICIPATION:
, 199 FROM: TO
- ---------- -- --------------- ------------------
FROM: TO
--------------- ------------------
FROM: TO
--------------- ------------------
<PAGE>
Exhibit 99.4
1998 Employee Stock Purchase Plan for ADA Canada
APPLIED DIGITAL ACCESS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
FOR ADA CANADA
PURPOSE
This Applied Digital Access, Inc. 1998 Employee Stock Purchase Plan
for ADA Canada (the "Plan") is intended to provide Qualifying Employees with the
opportunity to acquire a proprietary interest in the Company by accumulating
amounts for the Employee's Account through payroll deductions and the periodic
application of such amounts to the purchase of shares of the Company's Common
Stock.
DEFINITIONS
For purposes of plan administration, the following terms shall have
the meanings indicated:
ACT shall mean the Securities Act of 1933 (as amended).
ACCOUNT means the amount held for the benefit of a Participant
hereunder which Account will be increased by any payroll deductions from the
Participant and will be decreased by amounts applied to the purchase of shares
or refunded to or for the benefit of the Participant hereunder.
BOARD means the Company's Board of Directors.
CODE means the Internal Revenue Code of 1986, as amended from time to
time.
COMMON STOCK means shares of the Company's Common Stock.
COMPANY means Applied Digital Access, Inc., a Delaware corporation,
and any successor corporation thereto.
CORPORATE AFFILIATE means any company which is a parent or subsidiary
corporation of the Company (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Date.
EFFECTIVE DATE means May 21, 1998. However, for any Corporate
Affiliate which becomes a Participating Company in the Plan after the first day
of the initial option period, if any, a subsequent Effective Date shall be
designated with respect to participation by its Qualifying Employees.
<PAGE>
EMPLOYEE means any person treated as an employee (including an officer
or a director who is also an employee) in the records of a Participating
Company; provided, however, that neither service as a director nor payment of a
directors' fee shall be sufficient to constitute employment for purposes of the
Plan.
ENTRY DATE means the date on which a Participant first joins the
option period in effect under the Plan.
PARTICIPANT means any Qualifying Employee of a Participating Company
who has enrolled and is actively participating in the Plan.
PARTICIPATING COMPANY means (i) Applied Digital Access - Canada, Inc.,
and (ii) if designated by the Board, the Company and any Corporate Affiliate.
QUALIFYING EMPLOYEE means any Employee who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per calendar year; provided, however, that neither of the
following may be a Qualifying Employee: (i) a person who owns (within the
meaning of Code Section 424(d)) or holds outstanding options or other rights to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or any of its Corporate
Affiliates, or (ii) a person whose participation in the Plan would require the
approval of the Company's stockholders under any applicable law, regulation or
rule, including, without limitation, the rules applicable to the listing of the
Company's securities on the Nasdaq National Market System.
QUARTER means a calendar quarter and (except for the first Quarter of
the initial option period or as otherwise designated by the Plan Administrator),
each Quarter shall begin on the first business day of the Quarter and shall end
on the last business day of such Quarter. The first Quarter of the initial
option period under this Plan shall commence on the Effective Date and shall end
on June 30, 1998.
REGULAR COMPENSATION means the basic earnings paid to a Participant by
Participating Companies plus (i) any pre-tax contributions made by the
Participant to any Code Section 401(k) salary deferral plan or any Code
Section 125 cafeteria benefit program (now existing or hereafter established),
(ii) commissions, and (iii) bonuses payable to pursuant to any formal bonus plan
which has been approved and adopted by the Board. Regular Compensation shall
not include (I) overtime payments, profit-sharing distributions and other
incentive-type payments or (II) contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf under any
employee benefit or welfare plan (now existing or hereafter established).
SERVICE means the period during which an individual remains a
Qualifying Employee and all periods of Service shall be measured from such
individual's most recent date of hire by the Company or such Corporate
Affiliate.
ADMINISTRATION
<PAGE>
The Plan shall be administered by the Board or a committee comprised
of two (2) or more non-employee Board members appointed from time to time by the
Board (the "Plan Administrator"). The Plan Administrator shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan.
OPTION PERIODS
Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive option periods during the term of the Plan until
the maximum number of shares of Common Stock available for issuance under the
Plan shall have been issued.
The initial option period will begin on the Effective Date and will
end on the last business day in June 1999. Subsequent option periods will
commence on or about July 1 of each year and will end on the next following
June 30.
