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Exhibit 99.6
1996 Non-qualified Stock Option Plan
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APPLIED DIGITAL ACCESS, INC.
1996 NON-QUALIFIED STOCK OPTION PLAN
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
This 1996 Non-qualified Stock Option Plan ("Plan") is intended
to promote the interests of Applied Digital Access, Inc., a California
corporation (the "Corporation"), by providing (i) key employees of the
Corporation (or its parent or subsidiary corporations) other than officers who
are responsible for the growth and financial success of the Corporation (or its
parent or subsidiary corporations), and (ii) consultants and other independent
contractors who provide valuable services to the Corporation (or its parent or
subsidiary corporations) with the opportunity to acquire or increase their
proprietary interest in the Corporation as an incentive for them to remain in
the service of the Corporation (or its parent or subsidiary corporations).
II. GENERAL
A. The Plan shall become effective on May 23, 1996, the date
on which this Plan was approved by the Board of Directors of the Corporation.
Such date is hereby designated as the "Effective Date" of this Plan.
B. This Plan shall not supersede or replace any prior plan of
the Corporation.
C. For purposes of this Plan, the following provisions shall
be applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a PARENT of the Corporation, provided each such
corporation in the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
D. Neither the grant of options nor the issuance of any shares
pursuant to this Plan shall in any way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
E. The holder of an option grant under this Plan shall have
none of the rights of a shareholder with respect to any shares subject to such
option until such individual shall have exercised the option, paid the exercise
price for the purchased shares and been issued a stock certificate for such
shares.
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III. ADMINISTRATION OF THE PLAN
A. This Plan shall be administered by a committee
("Committee") of two (2) or more non-employee Board members who assume full
responsibility for the administration of the Plan (the "Plan Administrator").
Members of the Committee shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time.
B. The Plan Administrator shall have full power and authority
(subject to the express provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper administration of the Plan
and to make such determinations under, and issue such interpretations of, the
Plan and any outstanding option grants or stock issuances as it may deem
necessary or advisable. Decisions of the Plan Administrator shall be final and
binding on all parties who have an interest in the Plan or any outstanding
option or stock issuance.
IV. OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to receive option grants pursuant to
the Plan ("Optionee") are as follows:
(i) key employees of the Corporation (or its parent or
subsidiary corporations) who render services which contribute to the
growth and financial success of the Corporation (or its parent or
subsidiary corporations) other than officers of the corporation;
(ii) those consultants (other than Board members) or
other independent contractors who provide valuable services to the
Corporation (or its parent or subsidiary corporations).
B. The Plan Administrator shall have full authority to
determine which eligible individuals are to receive option grants, the number of
shares to be covered by each such grant, the time or times at which and the
circumstances under which each granted option is to become exercisable and the
maximum term for which the option may remain outstanding.
V. STOCK SUBJECT TO THE PLAN
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 400,000 shares, subject to adjustment from
time to time in accordance with the provisions of this Section V.
B. Should one or more outstanding options under this Plan
expire or terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant provisions of
Section III of Article Two of the Plan), then the shares subject to the portion
of each option not so exercised shall be available for subsequent option grant
or share issuance under this Plan. Shares subject to any option or portion
thereof surrendered or cancelled in accordance with Section I.D of Article
Three, and all shares issued under the Plan, whether or not such shares are
subsequently repurchased by the Corporation, shall reduce on a share-for-share
basis the number of shares of Common Stock available for subsequent option grant
under the Plan. In addition, should the exercise price of an outstanding option
under the Plan be paid with shares of Common Stock or should shares of Common
Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an outstanding option under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised.
C. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares, conversion
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or other change affecting the outstanding Common Stock, or any class of Common
Stock as a class, without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the number and/or class of shares
issuable under the Plan, (ii) the number and/or class of shares and price per
share in effect under each outstanding option under this Plan. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
D. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or such other restrictions as
determined by the Plan Administrator.
