-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AvUSMsKy0U0GisPS5vhoN0oRsf4WKbot1EgXUlFqwnu5VeDQ6KiuLi0TSvyRbNW4 iz3q+nUONyJB52aDXGkNHQ== 0001047469-98-022065.txt : 19980529 0001047469-98-022065.hdr.sgml : 19980529 ACCESSION NUMBER: 0001047469-98-022065 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19980528 EFFECTIVENESS DATE: 19980528 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPLIED DIGITAL ACCESS INC CENTRAL INDEX KEY: 0000919048 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 680132939 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-53795 FILM NUMBER: 98633093 BUSINESS ADDRESS: STREET 1: 9855 SCRANTON RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6196232200 S-8 1 S-8 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
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 ---------- ------------- -------------- ----------- -------------- 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
- ------------------------- (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. 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 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
Exhibit Number Exhibit -------- ------- 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
* 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 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 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 EXHIBIT INDEX
Exhibit Number Exhibit -------- ------- 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
* 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. EX-5 2 EXHIBIT 5 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 EX-23.2 3 EXHIBIT 23.2 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 EX-99.1 4 EXHIBIT 99.1 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. EX-99.2 5 EXHIBIT 99.2 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 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. 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. 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 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 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 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. EX-99.3 6 EXHIBIT 99.3 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 ------------------------------------- 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 --------------- ------------------ EX-99.4 7 EXHIBIT 99.4 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. EX-99.5 8 EXHIBIT 99.5 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 ----------------------- ------------------------------------ SIGNATURE OF EMPLOYEE ------------------------------------ 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 -------------- ------------- -----END PRIVACY-ENHANCED MESSAGE-----