Each Participant will have purchase rights as set forth in Article VII
for each option period, the purchase price for which shall be collected through
payroll deductions and which purchase rights shall be exercised in successive
installments each Quarter within the option period.
The acquisition of Common Stock through participation in the Plan for
any option period shall neither limit nor require the acquisition of Common
Stock by the Participant in any subsequent option period.
ELIGIBILITY AND PARTICIPATION
Each Qualifying Employee shall be eligible to participate in an option
period under the Plan in accordance with the following provisions:
- A Qualifying Employee with at least three (3) months of
Service on the Effective Date or the first day of any subsequent
option period may enter that option period on the Effective Date or
such first day, respectively, by enrolling in accordance with
Section V.C below.
- A Qualifying Employee who was not previously eligible to
enter an option period may enter that option period on the first day
of the Quarter next following the date such Qualifying Employee has at
least three (3) months of Service by enrolling in accordance with
Section V.C below.
A Qualifying Employee who does not enroll for an option period on the
first date such Qualifying Employee is permitted to enroll hereunder may not
subsequently enroll in that option period.
<PAGE>
To enroll in the Plan, a Qualifying Employee must complete the
enrollment forms prescribed by the Plan Administrator and file such forms with
the Plan Administrator (or its designate) on or before the date such Qualifying
Employee is first permitted to enter the Option Period.
The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Regular Compensation paid to the Participant during each
Quarter of the option period, up to maximum of fifteen percent (15%) of Regular
Compensation. The deduction rate so authorized shall continue in effect for the
remainder of the option period, except to the extent such rate is changed in
accordance with the following guidelines:
- The Participant may, at any time during a Quarter, reduce
the rate of payroll deduction. Such reduction shall become effective
as soon as possible after filing of the requisite reduction form with
the Plan Administrator (or its designate), but the Participant may not
effect more than one such reduction during the same Quarter.
- The Participant may, prior to the commencement of any new
Quarter within the option period, increase or decrease the rate of
payroll deduction for the new Quarterly by filing the appropriate form
with the Plan Administrator (or its designate). The new rate shall
become effective as of the first day of the next Quarter.
Payroll deductions will automatically cease upon the termination
of the Participant's purchase right in accordance with the applicable provisions
of Section VII below.
STOCK SUBJECT TO PLAN
The maximum number of shares of Common Stock which may be issued under
the Plan shall be 100,000 shares of Common Stock (subject to adjustment under
Section VI.B below).
In the event any change is made to the Company's outstanding Common
Stock by reason of any stock dividend, stock split, combination of shares or
other change affecting such outstanding Common Stock as a class without receipt
of consideration, then appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number shares issuable over the term
of the Plan, (ii) the class and maximum number of shares purchasable per
Participant during any one option period and (iii) the class and number of
shares and the price per share in effect under each purchase right at the time
outstanding under the Plan. Such adjustments shall be designed to preclude the
dilution or enlargement of rights and benefits under the Plan.
PURCHASE RIGHTS
<PAGE>
Each Participant in a particular option period shall have the right to
purchase shares of Common Stock in a series of successive quarterly installments
during such option period on the terms and conditions set forth below (the
"Purchase Rights"). Each Participant shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may require.
PURCHASE PRICE. The Purchase Rights shall be exercised at the
end of each Quarter at a purchase price equal to eighty-five percent (85% of the
LOWER of (i) the fair market value per share of the Common Stock on the
Participant's Entry Date or (ii) the fair market value per share of the Common
Stock on the last business day of the Quarter. However, for each Participant
whose Entry Date is other than the first day of the option period, the amount
determined under clause (i) shall not be less than the fair market value of the
Common Stock on the first day of such option period.
VALUATION. For purposes of determining the fair market value per
share of Common Stock on any relevant date, the following procedures shall be in
effect:
- If, as of any date, there is a public market for the Common
Stock, then the fair market value shall be the closing selling price
on that date, as officially quoted on the Nasdaq National Market
System (or such other national or regional securities exchange
constituting the primary market for the Common Stock), or if there is
no quoted selling price for such date, then the closing selling price
on the next preceding day for which there does exist such a quotation.
- If there is the no public market for the Common Stock, then
the fair market value of the Common Stock on such date shall be
determined by the Plan Administrator after taken into account such
factors as the Plan Administrator deems appropriate.
NUMBER OF PURCHASABLE SHARES. The number of shares purchasable
by a Participant each Quarter shall be the number of whole shares obtained by
dividing the amount in Participant's Account at the end of such Quarter by the
purchase price in effect for the Quarter.