ARTICLE TWO
OPTION GRANTS
I. TERMS AND CONDITIONS OF OPTIONS
Options granted to Employees of the Corporation or its parent
or subsidiary corporations pursuant to this Plan shall be authorized by action
of the Plan Administrator and may, at the Plan Administrator's discretion. Each
granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; provided, however, that each such instrument
shall comply with the terms and conditions specified below.
A. Option Price.
(i) In General. The option price per share shall be
fixed by the Plan Administrator. In no event, however, shall the price for any
share be less than eighty-five percent (85%) of the fair market value of that
share on the date of the option grant.
(ii) How Payable. The option price shall become
immediately due upon exercise of the option and, subject to the provisions of
Article Three, Section III and the instrument evidencing the grant, shall be
payable in one of the following alternative forms specified below:
- full payment in cash or check drawn to the
Corporation's order;
- full payment in shares of Common Stock held for
at least six (6) months and valued at fair market value on the Exercise
Date (as such term is defined below);
- full payment in a combination of shares of
Common Stock held for at least six (6) months and valued at fair market
value on the Exercise Date and cash or check; or
- full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Corporation in
connection with such purchase and (II) shall provide written directives
to the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale
transaction.
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For purposes of this subparagraph (ii), the Exercise Date
shall be the date on which written notice of the option exercise is delivered to
the Corporation. Except to the extent the sale and remittance procedure is
utilized in connection with the exercise of the option, payment of the option
price for the purchased shares must accompany such notice.
B. Term and Exercise of Options. Each option granted under
this Article Two shall have such term as may be fixed by the Plan Administrator,
be exercisable at such time or times and during such period, and on such
conditions, as is determined by the Plan Administrator and set forth in the
stock option agreement evidencing the grant. No such option, however, shall have
a maximum term in excess of ten (10) years from the grant date. Unless otherwise
permitted by the Plan Administrator, during the lifetime of the Optionee, the
option shall be exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution following the Optionee's death.
C. Termination of Service.
(i) Except to the extent otherwise provided pursuant
to Section III of this Article Two, the following provisions shall govern the
exercise period applicable to any outstanding options under this Article Two
which are held by the Optionee at the time of his or her cessation of Service or
death.
- Should an Optionee's Service terminate for any
reason (including death or permanent disability as defined in Section
22(e)(3) of the Internal Revenue Code) while the holder of one or more
outstanding options under the Plan, then none of those options shall
(except to the extent otherwise provided pursuant to Section V of this
Article Two) remain exercisable beyond the later of (i) the limited
post-Service period designated by the Plan Administrator at the time of
the option grant and set forth in the option agreement; or (ii) (A)
ninety (90) days from the date of termination if termination was caused
by other than the death or disability (as defined in Section 22(e)(3)
of the Internal Revenue Code) of such Optionee or (B) twelve (12)
months from the date of termination if termination was caused by death
or disability of Optionee.
- Any option granted to an Optionee under this
Article Two and exercisable in whole or in part on the date of the
Optionee's death may be subsequently exercised, by the personal
representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution, provided and only
if such exercise occurs prior to the earlier of (i) the first
anniversary of the date of the Optionee's death or (ii) the specified
expiration date of the option term. Upon the occurrence of the earlier
event, the option shall terminate and cease to be exercisable.
- Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option
term.
- During the limited post-Service period of
exercisability, the option may not be exercised for more than the
number of shares for which the option is exercisable on the date the
Optionee's Service terminates. Upon the expiration of such limited
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be exercisable.
(ii) The Plan Administrator shall have complete
discretion, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to permit one or more options held by the
Optionee under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (i) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the
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Optionee's cessation of Service but also with respect to one or more subsequent
installments of purchasable shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred.
(iii) For purposes of the foregoing provisions of
this Section I.C of Article Two (and for all other purposes under the
Plan):
- The Optionee shall (except to the extent otherwise
specifically provided in the applicable option or issuance agreement)
be deemed to remain in the SERVICE of the Corporation for so long as
such individual renders services on a periodic basis to the Corporation
(or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the Board or an independent
consultant or advisor.
