-----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, E8DhT1dSp66Y4btoJR7Q0DxYWqucgqPqN/J4jkGyzdQeR9YUESzDkG6GDGIOPdPl mJ7yWAulfv5WBlNtLU16fQ== 0000891618-98-005207.txt : 19981204 0000891618-98-005207.hdr.sgml : 19981204 ACCESSION NUMBER: 0000891618-98-005207 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19981203 EFFECTIVENESS DATE: 19981203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CISCO SYSTEMS INC CENTRAL INDEX KEY: 0000858877 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 770059951 STATE OF INCORPORATION: CA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-68335 FILM NUMBER: 98763725 BUSINESS ADDRESS: STREET 1: 170 WEST TASMAN DRIVE CITY: SAN JOSE STATE: CA ZIP: 95134-1706 BUSINESS PHONE: 4085264000 MAIL ADDRESS: STREET 1: 225 WEST TASMAN DRIVE CITY: SAN JOSE STATE: CA ZIP: 95134-1706 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on December 3, 1998 Registration No. 333-____________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 CISCO SYSTEMS, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 77-0059951 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706 (Address of principal executive offices) (Zip Code) SUMMA FOUR, INC. 1995 STOCK OPTION PLAN 1993 STOCK INCENTIVE PLAN INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992 1993 DIRECTOR STOCK OPTION PLAN, AS AMENDED (Full title of the Plans) JOHN T. CHAMBERS PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR CISCO SYSTEMS, INC. 170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706 (Name and address of agent for service) (408) 526-4000 (Telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
======================================================================================================= Proposed Proposed Title of Maximum Maximum Securities Amount Offering Aggregate Amount of to be to be Price Offering Registration Registered Registered(1) per Share(2) Price(2) Fee ---------- ------------- ------------ --------- ------------ 1995 STOCK OPTION PLAN Common Stock 126,672 shares $34.53 $4,373,984.16 $1,215.97 1993 STOCK INCENTIVE PLAN Common Stock 60,424 shares $43.68 $2,639,320.32 $ 733.73 INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992 32,538 shares $38.21 $1,243,276.98 $ 345.63 Common Stock 1993 DIRECTOR STOCK OPTION PLAN, AS AMENDED Common Stock 9,754 shares $65.55 $ 639,374.70 $ 177.75 Aggregate Registration Fee $2,473.08 =======================================================================================================
(1) This Registration Statement shall also cover any additional shares of Registrant's Common Stock which become issuable under the Summa Four, Inc. 1995 Stock Option Plan, the Summa Four, Inc. 1993 Stock Incentive Plan, the Incentive Stock Option Plan of August 1, 1992 and the Summa Four, Inc. 1993 Director Stock Option Plan, As Amended by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the Registrant's receipt of consideration which results in an increase in the number of the Registrant's outstanding shares of Common Stock. (2) Calculated solely for purposes of this offering under Rule 457(h) of the Securities Act of 1933, as amended, on the basis of the weighted average exercise price of the outstanding options. 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference Cisco Systems, Inc. (the "Registrant") hereby incorporates by reference into this Registration Statement the following documents previously filed with the Securities and Exchange Commission (the "Commission"): (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended July 25, 1998 filed with the Commission on September 25, 1998, pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "1934 Act"). (b) The Registrant's Current Reports on Form 8-K filed with the Commission on October 13, 1998, November 20, 1998 (for period date November 2, 1998) and November 20, 1998 (for period date November 4, 1998). (c) The Registrant's Registration Statement No. 000-18225 on Form 8-A filed with Commission on January 11, 1990, together with Amendment No.1 on Form 8-A/A filed with the Commission on February 15, 1990, and including any other amendments or reports filed for the purpose of updating such description, in which there is described the terms, rights and provisions applicable to the Registrant's Common Stock. (d) The Registrant's Registration Statement No. 000-18225 on Form 8-A filed with the Commission on June 11, 1998, including any amendments or reports filed for the purpose of updating such description, in which there is described the terms, rights and provisions applicable to the Registrant's Preferred Stock Purchase Rights. All reports and definitive proxy or information statements filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which de-registers 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. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any subsequently filed document which also is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. 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 317 of the California Corporations Code authorizes a court to award, or a corporation's Board of Directors to grant, indemnity to directors and officers in terms sufficiently broad to permit indemnification (including reimbursement of expenses incurred) under certain circumstances for liabilities arising under the Securities Act of 1933, as amended, (the "1933 Act"). The Registrant's Restated Articles of Incorporation, as amended, and Amended and Restated Bylaws provide for indemnification of its directors, officers, employees and other agents to the maximum extent permitted by the California Corporations Code. In addition, the Registrant has entered into Indemnification Agreements with each of its directors and officers. II-1 3 Item 7. Exemption from Registration Claimed Not Applicable. Item 8. Exhibits
Exhibit Number Exhibit - -------------- ------- 4 Instruments Defining the Rights of Stockholders. Reference is made to Registrant's Registration Statements No. 000-18225 on Form 8-A, together with the amendments and exhibits thereto, which are incorporated herein by reference pursuant to Items 3(c) and 3(d). 5 Opinion and consent of Brobeck, Phleger & Harrison LLP. 23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants. 23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5. 24 Power of Attorney. Reference is made to page II-4 of this Registration Statement. 99.1 Summa Four, Inc. 1995 Stock Option Plan. 99.2 Form of 1995 Stock Option Plan -- Incentive Stock Option Agreement. 99.3 Summa Four, Inc. 1993 Stock Incentive Plan. 99.4 Form of 1993 Stock Incentive Plan -- Incentive Stock Option Agreement. 99.5 Form of 1993 Stock Incentive Plan -- Non-Statutory Stock Option Agreement. 99.6 Incentive Stock Option Plan of August 1, 1992. 99.7 Form of Incentive Stock Option Plan of August 1, 1992 -- Employee Option Agreement. 99.8 Form of Incentive Stock Option Plan of August 1, 1992 -- Incentive Stock Option Agreement. 99.9 Form of Incentive Stock Option Plan of August 1, 1992 -- Non-Statutory Stock Option Agreement. 99.10 Summa Four, Inc. 1993 Director Stock Option Plan, As Amended. 99.11 Form of 1993 Director Stock Option Plan -- Non-Statutory Stock Option Agreement. 99.12 Form of Acceleration Waiver Letter Agreement. 99.13 Form of Option Assumption Agreement (Employee). 99.14 Form of Option Assumption Agreement (Director).