Notwithstanding the above, no Participant shall have the right to
purchase shares of Common Stock to the extent that, immediately after the grant,
such Participant would own (within the meaning of Code Section 424(d)) or hold
outstanding options or other rights to purchase, stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or any of its Corporate Affiliates.
PAYMENT. Payment for the Common Stock purchased under the Plan
shall be effected by means of the Participant's authorized payroll deductions.
Such deductions shall begin on the first pay day coincident with or immediately
following the Participant's Entry Date into the option period and shall (unless
sooner terminated by the Participant) continue through the pay day ending with
or immediately prior to the last day of the option period. The amounts so
collected shall be credited to the Participant's Account under the Plan but no
interest shall be
<PAGE>
paid on the balance from time to time outstanding in such Account. The amounts
collected from a Participant may be commingled with the general assets of the
Company and may be used for general corporate purposes.
TERMINATION OF PURCHASE RIGHT. The following provisions shall
govern the termination of outstanding purchase rights:
A Participant may, at any time prior to the last five (5)
business days of the Quarter, terminate his/her outstanding purchase right under
the Plan by filing the prescribed notification form with the Plan Administrator
(or its designate). No further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right, and any payroll
deductions collected for the current Quarter shall at the Participant's
election, be immediately refunded or held for the purchase of shares on the end
of the Quarter. If no such election is made, then such funds shall be refunded
as soon as possible after the close of such Quarter.
After the termination of purchase rights for an option period,
the Participant may not subsequently rejoin that option period. In order to
resume participation in any subsequent option period, such individual must
re-enroll in the Plan for that option period.
If a Participant ceases to be a Qualifying Employee for any
reason whatsoever during an option period then all payroll deductions shall
terminate and all funds held in the Participant's Account will be promptly paid
to the Participant or the Participant's legal representative. No further
purchases of shares hereunder shall occur after the Participant has ceased to be
a Qualifying Employee.
STOCK PURCHASE. Subject to the limitations set forth herein,
funds held in a Participant's Account at the end of a Quarter (and which are not
required to be refunded hereunder) shall be applied to the purchase of whole
shares of Common Stock for the Participant on the last business day of the
Quarter at the purchase price in effect for such Quarter. Any payroll
deductions not applied to such purchase because they are not sufficient to
purchase a whole share shall be held for the purchase of Common Stock in the
next Quarter. Any payroll deductions not applied to the purchase of Common
Stock for any other reason shall be promptly refunded to the Participant.
PRORATION OF PURCHASE RIGHTS. If the total number of shares of
Common Stock which would otherwise be purchased hereunder on any date exceed the
number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares to
Participants on a uniform and nondiscriminatory basis.
RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder
rights with respect to the shares subject to his/her outstanding purchase right
until the shares are actually purchased on the Participant's behalf in
accordance with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase.
<PAGE>
A Participant shall be entitled to receive, as soon as
practicable after purchase hereunder, a stock certificate for the number of
shares purchased for the Participant. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
ASSIGNABILITY. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.
CHANGE IN OWNERSHIP. Should the Company or its stockholders
enter into an agreement to dispose of all or substantially all of the assets or
outstanding capital stock of the Company by means of:
(i) a sale, merger or other reorganization in which the Company
will not be the surviving corporation (other than a reorganization effected
primarily to change the State in which the Company is incorporated), or
(ii) a reverse merger in which the Company is the surviving
corporation but in which more than 50% of the Company's outstanding voting stock
is transferred to holders different from those who hold the stock immediately
prior to the reverse merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the consummation of such sale,
merger, reorganization or reverse merger by applying the amounts in each
Participant's Account to the purchase of whole shares of Common Stock at
eighty-five percent (85%) of the LOWER of (i) the fair market value of the
Common Stock on the Participant's Entry Date into the option period in which
such transaction occurs or (ii) the fair market value of the Common Stock
immediately prior to the consummation of such transaction. However, the
applicable share limitations of Articles VII and VIII shall continue to apply to
any such purchase, and the clause (i) amount above shall not, for any
Participant whose Entry Date for the option period is other than the start date
of such option period, be less than the fair market value of the Common Stock on
such start date.
The Company shall use its best efforts to provide at least
ten (10) days advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.
ACCRUAL LIMITATIONS
No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (I) rights to purchase Common Stock
accrued under any other purchase right outstanding under this Plan and
(II) similar rights accrued under other employee stock purchase
<PAGE>
plans (within the meaning of Section 423 of the Code) of the Company or its
Corporate Affiliates, would otherwise permit such Participant to purchase more
than $25,000 worth of stock of the Company or any Corporate Affiliate
(determined on the basis of the fair market value of such stock on the date or
dates such rights are granted to the Participant) for each calendar year such
rights are at any time outstanding.