- The Optionee shall be considered to be an EMPLOYEE
for so long as he or she remains in the employ of the Corporation or
one or more parent or subsidiary corporations, subject to the control
and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
II. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under this Article Two and to
grant in substitution new options under this Article Two covering the same or
different numbers of shares of Common Stock but having an option price for each
share which is not less than eighty-five percent (85%) of the fair market value
of such share on the new grant date.
III. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to
extend the period of time for which any option granted under this Article Two is
to remain exercisable following the Optionee's cessation of Service or death
from the limited period in effect under Section I.C.(i) of this Article Two to
such greater period of time as the Plan Administrator shall deem appropriate;
provided, however, that in no event shall such option be exercisable after the
specified expiration date of the option term.
ARTICLE THREE
MISCELLANEOUS
I. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each outstanding option which is assumed in connection with
a Corporate Transaction or is otherwise to continue in effect following a
Corporate Transaction (as defined below) shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply and pertain to the number
and class of securities which would be issuable, in consummation of such
Corporate Transaction, to an actual holder of the same number of shares of
Common Stock as are subject to such option immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. Appropriate adjustments shall also be made to
the class and number of securities available for issuance under the Plan
following the consummation of such Corporate Transaction.
B. The Plan Administrator may, in its discretion, provide
that, in the event of any Corporate Transaction (as defined below), the
exercisability of each option grant at the time outstanding under this Plan
which is not continued under paragraph A hereof will automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable
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with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for all or any portion of such shares. Upon
the consummation of the Corporate Transaction, all option grants under this Plan
shall terminate and cease to be outstanding.
C. A Corporate Transaction means:
(i) a merger or consolidation in which the
Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Corporation's
incorporation,
(ii) the sale, transfer or disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is
the surviving entity but in which the holders of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities (as measured immediately prior to
such merger) transfer ownership of those securities to person or
persons not otherwise part of the transferor group.
D. Except as otherwise provided by the Plan Administrator in
agreements governing the grant of discretionary option grants or stock
issuances, in connection with any Change in Control of the Corporation, the
exercisability of each option grant at the time outstanding under this Plan
shall automatically accelerate so that each such option shall, immediately prior
to the specified effective date for the Change in Control, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. Similarly, all unvested shares issued under the Plan shall automatically
vest immediately prior to the effective date of the Change in Control. For
purposes of this Article Five, a Change in Control shall be deemed to occur in
the event:
(i) any person or related group of persons
(other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the
Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's shareholders which the Board does not
recommend such shareholders to accept; or
(ii) there is a change in the composition of the Board
over a period of twenty-four (24) consecutive months or less such that
a majority of the Board members (rounded up to the next whole number)
cease, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or
nomination was approved by the Board.
II. CERTAIN DEFINITIONS
A. Fair Market Value. The fair market value of a share of
Common Stock shall be determined in accordance with the following provisions:
- If shares of the Class of Common Stock to be valued are
not at the time listed or admitted to trading on any national stock
exchange but is traded on the NASDAQ National Market System, the fair
market value shall be the closing selling price per share of a share of
that class on the date in question, as such price is reported by the
National
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Association of Securities Dealers through the NASDAQ National Market
System or any successor system. If there is no reported closing selling
price for the series on the date in question, then the closing selling
price on the last preceding date for which such quotation exists shall
be determinative of fair market value.
- If shares of the class of common stock to be valued are
at the time listed or admitted to trading on any national stock
exchange, then the fair market value of a share of that class shall be
the closing selling price per share on the date in question on the
stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
reported sale of a share of the class on such exchange on the date in
question, then the fair market value shall be the closing selling price
on the exchange on the last preceding date for which such quotation
exists.
- If shares of the series of common stock to be valued at
the time are neither listed nor admitted to trading on any stock
exchange nor traded on the NASDAQ National Market System, then the fair
market value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem
appropriate, which may include independent professional appraisals, in
a manner consistent with the provisions of Section 260.140.50 of the
Rules of the California Corporations Commissioner.
B. Hostile Take-Over. A HOSTILE TAKE-OVER shall be deemed to
occur in the event (i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's shareholders which the Board does not recommend such
shareholders to accept.