Item 9. Undertakings A. The undersigned Registrant hereby undertakes: (1) 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 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 clauses (1)(i) and (1)(ii) shall not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference into this Registration Statement; (2) 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 (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the Summa Four, Inc. 1995 Stock Option Plan, the Summa Four, Inc. 1993 Stock Incentive Plan, the Incentive Stock Option Plan of August 1, 1992 or the Summa Four, Inc. 1993 Director Stock Option Plan, As Amended. B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the 1933 Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is incorporated by reference into 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. II-2 4 C. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers or controlling persons of the Registrant pursuant to the indemnification provisions summarized in Item 6 or otherwise, the Registrant has been advised that, in the opinion of the 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 Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant 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 Registrant 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 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Jose, State of California on this 3rd day of December, 1998. CISCO SYSTEMS, INC. By: /s/ John T. Chambers ------------------------------- John T. Chambers President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John T. Chambers and Larry R. Carter, and each of them, as such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date - --------- ----- ---- /s/ John T. Chambers - ------------------------------- President, Chief Executive December 3, 1998 John T. Chambers Office and Director (Principal Executive Officer) /s/ Larry R. Carter - ------------------------------- Senior Vice President, Finance December 3, 1998 Larry R. Carter and Administration, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) /s/ John P. Morgridge - ------------------------------- Chairman of the Board and December 3, 1998 John P. Morgridge Director /s/ Donald T. Valentine - ------------------------------- Vice Chairman and Director December 3, 1998 Donald T. Valentine
II-4 6
Signature Title Date - --------- ----- ---- /s/ James F. Gibbons - ------------------------------- Director December 3, 1998 James F. Gibbons /s/ Robert L. Puette - ------------------------------- Director December 3, 1998 Robert L. Puette /s/ Masayoshi Son - ------------------------------- Director December 3, 1998 Masayoshi Son /s/ Steven M. West - ------------------------------- Director December 3, 1998 Steven M. West /s/ Edward R. Kozel - ------------------------------- Director December 3, 1998 Edward R. Kozel /s/ Carol A. Bartz - ------------------------------- Director December 3, 1998 Carol A. Bartz /s/ James C. Morgan - ------------------------------- Director December 3, 1998 James C. Morgan /s/ Mary Cirillo - ------------------------------- Director December 3, 1998 Mary Cirillo /s/ Arun Sarin - ------------------------------- Director December 3, 1998 Arun Sarin
II-5 7 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 EXHIBITS TO FORM S-8 UNDER SECURITIES ACT OF 1933 CISCO SYSTEMS, INC. 8 EXHIBIT INDEX
Exhibit Number Exhibit - -------------- ------- 4 Instruments Defining the Rights of Stockholders. Reference is made to Registrant's Registration Statements No. 000-18225 on Form 8-A, together with the amendments and exhibits thereto, which are incorporated herein by reference pursuant to Items 3(c) and 3(d). 5 Opinion and consent of Brobeck, Phleger & Harrison LLP. 23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants. 23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5. 24 Power of Attorney. Reference is made to page II-4 of this Registration Statement. 99.1 Summa Four, Inc. 1995 Stock Option Plan. 99.2 Form of 1995 Stock Option Plan -- Incentive Stock Option Agreement. 99.3 Summa Four, Inc. 1993 Stock Incentive Plan. 99.4 Form of 1993 Stock Incentive Plan -- Incentive Stock Option Agreement. 99.5 Form of 1993 Stock Incentive Plan -- Non-Statutory Stock Option Agreement. 99.6 Incentive Stock Option Plan of August 1, 1992. 99.7 Form of Incentive Stock Option Plan of August 1, 1992 -- Employee Option Agreement. 99.8 Form of Incentive Stock Option Plan of August 1, 1992 -- Incentive Stock Option Agreement. 99.9 Form of Incentive Stock Option Plan of August 1, 1992 -- Non-Statutory Stock Option Agreement. 99.10 Summa Four, Inc. 1993 Director Stock Option Plan, As Amended. 99.11 Form of 1993 Director Stock Option Plan -- Non-Statutory Stock Option Agreement. 99.12 Form of Acceleration Waiver Letter Agreement. 99.13 Form of Option Assumption Agreement (Employee). 99.14 Form of Option Assumption Agreement (Director).
EX-5 2 OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON 1 EXHIBIT 5 OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP December 3, 1998 Cisco Systems, Inc. 170 West Tasman Drive San Jose, California 95134-1706 Re: Cisco Systems, Inc. - Registration Statement for Offering of an Aggregate of 229,388 Shares of Common Stock Dear Ladies and Gentlemen: We have acted as counsel to Cisco Systems, Inc., a California corporation (the "Company"), in connection with the registration on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, of an aggregate of 229,388 shares of common stock and related stock options (the "Shares") under (i) the Summa Four, Inc. 1995 Stock Option Plan, (ii) the Summa Four, Inc. 1993 Stock Incentive Plan, (iii) the Incentive Stock Option Plan of August 1, 1992 and (iv) the Summa Four, Inc. 1993 Director Stock Option Plan, As Amended (collectively, the "Plans"). This opinion is being furnished in accordance with the requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K. We have reviewed the Company's charter documents and the corporate proceedings taken by the Company in connection with the assumption of the Plans and the options outstanding thereunder. Based on such review, we are of the opinion that if, as and when the Shares are issued and sold (and the consideration therefor received) pursuant to the provisions of option agreements duly authorized under the Plans and in accordance with the Registration Statement, such Shares will be duly authorized, legally issued, fully paid and nonassessable. We consent to the filing of this opinion letter as Exhibit 5 to the Registration Statement. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Plans or the Shares. Very truly yours, /s/ BROBECK, PHLEGER & HARRISON LLP BROBECK, PHLEGER & HARRISON LLP EX-23.1 3 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement on Form S-8 of Cisco Systems, Inc. for the registration of 229,388 common shares in connection with the acquisition of Summa Four, Inc., of our reports dated August 4, 1998, on our audits of the consolidated financial statements and financial statement schedule of Cisco Systems, Inc. as of July 25, 1998 and July 26, 1997, and for each of the three years in the period ended July 25, 1998 which reports are included in Cisco Systems, Inc.'s 1998 Annual Report on Form 10-K, filed with the Securities and Exchange Commission. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP San Jose, California December 3, 1998 EX-99.1 4 SUMMA FOUR, INC. 1995 STOCK OPTION PLAN 1 EXHIBIT 99.1 Adopted by the Board of Directors on June 7, 1993. Approved by the stockholders on August 16, 1993. Amended by the Board of Directors on May 1, 1995. Amendment approved by stockholders on July 21, 1995. SUMMA FOUR, INC. 1995 STOCK OPTION PLAN Adopted by the Board of Directors on May 30, 1995 1. PURPOSE. The purpose of this plan (the "Plan") is to secure for Summa Four, Inc. (the "Company") and its stockholders the benefits arising from capital stock ownership by employees and officers of, and consultants or advisors to, the Company and its subsidiary corporations who are expected to contribute to the Company's future growth and success. Except where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). Those provisions of the Plan which make express reference to Section 422 shall apply only to Incentive Stock Options (as that term is defined in the Plan). 2. TYPE OF OPTIONS AND ADMINISTRATION. (a) TYPES OF OPTIONS. Options granted pursuant to the Plan may be either incentive stock options ("Incentive Stock Options") meeting the requirements of Section 422 of the Code or Non-Statutory Options which are not intended to meet the requirements of Section 422 of the Code ("Non-Statutory Options"). (b) ADMINISTRATION. (i) The Plan will be administered by the Board of Directors of the Company, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. The Board of Directors may in its sole discretion 2 grant options to purchase shares of the Company's Common Stock ("Common Stock") and issue shares upon exercise of such options as provided in the Plan. The Board shall have authority, subject to the express provisions of the Plan, to construe the respective option agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the respective option agreements, which need not be identical, and to make all other determinations which are, in the judgment of the Board of Directors, necessary or desirable for the administration of the Plan. The Board of Directors may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any option agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director or person acting pursuant to authority delegated by the Board of Directors shall be liable for any action or determination under the Plan made in good faith. (ii) The Board of Directors may, to the full extent permitted by or consistent with applicable laws or regulations and Section 3(b) of this Plan delegate any or all of its powers under the Plan to a committee (the "Committee") appointed by the Board of Directors, and if the Committee is so appointed all references to the Board of Directors in the Plan shall mean and relate to such Committee. (c) APPLICABILITY OF RULE 16b-3. Those provisions of the Plan which make express reference to Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule ("Rule 16b-3"), or which are required in order for certain option transactions to qualify for exemption under Rule 16b-3, shall apply only to such persons as are required to file reports under Section 16(a) of the Exchange Act (a "Reporting Person"). 3. ELIGIBILITY. (a) GENERAL. Options may be granted to persons who are, at the time of grant, employees (including employees who are directors of the Company) or officers of, or consultants or advisors to, the Company; PROVIDED, that the class of employees to whom Incentive Stock Options may be granted shall be limited to all employees of the Company. A person who has been granted an option may, if he or she is otherwise eligible, be granted additional options if the Board of Directors shall so determine. Subject to adjustment as provided in Section 15 below, the maximum number of shares with respect to which options may be granted to any employee under the Plan shall not exceed 500,000 shares of common stock in any one calendar year. For the purpose of calculating such maximum number, (a) an option shall continue to be treated as outstanding notwithstanding its repricing, cancellation or expiration and (b) the repricing of an outstanding option or the issuance of a new option in substitution for a cancelled option shall be deemed to constitute the grant of a new additional option separate from the original grant of the option that is repriced or cancelled. (b) GRANT OF OPTIONS TO OFFICERS. For so long as Common Stock of the Company is registered under the Exchange Act, the selection of an officer or an officer who is also a director (as the terms "director" and "officer" are defined for 2 3 purposes of Rule 16b-3) as a recipient of an option, the timing of the option grant, the exercise price of the option and the number of shares subject to the option shall be determined either (i) by the Board of Directors, of which all members shall be "disinterested Persons" (as hereinafter defined), or (ii) by two or more directors having full authority to act in the matter, each of whom shall be a "disinterested person." For the purposes of the Plan, a director shall be deemed to be a "disinterested person" only if such person qualifies as a "disinterested person" within the meaning of Rule 16b-3, as such term is interpreted from time to time. 4. STOCK SUBJECT TO PLAN. Subject to adjustment as provided in Section 15 below, the maximum number of shares of Common Stock which may be issued and sold under the Plan is 500,000 shares. If an option granted under the Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject to such option shall again be available for subsequent option grants under the Plan. If shares issued upon exercise of an option under the Plan are tendered to the Company in payment of the exercise price of an option granted under the Plan, such tendered shares shall again be available for subsequent option grants under the Plan; provided, that in no event shall such shares be made available for issuance to Reporting Persons or pursuant to exercise of Incentive Stock Options. 