For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:
The right to acquire Common Stock under each such purchase right
shall accrue in a series of successive quarterly installments as and when the
purchase right first becomes exercisable for each quarterly installment on the
last business day of each Quarter for which the right remains outstanding.
No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the same
calendar year the right to acquire $25,000 worth of Common Stock (determined on
the basis of the fair market value on the date or dates of grant) pursuant to
one or more purchase rights held by the Participant during such calendar year.
If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Quarter, then the payroll
deductions which the Participant made during that Quarter with respect to such
purchase right shall be promptly refunded.
In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.
STATUS OF PLAN UNDER FEDERAL TAX LAWS
The Plan is NOT designed to qualify as an employee stock purchase plan
under Code Section 423.
AMENDMENT AND TERMINATION
The Board may alter, amend, suspend or discontinue the Plan following
the close of any Quarter.
The Company shall have the right, exercisable in the sole discretion
of the Plan Administrator, to terminate all outstanding purchase rights under
the Plan immediately following the close of any Quarter. Should the Company
elect to exercise such right, then the Plan shall terminate in its entirety. No
further purchase rights shall thereafter be granted or exercised, and no further
payroll deductions shall thereafter be collected, under the Plan.
GENERAL PROVISIONS
<PAGE>
The issuance of shares under the Plan shall be subject to compliance
with all applicable requirements of federal, state and foreign law with respect
to such securities. A Purchase Right may not be exercised if the issuance of
shares upon such exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any securities exchange or market system upon which the Common
Stock may then be listed. In addition, no Purchase Right may be exercised
unless (a) a registration statement under the Act shall at the time of exercise
of the Purchase Right be in effect with respect to the shares issuable upon
exercise of the Purchase Right, or (b) in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Purchase Right may be issued
in accordance with the terms of an applicable exemption from the registration
requirements of the Act. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares under the Plan shall relieve the Company of any liability in respect of
the failure to issue or sell such shares as to which such requisite authority
shall not have been obtained. As a condition to the exercise of a Purchase
Right, the Company may require the Participant to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation, and to make any representation or warranty with respect
thereto as may be requested by the Company.
The Plan shall continue in effect until the earlier of its termination
by the Plan Administrator or the date on which all of the shares of Common Stock
available for issuance under the Plan have been issued.
All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.
Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any Corporate Affiliate for any
period, and such person's employment may be terminated at any time, with or
without cause.
<PAGE>
Form of Stock Purchase Agreement
APPLIED DIGITAL ACCESS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN FOR ADA CANADA
STOCK PURCHASE AGREEMENT
1. I HEREBY ELECT TO PARTICIPATE IN THE APPLIED DIGITAL ACCESS, INC. 1998
EMPLOYEE STOCK PURCHASE PLAN FOR ADA CANADA (THE "PLAN") FOR THE OPTION
PERIOD SPECIFIED BELOW, AND I ACCORDINGLY SUBSCRIBE TO PURCHASE SHARES OF
APPLIED DIGITAL ACCESS, INC. COMMON STOCK AT THE END OF EACH OF MY
QUARTERLY PERIODS OF PARTICIPATION WITHIN SUCH OPTION PERIOD.
2. BY SEPARATE FORM, I HAVE AUTHORIZED PAYROLL DEDUCTIONS FROM EACH OF MY
PAYCHECKS DURING MY PERIOD OF PARTICIPATION IN THE OPTION PERIOD. SUCH
PAYROLL DEDUCTIONS WILL BE ACCUMULATED FOR THE PURCHASE OF SHARES OF
APPLIED DIGITAL ACCESS, INC. COMMON STOCK ON THE LAST BUSINESS DAY OF EACH
QUARTERLY PERIOD OF PARTICIPATION. THE PURCHASE PRICE PER SHARE WILL BE
THE LOWER OF (i) 85% OF THE MARKET PRICE ON THE START DATE OF THE QUARTERLY
PERIOD OF PARTICIPATION IN WHICH I FIRST ENTER THE OPTION PERIOD OR
(ii) 85% OF THE MARKET PRICE ON EACH QUARTERLY PURCHASE DATE. HOWEVER, THE
CLAUSE (i) AMOUNT WILL IN NO EVENT BE LESS THAN 85% OF THE MARKET PRICE ON
THE START DATE OF THE OPTION PERIOD.