C. Take-Over Price. The Take-Over Price per share shall be
deemed to be equal to the greater of (a) the fair market value per share on the
option surrender date, as determined pursuant to the valuation provisions of
Section II.A of this Article Five, or (b) the highest reported price per share
paid by the tender offeror in effecting such Hostile Take-Over.
III. LOANS OR GUARANTEE OF LOANS
A. The Plan Administrator may, in its discretion, assist any
Optionee or Participant (including an Optionee or Participant who is an officer
of the Corporation) in the exercise of one or more options granted to such
Optionee under the Plan, including the satisfaction of any Federal and State
income and employment tax obligations arising therefrom by (i) authorizing the
extension of a loan from the Corporation to such Optionee or Participant or (ii)
permitting the Optionee or Participant to pay the option price or purchase price
for the purchased Common Stock in installments over a period of years. The terms
of any loan or installment method of payment (including the interest rate and
terms of repayment) will be upon such terms as the Plan Administrator specifies
in the applicable option or issuance agreement or otherwise deems appropriate
under the circumstances. Loans and installment payments may be granted with or
without security or collateral (other than to individuals who are consultants or
independent contractors, in which event the loan must be adequately secured by
collateral other than the purchased shares). However, the maximum credit
available to the Optionee or Participant may not exceed the option or purchase
price of the acquired shares (less the par value of such shares) plus any
Federal and State income and employment tax liability incurred by the Optionee
or Participant in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under this financial assistance
program shall be subject to forgiveness by the Corporation in whole or in part
upon such terms and conditions as the Plan Administrator may deem appropriate.
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IV. TAX WITHHOLDING
A. The Company's obligation to deliver shares upon the
exercise of stock options shall be subject to the satisfaction of all applicable
Federal, State and local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and upon such
terms and conditions as it may deem appropriate, provide any or all holders of
outstanding option grants under the Plan with the election to have the Company
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such options, a portion of such shares with an aggregate fair market value
equal to the designated percentage (up to 100% as specified by the optionee) of
the Federal and State income taxes ("Taxes") incurred in connection with the
acquisition of such shares. In lieu of such direct withholding, one or more
option holders may also be granted the right to deliver shares of Common Stock
to the Company in satisfaction of such Taxes. The withheld or delivered shares
shall be valued at the Fair Market Value on the applicable determination date
for such Taxes.
V. AMENDMENT OF THE PLAN AND AWARDS
Except as herein provided, the Board has complete and
exclusive power and authority to amend or modify the Plan (or any component
thereof) in any or all respects whatsoever. No amendment or modification may
adversely affect the rights and obligations of an Optionee with respect to
options at the time outstanding under the Plan, nor adversely affect the rights
of any Participant with respect to Common Stock issued under the Plan prior to
such action, unless the Optionee or Participant consents to such amendment. In
addition, the Board may not, without the approval of the Corporation's
shareholders, amend the Plan to (i) materially increase the maximum number of
shares issuable under the Plan (except for permissible adjustments under Article
One, Section VI) or (ii) materially modify the eligibility requirements for
participation in the Plan or materially increase the benefits accruing to
Optionees or Participants under the Plan.
VI. EFFECTIVE DATE AND TERM OF PLAN
This Plan shall become effective as of the Effective Date. The
Plan shall terminate upon the earlier of (i) the tenth anniversary of the
Effective Date or (ii) the date on which all shares available for issuance under
the Plan shall have been issued or cancelled pursuant to the exercise, surrender
or cash-out of the options granted under the Plan. If the date of termination is
determined under clause (i) above, then all option grants and unvested stock
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
grants or issuances.
VII. USE OF PROCEEDS
Cash proceeds received by the Company from the sale of shares
under the Plan shall be used for general corporate purposes.
VIII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it, and the Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under this Plan unless and until there shall have been compliance
with all applicable requirements of Federal and State securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which stock of the same class is then
listed.
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IX. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the right
to remain in the employ or service of the Corporation (or any parent or
subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.
X. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any Optionee or
Participant.
B. The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.