5. FORMS OF OPTION AGREEMENTS. As a condition to the grant of an option under the Plan, each recipient of an option shall execute an option agreement in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such option agreements may differ among recipients. 6. PURCHASE PRICE. (a) GENERAL. Subject to Section 3(b), the purchase price per share of stock deliverable upon the exercise of an option shall be determined by the Board of Directors at the time of grant of such option; provided, however, that (i) in the case of Incentive Stock Options, the exercise price shall not be less than 100% of the fair market value of such stock and (ii) in the case of Non-Statutory Options, the exercise price shall not be less than 75% of the fair market value of such stock, and (iii) in the case of options described in section 11(b), the exercise price shall not be less than 110% of the fair market value of such stock. (b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may provide for the payment of the exercise price by delivery of cash or a check to the order of the Company in an amount equal to the exercise price of such options, or, to the extent provided in the applicable option agreement, or otherwise agreed to by the Company, (i) by delivery to the Company of shares of Common Stock of the Company already owned by the optionee having a fair market value equal in amount to the exercise price of the options being exercised or (ii) by any other means (including, without limitation, by 3 4 delivery of a promissory note of the optionee payable on such terms as are specified by the Board of Directors) which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Regulation T promulgated by the Federal Reserve Board). The fair market value of any shares of the Company's Common Stock or other non-cash consideration which may be delivered upon exercise of an option shall be determined by the Board of Directors. 7. OPTION PERIOD. Each option and all rights thereunder shall expire on such date as shall be set forth in the applicable option agreement, except that, in the case of an Incentive Stock Option, such date shall not be later than ten years after the date on which the option is granted and, in all cases, options shall be subject to earlier termination as provided in the Plan. 8. EXERCISE OF OPTIONS. Each option granted under the Plan shall be exercisable either in full or in installments at such time or times and during such period as shall be set forth in the agreement evidencing such option, subject to the provisions of the Plan. 9. NONTRANSFERABILITY OF OPTIONS. All options granted shall not be assignable or transferable by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the optionee, shall be exercisable only by the optionee; provided, however, that Non-Statutory Options may be transferred pursuant to a qualified domestic relations order (as defined in Rule 16b-3). 10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. Except as provided in Section 11(d) with respect to Incentive Stock Options, and subject to the provisions of the Plan, the Board of Directors shall determine the period of time during which an optionee may exercise an option following (i) the termination of the optionee's employment or other relationship with the Company or (ii) the death or disability of the optionee. Such periods shall be set forth in the agreement evidencing such option. 11. INCENTIVE STOCK OPTIONS. Options granted under the Plan which are intended to be Incentive Stock options shall be subject to the following additional terms and conditions: (a) EXPRESS DESIGNATION. All incentive Stock options granted under the Plan shall, at the time of grant, be specifically designated as such in the option agreement covering such Incentive Stock Options. 4 5 (b) 10% STOCKHOLDER. If any employee to whom an Incentive Stock Option is to be granted under the Plan is, at the time of the grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (after taking into account the attribution of stock ownership rules of Section 424(d) of the Code), then the following special provisions shall be applicable to the Incentive Stock Option granted to such individual: (i) The purchase price per share of the Common Stock subject to such Incentive Stock Option shall not be less than 110% of the fair market value of one share of Common Stock at the time of grant; and (ii) the option exercise period shall not exceed five years from the date of grant. (c) DOLLAR LIMITATION. For so long as the Code shall so provide, options granted to any employee under the Plan (and any other incentive stock option plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate fair market value (determined as of the respective date or dates of grant) of more than $100,000. (d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive Stock Option may be exercised unless, at the time of such exercise, the optionee is, and has been continuously since the date of grant of his or her option, employed by the Company, except that: (i) an Incentive Stock Option may be exercised within the period of three months after the date the optionee ceases to be an employee of the Company (or within such lesser period as may be specified in the applicable option agreement), PROVIDED, that the agreement with respect to such option may designate a longer exercise period and that the exercise after such three-month period shall be treated as the exercise of a non-statutory option under the Plan; (ii) if the optionee dies while in the employ of the Company, or within three months after the optionee ceases to be such an employee, the Incentive Stock Option may be exercised by the person to whom it is transferred by will or the laws of descent and distribution within the period of one year after the date of death (or within such lesser period as may be specified in the applicable option agreement); and (iii) if the optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code or any successor provision thereto) while in the employ of the Company, the Incentive Stock Option may be exercised within the period of one year after the date the optionee ceases to be such an employee because of such disability (or within such lesser period as may be specified in the applicable option agreement). 5 6 For all purposes of the Plan and any option granted hereunder, "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations). Notwithstanding the foregoing provisions, no Incentive Stock Option may be exercised after its expiration date. 12. ADDITIONAL PROVISIONS. (a) ADDITIONAL OPTION PROVISIONS. The Board of Directors may, in its sole discretion, include additional provisions in option agreements covering options granted under the Plan, including without limitation restrictions on transfer, repurchase rights, commitments to pay cash bonuses, to make, arrange for or guaranty loans or to transfer other property to optionees upon exercise of options, or such other provisions as shall be determined by the Board of Directors; PROVIDED THAT such additional provisions shall not be inconsistent with any other term or condition of the Plan and such additional provisions shall not cause any Incentive Stock Option granted under the Plan to fail to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code. (b) ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its sole discretion, (i) accelerate the date or dates on which all or any particular option or options granted under the Plan may be exercised or (ii) extend the dates during which all, or any particular, option or options granted under the Plan may be exercised. 13. GENERAL RESTRICTIONS. (a) INVESTMENT REPRESENTATIONS. The Company may require any person to whom an option is granted, as a condition of exercising such option, to give written assurances in substance and form satisfactory to the Company to the effect that such person is acquiring the Common Stock subject to the option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws, or with covenants or representations made by the Company in connection with any public offering of its Common Stock. (b) COMPLIANCE WITH SECURITIES LAWS. Each option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject to such option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares thereunder, such option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification, or to satisfy such condition. 6 7 14. RIGHTS AS A STOCKHOLDER. The holder of an option shall have no rights as a stockholder with respect to any shares covered by the option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to him or her for such shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS AND RELATED TRANSACTIONS. (a) GENERAL. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and proportionate adjustment may be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to any then outstanding options under the Plan, and (z) the price for each share subject to any then outstanding options under the Plan, without changing the aggregate purchase price as to which such options remain exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 15 if such adjustment would cause the Plan to fail to comply with Section 422 of the Code. (b) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this Section 15 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued under the Plan on account of any such adjustments. 16. CHANGE OF CONTROL. Notwithstanding any other provision to the contrary in this Plan, in the event of a Change of Control (as defined below), all options outstanding as of the date such Change in Control occurs shall become exercisable in full, whether or not exercisable in accordance with their terms. A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 7 8 securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) individuals who, as of the date this Plan is adopted, constitute the Board of Directors of the Company (as of the date thereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date thereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 17. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or in any option shall confer upon any optionee any right with respect to the continuation of his or her employment by the Company or interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease the compensation of the optionee. 18. OTHER EMPLOYEE BENEFITS. Except as to plans which by their terms include such amounts as compensation, the amount of any compensation deemed to be received by an employee as a result of the exercise of an option or the sale of shares received upon such exercise will not constitute compensation with respect to which any other employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board of Directors. 