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Exhibit 99.1
Amended and Restated 1996 Non-qualified Stock Option Plan
APPLIED DIGITAL ACCESS, INC.
AMENDED AND RESTATED
1996 NON-QUALIFIED STOCK OPTION PLAN
ARTICLE ONE
GENERAL
PURPOSE OF THE PLAN
This Amended and Restated 1996 Non-qualified Stock Option Plan ("Plan") is
intended to promote the interests of Applied Digital Access, Inc., a Delaware
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).
GENERAL
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.
This Plan shall not supersede or replace any prior plan of the Corporation.
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
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classes of stock in one of the other corporations in such chain.
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.
ADMINISTRATION OF THE PLAN
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.
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.
OPTION GRANTS AND STOCK ISSUANCES
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).
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.
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STOCK SUBJECT TO THE PLAN
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 950,000 shares, subject to adjustment from time to time in
accordance with the provisions of this Section V.
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.
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 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.
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
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.
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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.
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.
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.
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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 (1)
above, not only with respect to the number of shares for which each
such option is exercisable at the time of the 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.
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(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.
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.
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
CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
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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.
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 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.
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.
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
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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.
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CERTAIN DEFINITIONS
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 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.
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.
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.
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LOANS OR GUARANTEE OF LOANS
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.
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.
TAX WITHHOLDING
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.
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.
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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.
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.
USE OF PROCEEDS
Cash proceeds received by the Company from the sale of shares under the
Plan shall be used for general corporate purposes.
REGULATORY APPROVALS
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.
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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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.
MISCELLANEOUS PROVISIONS
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.
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.
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