3. THIS ENROLLMENT WILL BE EFFECTIVE FOR THE DURATION OF THE OPTION PERIOD
SPECIFIED BELOW, AND SHARES WILL AUTOMATICALLY BE PURCHASED ON MY BEHALF AT
THE END OF EACH QUARTERLY PERIOD OF PARTICIPATION, UNLESS I WITHDRAW FROM
THE PLAN OR MY EMPLOYMENT TERMINATES.
4. MY RATE OF PAYROLL DEDUCTION WILL AUTOMATICALLY CONTINUE IN EFFECT FOR EACH
OF MY QUARTERLY PERIODS OF PARTICIPATION WITHIN THE OPTION PERIOD, UNLESS I
CHANGE SUCH RATE OR OTHERWISE WITHDRAW FROM THE PLAN OR MY EMPLOYMENT
TERMINATES.
5. I CAN WITHDRAW FROM THE PLAN AT ANY TIME AND ELECT EITHER TO HAVE THE
COMPANY REFUND ALL MY PAYROLL DEDUCTIONS FOR THE QUARTERLY PERIOD OF
PARTICIPATION IN WHICH I WITHDRAW OR TO HAVE SUCH PAYROLL DEDUCTIONS
APPLIED TO THE PURCHASE OF APPLIED DIGITAL ACCESS, INC. COMMON STOCK AT THE
END OF SUCH PERIOD. HOWEVER, I MAY NOT REJOIN THE PLAN FOR THAT PARTICULAR
OPTION PERIOD AT ANY LATER DATE. UPON MY TERMINATION OF EMPLOYMENT OR
CHANGE TO INELIGIBLE EMPLOYEE STATUS, PAYROLL DEDUCTIONS WILL AUTOMATICALLY
CEASE ON MY BEHALF AND THE COMPANY WILL REFUND MY PAYROLL DEDUCTIONS TO
DATE IN THE QUARTERLY PERIOD OF PARTICIPATION IN WHICH SUCH TERMINATION OR
CHANGE OCCURS.
6. I HAVE A COPY OF, AND AM FAMILIAR WITH, THE OFFICIAL PLAN PROSPECTUS
SUMMARIZING THE OPERATION OF THE PLAN. A COMPLETE COPY OF THE ACTUAL PLAN
DOCUMENT IS ATTACHED AS EXHIBIT A TO THE PROSPECTUS.
7. I AM TO RECEIVE A STOCK CERTIFICATE FOR THE SHARES PURCHASED ON MY BEHALF
AFTER EACH QUARTERLY PURCHASE DATE. THE CERTIFICATE WILL BE ISSUED AS
INDICATED ON MY ENROLLMENT/CHANGE FORM.
8. THE COMPANY HAS THE RIGHT TO AMEND OR TERMINATE THE PLAN AT ANY TIME, WITH
SUCH AMENDMENT OR TERMINATION TO BECOME EFFECTIVE IMMEDIATELY FOLLOWING THE
EXERCISE OF OUTSTANDING PURCHASE RIGHTS AT THE END OF ANY CURRENT QUARTERLY
PERIOD OF PARTICIPATION. SHOULD THE COMPANY ELECT TO TERMINATE THE PLAN, I
WILL HAVE NO FURTHER RIGHTS TO PURCHASE SHARES OF APPLIED DIGITAL ACCESS,
INC. COMMON STOCK PURSUANT TO THIS AGREEMENT.
9. I AM FAMILIAR WITH THE PLAN RESTRICTION PROHIBITING ANY PARTICIPANT FROM
PURCHASING MORE THAN $25,000 WORTH OF COMMON STOCK PER CALENDAR YEAR.
10. I HAVE READ THIS AGREEMENT AND THE PLAN. I HEREBY AGREE TO BE BOUND BY THE
TERMS OF BOTH THIS AGREEMENT AND THE PLAN. THE EFFECTIVENESS OF THIS
AGREEMENT IS DEPENDENT UPON MY ELIGIBILITY TO PARTICIPATE IN THE PLAN.
DATE
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SIGNATURE OF EMPLOYEE
------------------------------------
PRINTED NAME
<PAGE>
DURATION OF OPTION PERIOD:
FROM: TO
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START DATE OF MY QUARTERLY SUBSEQUENT QUARTERLY PERIODS
PERIOD OF PARTICIPATION: OF PARTICIPATION:
, 199 FROM: TO
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FROM: TO
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FROM: TO
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