19. AMENDMENT OF THE PLAN. (a) The Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect, except that if at any time the approval of the stockholders of the Company is required under Section 422 of the Code or any successor provision 8 9 with respect to Incentive Stock Options, or under Rule 16b-3, the Board of Directors may not effect such modification or amendment without such approval. (b) The termination or any modification or amendment of the Plan shall not, without the consent of an optionee, affect his or her rights under an option previously granted to him or her. With the consent of the optionee affected, the Board of Directors may amend outstanding option agreements in a manner not inconsistent with the Plan. The Board of Directors shall have the right to amend or modify (i) the terms and provisions of the Plan and of any outstanding Incentive Stock Options granted under the Plan to the extent necessary to qualify any or all such options for such favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code and (ii) the terms and provisions of the Plan and of any outstanding option to the extent necessary to ensure the qualification of the Plan under Rule 16b-3. 20. WITHHOLDING. (a) The Company shall have the right to deduct from payments of any kind otherwise due to the optionee any federal, state or local taxes of any kind required by law to be withheld with respect to any shares issued upon exercise of options under the Plan. Subject to the prior approval of the Company, which may be withheld by the Company in its sole discretion, the optionee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company to withhold shares of Common Stock otherwise issuable pursuant to the exercise of an option or (ii) by delivering to the Company shares of Common Stock already owned by the optionee. The shares so delivered or withheld shall have a fair market value equal to such withholding obligation. The fair market value of the shares used to satisfy such withholding obligation shall be determined by the Company as of the date that the amount of tax to be withheld is to be determined. An optionee who has made an election pursuant to this Section 20(a) may only satisfy his or her withholding obligation with shares of Common Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. (b) Notwithstanding the foregoing, in the case of a Reporting Person, no election to use shares for the payment of withholding taxes shall be effective unless made in compliance with any applicable requirements of Rule 16b-3 (unless it is intended that the transaction not qualify for exemption under Rule 16b-3). 21. CANCELLATION AND NEW GRANT OF OPTIONS, ETC. The Board of Directors shall have the authority to effect, at any time and from time to time, with the consent of the affected optionees, (i) the cancellation of any or all outstanding options under the Plan and the grant in substitution therefor of new options under the Plan covering the same or different numbers of shares of Common Stock and having an option exercise price per share which may be lower or higher than the exercise price per share of the cancelled options or (ii) the amendment of the terms of any and all outstanding options under the Plan to provide an option exercise price per share which is higher or lower than the then-current exercise price per share of such outstanding options. 9 10 22. EFFECTIVE DATE AND DURATION OF THE PLAN. (a) EFFECTIVE DATE. The Plan shall become effective when adopted by the Board of Directors, but no option granted under the Plan shall become exercisable unless and until the Plan shall have been approved by the Company's stockholders. If such stockholder approval is not obtained within twelve months after the date of the Board's adoption of the Plan, options previously granted under the Plan shall not vest and shall terminate and no options shall be granted thereafter. Amendments to the Plan not requiring stockholder approval shall become effective when adopted by the Board of Directors; amendments requiring stockholder approval (as provided in Section 19) shall become effective when adopted by the Board of Directors, but no option granted after the date of such amendment shall become exercisable (to the extent that such amendment to the Plan was required to grant such option to a particular person) unless and until such amendment shall have been approved by the Company's stockholders. If such stockholder approval is not obtained within twelve months of the Board's adoption of such amendment, any options granted on or after the date of such amendment shall terminate to the extent that such amendment was required to enable the Company to grant such option to a particular optionee. Subject to this limitation, options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan. (b) TERMINATION. Unless sooner terminated in accordance with Section 16 herein, the Plan shall terminate upon the close of business on the day next preceding the tenth anniversary of the date of its adoption by the Board of Directors. Options outstanding on such date shall continue to have force and effect in accordance with the provisions of the instruments evidencing such options. 23. PROVISION FOR FOREIGN PARTICIPANTS. The Board of Directors may, without amending the Plan, modify awards or options granted to participants who are foreign nationals or employed outside the United States to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters. Adopted by the Board of Directors on May 30, 1995 Adopted by the Stockholders of the Company on July 21, 1995 10 EX-99.2 5 FORM OF 1995 STOCK OPTION PLAN - INCENTIVE STOCK 1 EXHIBIT 99.2 SUMMA FOUR, INC. 1995 STOCK INCENTIVE PLAN INCENTIVE STOCK OPTION AGREEMENT 1. GRANT OF OPTION. Summa Four, Inc., a Delaware corporation (the "Company"), hereby grants to ___________ (the "Optionee"), an option, pursuant to the Company's 1995 Stock Option Plan (the "Plan"), to purchase an aggregate of _________shares of Common Stock ("Common Stock") of the Company at a price of $_____per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term "Company" shall include all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. INCENTIVE STOCK OPTION. This option is intended to qualify as an incentive stock option ("Incentive Stock Option") within the meaning of Section 422 of the Code. 3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date") in installments as to not more than the number of shares set forth in the table below during the respective installment periods set forth in the table below.
Number of Shares as to which Option Exercise Period is Exercisable --------------- ------------------------------------ Prior to On or after On or after On or after On or after On or after
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date. 1 2 (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the Company of such written notice together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. (c) Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424(a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the "Successor Corporation") shall be considered for all purposes of this option to be employment by the Company. (d) Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements, arising by reason of this option being treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as the result of a discharge for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Optionee", as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. 2 3 (f) Discharge for Cause. If the Optionee, prior to the Expiration Date, is discharged by the Company for "cause" (as defined below), the right to exercise this option shall terminate immediately upon such cessation of employment. "Cause" shall mean willful misconduct in connection with the Optionee's employment or willful failure to perform his or her employment responsibilities in the best interests of the Company (including, without limitation, breach by the Optionee of any provision of any employment, nondisclosure, non-competition or other similar agreement between the Optionee and the Company), as determined by the Company, which determination shall be conclusive. The Optionee shall be considered to have been discharged "for cause" if the Company determines, within 30 days after the Optionee's resignation, that discharge for cause was warranted. 4. PAYMENT OF PURCHASE PRICE. (a) Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (iv) by any combination of such methods of payment. (b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company's Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. (c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this option. (d) Restrictions on Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. 5. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC. (a) General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that if 3 4 any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action. (b) Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such other condition. 6. NONTRANSFERABILITY OF OPTION. Except as provided in paragraph (e) of Section 3, this option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 7. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised. 8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. ADJUSTMENT PROVISIONS. (a) General. If, through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification. stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. 4 5 (b) Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued pursuant to this option on account of any such adjustments. (c) Limits on Adjustments. No adjustment shall be made under this Section 9 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of this option or a grant of additional benefits to the Optionee. 10. CHANGE OF CONTROL. In the event of a "Change of Control", as defined in Section 16 of the Plan, this option shall become exercisable in full with respect to any unexercised portion. 11. WITHHOLDING TAXES. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. 12. LIMITATIONS ON DISPOSITION OF INCENTIVE STOCK OPTION SHARES. It is understood and intended that this option shall quality as an "incentive stock option" as defined in Section 422 of the Code. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Optionee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition. 13. MISCELLANEOUS. (a) Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. 5 6 (c) This option shall be governed by and construed in accordance with the laws of the State of New Hampshire. Date of Grant: SUMMA FOUR, INC. ______________, 19__ By: ___________________________ Title: ________________________ Address: ______________________ OPTIONEE'S ACCEPTANCE The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 1995 Stock Option Plan. OPTIONEE ___________________________________ Address: __________________________ ___________________________________ 6 EX-99.3 6 SUMMA FOUR, INC. 1993 STOCK INCENTIVE PLAN 1 EXHIBIT 99.3 SUMMA FOUR, INC. 1993 STOCK INCENTIVE PLAN AS AMENDED AND RESTATED The 1993 Stock Incentive Plan, as adopted by the Board of Directors of the Company at its meeting held on June 7, 1993, and subsequently approved by stockholders by written action in lieu of a meeting, is hereby amended and restated in its entirety to reflect a correction to the Plan which reflects the inadvertent omission from the Plan, as initially prepared, of a provision which would cause outstanding Awards to become immediately exercisable in the event of a Change in Control of the Company, whether or not such Awards are then exercisable in accordance with their terms, so that, as amended and restated, the Plan would be consistent with other incentive stock plans of the Company. Section 1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to advance the interests of Summa Four, Inc. by enhancing its ability to attract and retain key employees, consultants and others who are in a position to contribute to the Company's future growth and success. Section 2. Definitions. "Award" means any Option, Stock Appreciation Right, Performance Share, Restricted Stock or Unrestricted Stock awarded under the Plan. