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.
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
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.
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
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
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.
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
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
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.