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a committee of not less than two members of the Board appointed by the Board to administer the Plan, provided that if and when the Common Stock is registered under Section 12 of the Securities Exchange Act of 1934, each member of the Committee shall be a "disinterested person" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 ("Rule 16b-3"). "Common Stock" or "Stock" means the Common Stock, $.01 par value per share, of the Company. "Company" means Summa Four, Inc. and, except where the content otherwise requires, all present and future subsidiaries of the Company as defined in Sections 424(f) of the Code. "Designated Beneficiary" means the beneficiary designated by a Participant, in a manner determined by the Board, to receive amounts due or exercise rights of the Participant in the event of the Participant's death. In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 2 "Fair Market Value" means, with respect to Common Stock or any other property, the fair market value of such property as determined by the Board in good faith or in the manner established by the Board from time to time. "Incentive Stock Option" means an option to purchase shares of Common Stock awarded to a Participant under Section 6 which is intended to meet the requirements of Section 422 of the Code or any successor provision. "Nonstatutory Stock Option" means an option to purchase shares of Common Stock awarded to a Participant under Section 6 which is not intended to be an Incentive Stock Option. "Option" means an Incentive Stock Option or a Nonstatutory Stock Option. "Participant" means a person selected by the Board to receive an Award under the Plan. "Performance Shares" mean shares of Common Stock which may be earned by the achievement of performance goals awarded to a Participant under Section 8. "Reporting Person" means a person subject to Section 16 of the Securities Exchange Act of 1934 or any successor provision. "Restricted Period" means the period of time selected by the Board during which shares subject to a Restricted Stock Award may be purchased by or forfeited to the Company. "Restricted Stock" means shares of Common Stock awarded to a Participant under Section 9. "Stock Appreciation Right" means a right to receive any excess in Fair Market Value of shares of Common Stock over the exercise price awarded to a Participant under Section 7. "Unrestricted Stock" means shares of Common Stock awarded to a Participant under Section 9(c). Section 3. Administration. The Plan will be administered by the Board. The Board shall have authority to make Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable from time to time, and to interpret the provisions of the Plan. The Board's decisions shall be final and binding. No member of the Board shall be liable for any action or determination relating to the Plan made in good faith. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to make Awards to Participants who are not Reporting Persons and all determinations under the Plan with respect thereto, provided that the Board shall fix the maximum amount of such Awards to be made by such executive officers and a maximum amount for any one Participant. To the extent permitted by applicable law, the Board may appoint a Committee to administer the Plan and, in such event, all references to the Board in the Plan shall mean such Committee or the Board. All decisions by the Board or the Committee -2- 3 pursuant to the Plan shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. Section 4. Eligibility. All of the Company's employees, officers, directors, consultants and advisors who are expected to contribute to the Company's future growth and success, other than persons who have irrevocably elected not to be eligible, are eligible to be Participants in the Plan. Incentive Stock Options may be awarded only to persons eligible to receive Incentive Stock Options under the Code. Section 5. Stock Available for Awards. (a) Subject to adjustment under subsection (b) below, Awards may be made under the Plan for up to 350,000 shares of Common Stock. Unless otherwise indicated, all share amounts set forth in this Plan reflect the 3.5-for-1 stock split approved by the Board of Directors on July 14, 1993. If any Award in respect of shares of Common Stock expires or is terminated unexercised or is forfeited for any reason or settled in a manner that results in fewer shares outstanding than were initially awarded, the shares subject to such Award or so surrendered, as the case may be, to the extent of such expiration, termination, forfeiture or decrease, shall again be available for award under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. (b) In the event that the Board, in its sole discretion, determines that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or other similar transaction affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under the Plan, then the Board, subject, in the case of Incentive Stock Options, to any limitation required under the Code, shall equitably adjust any or all of (i) the number and kind of shares in respect of which Awards may be made under the Plan, (ii) the number and kind of shares subject to outstanding Awards, and (iii) the award, exercise or conversion price with respect to any of the foregoing, and if considered appropriate, the Board may make provision for a cash payment with respect to an outstanding Award, provided that the number of shares subject to any Award shall always be a whole number. (c) The Board may grant Awards under the Plan in substitution for stock and stock based awards held by employees of another corporation who concurrently become employees of the Company as a result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a subsidiary of property or stock of the employing corporation. The substitute Awards shall be granted on such terms and conditions as the Board considers appropriate in the circumstances. The shares which may be delivered under such substitute Awards shall be in addition to the maximum number of shares provided for in Section 5(a) only to the extent that the substitute Awards are both (i) granted to persons whose relationship to the Company does not make (and is not expected to make) them Reporting Persons; and (ii) granted in substitution for awards issued under a plan approved, to the extent then required under Rule 16b-3, by the stockholders of the entity which issued such predecessor awards. -3- 4 Section 6. Stock Options (a) General. (i) Subject to the provisions of the Plan, the Board may award Incentive Stock Options and Nonstatutory Stock Options, and determine the number of shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option. The terms and conditions of Incentive Stock Options shall be subject to and comply with Section 422 of the Code, or any successor provision, and any regulations thereunder. (ii) The Board shall establish the exercise price at the time each Option is awarded. In the case of Incentive Stock Options, such price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of award. (iii) Each option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Award or thereafter. The Board may impose such conditions with respect to the exercise of Options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. (iv) Options granted under the Plan may provide for the payment of the exercise price by delivery of cash or check in an amount equal to the exercise price of such Options or, to the extent permitted by the Board at or after the award of the Option, by (A) delivery of shares of Common Stock owned by the optionee for at least six months (or such shorter period as is approved by the Board), valued at their Fair Market Value, (B) delivery of a promissory note of the optionee to the Company on terms determined by the Board, (C) delivery of an irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price or delivery of irrevocable instructions to a broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price, (D) payment of such other lawful consideration as the Board may determine, or (E) any combination of the foregoing. (v) The Board may provide for the automatic award of an Option upon the delivery of shares to the Company in payment of the exercise price of an Option for up to the number of shares so delivered. (vi) The Board may at any time accelerate the time at which all or any part of an Option may be exercised. (b) Incentive Stock Options. Options granted under the Plan which are intended to be Incentive Stock Options shall be subject to the following additional terms and conditions: (i) All Incentive Stock Options granted under the Plan shall, at the time of grant, be specifically designated as such in the option agreement covering such Incentive Stock Options. The Option exercise period shall not exceed ten years from the date of grant. -4- 5 (ii) If any employee to whom an Incentive Stock Option is to be granted under the Plan is, at the time of the grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (after taking into account the attribution of stock ownership rule of Section 424(d) and of the Code), then the following special provisions shall be applicable to the Incentive Stock Option granted to such individual: (x) The purchase price per share of the Common Stock subject to such Incentive Stock Option shall not be less than 110% of the Fair Market Value of one share of Common Stock at the time of grant; and (y) The option exercise period shall not exceed five years from the date of grant. (iii) For so long as the Code shall so provide, options granted to any employee under the Plan (and any other incentive stock option plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate Fair Market Value (determined as of the respective date or dates of grant) of more than $100,000. (iv) No Incentive Stock Option may be exercised unless, at the time of such exercise, the Participant is, and has been continuously since the date of grant of his or her Option, employed by the Company, except that: (x) an Incentive Stock Option may be exercised within the period of three months after the date the Participant ceases to be an employee of the Company (or within such lesser period as may be specified in the applicable option agreement), provided, that the agreement with respect to such Option may designate a longer exercise period and that the exercise after such three-month period shall be treated as the exercise of a Nonstatutory Stock Option under the Plan; (y) if the Participant dies while in the employ of the Company, or within three months after the Participant ceases to be such an employee, the Incentive Stock Option may be exercised by the Participant's Designated Beneficiary within the period of one year after the date of death (or within such lesser period as may be specified in the applicable Option agreement); and (z) if the Participant becomes disabled (within the meaning of Section 22(e)(3) of the Code or any successor provision thereto) while in the employ of the Company, the Incentive Stock Option may be exercised within the period of one year after the date of disability (or within such lesser period as may be specified in the Option agreement). For all purposes of the Plan and any Option granted hereunder, "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations). Notwithstanding the foregoing provisions, no Incentive Stock Option may be exercised after its expiration date. -5- 6 Section 7. Stock Appreciation Rights. (a) The Board may grant Stock Appreciation Rights entitling recipients on exercise of the Stock Appreciation Right to receive an amount, in cash or Stock or a combination thereof (such form to be determined by the Board), determined in whole or in part by reference to appreciation in the Fair Market Value of the Stock between the date of the Award and the exercise of the Award. A Stock Appreciation Right shall entitle the Participant to receive, with respect to each share of Stock as to which the Stock Appreciation Right is exercised, the excess of the share's Fair Market Value on the date of exercise over its Fair Market Value on the date the SAR was granted. The Board may also grant Stock Appreciation Rights that provide that, following a change in control of the Company (as defined by the Board at the time of the Award), the holder of such Stock Appreciation Right will be entitled to receive, with respect to each share of Stock subject to the Stock Appreciation Right, an amount equal to the excess of a specified value (which may include an average of values) for a share of Stock during a period preceding such change in control over the Fair Market Value of a share of Stock on the date the Stock Appreciation Right was granted. (b) Stock Appreciation Rights may be granted in tandem with, or independently of, Options granted under the Plan. A Stock Appreciation Right granted in tandem with an Option which is not an Incentive Stock Option may be granted either at or after the time the Option is granted. A Stock Appreciation Right granted in tandem with an Incentive Stock Option may be granted only at the time the Option is granted. (c) When Stock Appreciation Rights are granted in tandem with Options, the following provisions will apply: (i) The Stock Appreciation Right will be exercisable only at such time or times, and to the extent, that the related Option is exercisable and will be exercisable in accordance with the procedure required for exercise of the related Option. (ii) The Stock Appreciation Right will terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less than the full number of shares covered by an Option will not be reduced until the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the Stock Appreciation Right. (iii) The Option will terminate and no longer be exercisable upon the exercise of the related Stock Appreciation Right. (iv) The Stock Appreciation Right will be transferable only with the related Option. (v) A Stock Appreciation Right granted in tandem with an Incentive Stock Option may be exercised only when the market price of the Stock subject to the Option exceeds the exercise price of such option. (d) A Stock Appreciation Right not granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Board may specify. -6- 7 (e) The Board may at any time accelerate the time at which all or any part of the Stock Appreciation Right may be exercised. Section 8. Performance Shares. (a) The Board may make Performance Share Awards entitling recipients to acquire shares of Stock upon the attainment of specified performance goals. The Board may make Performance Share Awards independent of or in connection with the granting of any other Awards under the Plan. The Board in its sole discretion shall determine the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded Performance Shares; provided, however, that the Board may rely on the performance goals and other standards applicable to other performance plans of the Company in setting the standards for Performance Share Awards under the Plan. (b) Performance Share Awards and all rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. (c) A Participant receiving a Performance Share Award shall have the rights of a stockholder only as to shares actually received by the Participant under the Plan and not with respect to shares subject to an Award but not actually received by the Participant. A Participant shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the agreement evidencing the Performance Share Award. (d) The Board may at any time accelerate or waive any or all of the goals, restrictions or conditions imposed under any Performance Share Award. Section 9. Restricted and Unrestricted Stock. (a) The Board may grant Restricted Stock Awards entitling recipients to acquire shares of Stock, subject to the right of the Company to repurchase all or part of such shares at their purchase price (or to require forfeiture of such shares if purchased at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable Restricted Period or Restricted Periods established by the Board for such Award. Conditions for repurchase (or forfeiture) may be based on continuing employment or service or achievement of pre-established performance or other goals and objectives. (b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as permitted by the Board, during the applicable Restricted Period. Shares of Restricted Stock shall be evidenced in such manner as the Board may determine. Any certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the Restricted Period, the Company (or such designee) shall deliver such certificates to the Participant or if the Participant has died, to the Participant's Designated Beneficiary. -7- 8 (c) The Board may, in its sole discretion, grant (or sell at a purchase price determined by the Board, which shall not be lower than 85% of Fair Market Value on the date of sale) to Participants shares of Stock free of any restrictions under the Plan ("Unrestricted Stock"). (d) The purchase price for each share of Restricted Stock and Unrestricted Stock shall be determined by the Board of Directors and may not be less than the par value of the Common Stock. Such purchase price may be paid in the form of past services or such other lawful consideration as is determined by the Board. (e) The Board may at any time accelerate the expiration of the Restricted Period applicable to all, or any particular, outstanding shares of Restricted Stock. Section 10. General Provisions Applicable to Awards. (a) Applicability of Rule 16b-3. Those provisions of the Plan which make an express reference to Rule 16b-3 shall apply to the Company only at such time as the Company's Common Stock is registered under the Securities Exchange Act of 1934, or any successor provision, and then only to Reporting Persons. (b) Reporting Person Limitations. Notwithstanding any other provision of the Plan, to the extent required to qualify for the exemption provided by Rule 16b-3, (i) any Option, Stock Appreciation Right, Performance Share Award or other similar right related to an equity security issued under the Plan to a Reporting Person shall not be transferable other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I or the Employee Retirement Income Security Act ("ERISA"), or the rules thereunder, and shall be exercisable during the Participant's lifetime only by the Participant or the Participant's guardian or legal representative, and (ii) the selection of a Reporting Person as a Participant and the terms of his or her Award shall be determined only in accordance with the applicable provisions of Rule 16b-3. (c) Documentation. Each Award under the Plan shall be evidenced by an instrument delivered to the Participant specifying the terms and conditions thereof and containing such other terms and condition not inconsistent with the provisions of the Plan as the Board considers necessary or advisable. Such instruments may be in the form of agreements to be executed by both the Company and the Participant, or certificates, letters or similar documents, acceptance of which will evidence agreement to the terms thereof and of this Plan. (d) Board Discretion. Each type of Award may be made alone, in addition to or in relation to any other type of Award. The terms of each type of Award need not be identical, and the Board need not treat Participants uniformly. Except as otherwise provided by the Plan or a particular Award, any determination with respect to an Award may be made by the Board at the time of award or at any time thereafter. (e) Termination of Status. Subject to the provisions of Section 6(b)(iv), the Committee shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other termination of employment or other status of a Participant and the extent to which, and the period during which, the Participant's legal representative, guardian or Designated Beneficiary may exercise rights under such Award. -8- 9 (f) Mergers, Etc. (X) Except as set forth in subparagraph (Y) below, in the event of a consolidation, merger or other reorganization in which all of the outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity (an "Acquisition") or in the event of a liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions as to outstanding Awards: (i) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) on such terms as the Board determines to be appropriate, (ii) upon written notice to Participants, provide that all unexercised Options or Stock Appreciation Rights will terminate immediately prior to the consummation of such transaction unless exercised by the Participant within a specified period following the date of such notice, (iii) in the event of an Acquisition under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the Acquisition (the "Acquisition Price"), make or provide for a cash payment to Participants equal to the difference between (A) the Acquisition Price times the number of shares of Common stock subject to outstanding Options or Stock Appreciation Rights (to the extent then exercisable t prices not in excess of the Acquisition Price) and (B) the aggregate exercise price of all such outstanding Options or Stock Appreciation Rights in exchange for the termination of such Options and Stock Appreciation Rights, and (iv) provide that all or any outstanding Awards shall become exercisable or realizable in full prior to the effective date of such Acquisition. (Y) Notwithstanding any other provisions to the contrary in this Plan, in the event of a Change of Control (as defined below), all Awards outstanding as of the date such Change in Control occurs shall become exercisable in full, whether or not exercisable in accordance with their terms. A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) individuals who, as of the date this Plan is adopted, constitute the Board of Directors of the Company (as of the date thereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date thereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the -9- 10 combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquired more than 30% of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. (g) Withholding. The Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability. In the Board's discretion, and subject to such conditions as the Board may establish, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant. (h) Foreign Nationals. Awards may be made to Participants who are foreign nationals or employed outside the United States on such terms and conditions different from those specified in the Plan as the Board considers necessary or advisable to achieve the purposes of the Plan or comply with applicable laws. (i) Amendment of Award. The Board may amend, modify or terminate any outstanding Award, including substituting therefor another Award of the same or a different type, changing the date of exercise or realization and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (j) Cancellation and New Grant of Options. The Board of Directors shall have the authority to effect, at any time and from time to time, with the consent of the affected optionees, (i) the cancellation of any or all outstanding Options under the Plan and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock and having an option exercise price per share which may be lower or higher than the exercise price per share of the cancelled Options or (ii) the amendment of the terms of any and all outstanding Options under the Plan to provide an option exercise price per share which is higher or lower than the then current exercise price per share of such outstanding Options. (k) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan (i) until all conditions of the Award have been satisfied or removed, (ii) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, (iii) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of notice of issuance, and (iv) until all other legal matters in connection with the issuance and delivery of such legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. If the sale of Stock -10- 11 has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Stock bear an appropriate legend restricting transfer. Section 11. Miscellaneous. (a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or service for the Company. The Company expressly reserves the right at any time to dismiss a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed under the Plan until he or she becomes the record holder thereof. (c) Exclusion from Benefit Computations. No amounts payable upon exercise of Awards granted under the Plan shall be considered salary, wages or compensation to Participants for purposes of determining the amount or nature of benefits that Participants are entitled to under any insurance, retirement or other benefit plans or programs of the Company. (d) Effective Date and Term. Subject to the approval of the stockholders of the Company, the Plan shall be effective on June 7, 1993. Prior to such approval, Awards may be made under the Plan expressly subject to such approval. No Award may be made under the Plan after June 7, 2003, but Awards previously granted may extend beyond that date. (e) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary to comply with any applicable tax or regulatory requirement, including any requirements for compliance with Rule 16b-3. Prior to any such approval, Awards may be made under the Plan expressly subject to such approval. -11- 12 (f) Governing Law. The provisions of the Plan shall be governed by and interpreted in accordance with the laws of the State of New Hampshire. Adopted by the Board of Directors on June 7, 1993 Approved by the stockholders on August 16, 1993 Amended and Restated to reflect the correction hereinabove noted by the Board of Directors on August 30, 1993 and the Stockholders on September 17, 1993 -12- EX-99.4 7 FORM OF 1993 STOCK INCENTIVE PLAN-INCENTIVE STOCK 1 EXHIBIT 99.4 Option # Date: --------------------- --------------------- No. Shares ------------------- SUMMA FOUR, INC. 1993 STOCK INCENTIVE PLAN INCENTIVE STOCK OPTION AGREEMENT 1. GRANT OF OPTION. Summa Four, Inc., a Delaware corporation (the "Company"), hereby grants to _____________(the "Optionee"), an option, pursuant to the Company's 1993 Stock Incentive Plan (the "Plan"), to purchase an aggregate of ___________shares of Common Stock ("Common Stock") of the Company at a price of $______ per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 242(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. INCENTIVE STOCK OPTION. This option is intended to qualify as an incentive stock option ("Incentive Stock Option") within the meaning of Section 422 of the Code. 3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date") in installments as to not more than the number of shares set forth in the table below during the respective installment periods set forth in the table below. Exercise Period Number of Shares as to which Option is Exercisable The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date. (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the Company of such written notice together with the required payment. The Optionee may purchase less than the number of shares covered -1- 2 Option # Date: --------------------- --------------------- No. Shares ------------------- hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. (c) Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424(a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the "Successor Corporation") shall be considered for all purposes of this option to be employment by the Company. (d) Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements, arising by reason of this option being treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company; the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as a result of a discharge for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Optionee", as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. (f) Discharge for Cause. If the Optionee, prior to the Expiration Date, ceases his or her employment with the Company because he or she is discharged for "cause" (as defined below), the right to exercise this option shall terminate immediately upon such cessation of employment. "Cause" shall mean willful misconduct in connection with the Optionee's employment or willful failure to perform his or her employment responsibilities in the best interests of the Company (including, without limitation, breach by the Optionee of any provision of any employment, -2- 3 Option # Date: --------------------- --------------------- No. Shares ------------------- nondisclosure, non-competition or other similar agreement between the Optionee and the Company), as determined by the Company, which determination shall be conclusive. 4. PAYMENT OF PURCHASE PRICE. (a) Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made by delivery of cash or check in an amount equal to the exercise price of such options or, with the prior consent of the Company (which may be withheld in its sole discretion), by (A) delivery of shares of Common Stock owned by the Optionee for at least six months, valued at their fair market value, as determined in (b) below, (B) delivery of a promissory note of the optionee to the Company on terms determined by the Board, (C) delivery of an irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price or delivery of irrevocable instructions to a broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price, (D) payment of such other lawful consideration as the Board may determine, or (E) any combination of the foregoing. (b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company's Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith or in the manner determined by the Board of Directors of the Company from time to time. (c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this option. (d) Restrictions on Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within six months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. 5. DELIVERY OF SHARES: COMPLIANCE WITH SECURITIES LAWS, ETC. The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove restriction from shares previously delivered under the Plan (i) until all conditions of the option have been satisfied or removed, (ii) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, (iii) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of notice of issuance, and (iv) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. -3- 4 Option # Date: --------------------- --------------------- No. Shares ------------------- 6. NONTRANSFERABILITY OF OPTION. This option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process, except that this option may be transferred (i) by will or the laws of descent and distribution or (ii) pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 7. NO SPECIAL EMPLOYMENT OR SIMILAR RIGHTS. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment or other relationship of the Optionee with the Company for the period within which this option may be exercised. The Company expressly reserves the right at any time to dismiss the Optionee free from any liability or claim under the Plan, except as otherwise expressly provided in this Agreement. 8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. ADJUSTMENT PROVISIONS. In the event that the Board, in its sole discretion, determines that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or other similar transaction affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under the Plan, then the Board shall equitably adjust either or both (i) the number and kind of shares subject to this option, and (ii) the award, exercise or conversion price with respect to the foregoing, and if considered appropriate, the Board may make provision for a cash payment with respect to this option, provided that the number of shares subject to this option shall always be a whole number. 10. MERGERS, ETC. (X) Except as set forth in subparagraph (Y) below, in the event of a consolidation, merger or other reorganization in which all of the outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity (an "Acquisition") or in the event of a liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions as to this Option: (i) provide that this Option shall be assumed, or a substantially equivalent Option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) on such terms as the Board determines to be appropriate, (ii) upon written notice to Optionee, provide that if unexercised, this Option will terminate immediately prior to the consummation of such transaction unless exercised by the Optionee within a specified period following the date of such notice, (iii) in the event of an Acquisition under the terms of which holders of the Common -4- 5 Option # Date: --------------------- --------------------- No. Shares ------------------- Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the Acquisition (the "Acquisition Price"), make or provide for a cash payment to the Optionee equal to the difference between (A) the Acquisition Price times the number of shares of Common Stock subject to outstanding Options (to the extent then exercisable at prices not in excess of the Acquisition Price) and (B) the aggregate exercise price of all such outstanding Options in exchange for the termination of such Options, and (iv) provide that all or any outstanding Options shall become exercisable or realizable in full prior to the effective date of such Acquisition. (Y) Notwithstanding any other provision to the contrary, in the event of a Change of Control (as defined below), all options outstanding as of the date such Change in Control occurs shall become exercisable in full, whether or not exercisable in accordance with their terms. A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) individuals who, as of the date the Plan was adopted, constitute the Board of Directors of the Company (as of the date thereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date thereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve as of the Company or an agreement for the sale or disposition by the plan of complete liquidation of Company of all or substantially all of the Company's assets. 11. WITHHOLDING TAXES. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionees satisfaction of all applicable federal, state and local income and employment tax withholding requirements. The Optionee shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in respect of options under the Plan no later than the rate of the event creating the tax -5- 6 Option # Date: --------------------- --------------------- No. Shares ------------------- liability. In the Board's discretion, and subject to such conditions as the Board may establish, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the option creating the tax obligation, valued at their fair market value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Optionee. 12. MISCELLANEOUS. (a) The Board may amend, modify or terminate any outstanding option, including substituting therefor another option of the same or a different type, changing the date of exercise or realization, provided that the Optionee's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Optionee. The Board may at any time accelerate the time at which all or any part of an Option may be exercised. (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. (c) This option shall be governed by and construed in accordance with the laws of the State of New Hampshire. SUMMA FOUR, INC. Date By: ------------------------------- --------------------------------- Title: ------------------------------ Address: ---------------------------- Optionee's Acceptance The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 1993 Stock Incentive Plan. Date By: ------------------------------- --------------------------------- Address: ---------------------------- ---------------------------- -6- EX-99.5 8 FORM OF 1993 STOCK INCENTIVE PLAN-NON STATUTORY 1 EXHIBIT 99.5 SUMMA FOUR, INC. NON-STATUTORY STOCK OPTION AGREEMENT 1. GRANT OF OPTION. Summa Four, Inc., a Delaware Corporation (the "Company"), hereby grants to _______________ (the "Optionee") an option, pursuant to the Company's 1993 Stock Incentive Plan (the "Plan"), to purchase an aggregate of __________ shares of Common Stock ("Common Stock") of the Company at a price of $___________ per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. NON-STATUTORY STOCK OPTION. This option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date") in installments as to not more than the number of shares set forth in the table below during the respective installment periods set forth in the table below. Number of Shares as to which Exercise Period Option is Exercisable The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible, it shall be execrable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date, except as otherwise provided in Section 3 (e) below. (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the company of such written notice together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. (c) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an 2 employee, officer, or director of, or consultant or advisor to, the Company (an "eligible Optionee"). (d) Termination of Relationship with the Company. If the Optionee ceases to be an Eligible Optionee for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate twelve (12) months after such cessation (but in no event after the expiration date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Optionee, prior to the Expiration date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality or nondisclosure agreement or other agreement between the Optionee and the Company, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Optionee dies or become disable (within the meaning of Section 22(e) (3) of the Code) prior to the Expiration Date while he or she is an Eligible Optionee, or if the Optionee dies within three months after the Optionee ceases to be a Eligible Optionee (other than as a result of a termination of such relationship by the company for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of twelve months following the date of death or disability of the Optionee (whether or not such exercise occurs before the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Optionee", as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. (f) Discharge for Cause. If the Optionee, prior to the Expiration date, ceases his or her relationship with the Company because such relationship is terminated by the Company for cause" (as defined below), the right to exercise this option shall terminate immediately upon such cessation. "cause" shall mean willful misconduct by the Optionee or willful failure to perform his or her responsibilities in the best interests of the company (including, without limitation, breach by the Optionee of any procession of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Optionee and the Company), as determined by the company, which determination shall be conclusive. 4. PAYMENT OF PURCHASE PRICE. (a) Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (I) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T 3 promulgated by the Federal Reserve Board), or (iv) by any combination of such methods of payment. (b) Valuation of Shares or Other Non-Cash Consideration tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the company's common Stock or other non-cash consideration which may be delivered to the company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. (c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises this option by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this option. (d) Restrictions on Use of Option Stock. Notwithstanding the foregoing, no share of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. 5. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC. (a) General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that if any law or regulation requires the Company to take any action with respect to such shares before to issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action. (b) Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification or disclosure, or to satisfy such other condition. 6. NONTRANSFERABILITY OF OPTION. This option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process, except that this option may be transferred (I) by will or the laws of descent and distribution or (ii) pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code. Upon 4 any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 7. NO SPECIAL EMPLOYMENT OR SIMILAR RIGHTS. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment or other relationship of the Optionee with the Company for the period within which this option may be exercised. 8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a Certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. ADJUSTMENT PROVISIONS. (a) General. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (I) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. (b) Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the board of directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued pursuant to this option on account of any such adjustments. 10. CHANGE IN CONTROL. In the event of a Change in Control as defined in Section 10 of the Plan, prior to the Expiration Date or termination of this option, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 10 of the Plan. 11. WITHHOLDING TAXES. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. 12. MISCELLANEOUS. (a) Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. 5 (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. (c) This option shall be governed by and construed in accordance with the laws of the State of New Hampshire. SUMMA FOUR, INC. Dated By: ----------------------------- ------------------------------ Title: --------------------------- Address: ------------------------- ------------------------- OPTIONEE'S ACCEPTANCE The undersigned hereby accepts the foregoing option and agrees to the terms and conditions hereof. The undersigned hereby acknowledges receipt of a copy of the Company's 1993 Stock Incentive Plan. Option # By: ---------------------------- ------------------------------ Address: ------------------------- ------------------------- EX-99.6 9 INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992. 1 EXHIBIT 99.6 INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992 1. PURPOSE OF THE PLAN This Incentive Stock Option Plan of August 1, 1992 (hereinafter referred to as the "Plan"), is intended to encourage ownership of shares of Summa Four, Inc. (hereinafter referred to as "Summa Four"), by key employees of Summa Four and its subsidiaries and to provide additional incentive for them to promote the success of the business. This Plan is adopted in accordance with the provisions of Section 422 of the Internal Revenue Code as Amended. 2. SHARES SUBJECT TO THE PLAN There will be reserved for use upon the exercise of options to be granted from time to tine under the Plan (hereinafter referred to as "Options"), an aggregate of 100,000 common shares, of the par value of $.0l per share (hereinafter referred to as "Common Shares"), of Summa Four, which shares may be in whole or in part, as the Board of Directors of Summa Four shall from time to time determine, authorized but unissued Common Shares or issued Common Shares which shall have been reacquired by Summa Four. Options shall not be granted in any year ending with December 31 (hereinafter referred to as the "Plan Year"), for in excess of the aggregate number of shares available for issuance under the Plan; provided, however, that if an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares covered thereby shall (unless the Plan still have been terminated) be added to the shares otherwise available for Options which may be granted in accordance with the terms of the Plan. 3. ADMINISTRATION OF THE PLAN The Board or Directors, subject to the provisions of the Plan, shall have plenary authority in its discretion to determine the employees of Summa Four and its subsidiaries to whom Options shall be granted, and the time or times at which Options shall be granted; to interpret the Plan; and to prescribe, amend, and rescind rules and regulations relating to it. The Board shall hold its meetings with respect to the Plan at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum. All action of the Board shall be taken by a majority of its members. Any action may be taken by a written instrument signed by a majority of its members and actions so taken shall be fully as effective as if it had been taken by a vote of a majority of the members at a meeting duly called and held. The Board shall make such rules and regulations for the conduct of its business as it shall deem advisable. 4. EMPLOYEES TO WHOM OPTIONS MAY BE GRANTED An Option may be granted in each Plan Year to each key employee of Summa Four or one or more of its subsidiaries as defined in Section of 424 of the Internal Revenue Code, who shall be selected by the Board whether or not in any case the grantee shall have received one or more options hereunder in any previous Plan Year or Years. 2 No person to whom options are granted hereunder shall receive options, first exercisable during any single calendar year, for shares, the fair market value of which (determined at the time of grant of the options) exceeds $100,000. Accordingly, no optionee shall be entitled to exercise options in any single calendar year, except to the extent first exercisable in previous calendar years, for shares of Common Stock the value of which (determined at the time of grant of the options) exceeds $100,000. 5. FACTORS CONSIDERED IN GRANTING OPTIONS In making any determination as to employees (other than those who are also directors of Summa Four) to whom options shall be granted and as to the number of shares to be covered by such Options, the Board shall take into account the duties of the respective employees, their present and potential contributions to the success of Summa Four, and such other factors as the Board shall deem relevant in connection with accomplishing the purpose of the Plan. 6. OPTION PRICES The purchase price of the common shares shall be not less than fair market value and as determined by the Board. The purchase price per share of Common Stock purchasable under options granted pursuant to this Plan to a person who owns more than 10 percent of the voting power of the Corporation's voting stock shall not be less than 110 percent of the fair market value of such shares, at the time the options are granted. For the purposes of the preceding sentence (a) the employee shall be considered as owning the stock owned directly or indirectly by or for himself, the stock which the employee may purchase under outstanding options and the stock owned, directly or indirectly, by or for his brothers and sisters (whether of the whole or half blood), spouse, ancestors, and lineal descendants and (b) stock owned directly or indirectly by or for a corporation, partnership, estate, or trust shall be considered as being owned proportionately by or for its shareholders, partners or beneficiaries. 7. TERM OF OPTIONS The term of each option shall be ten (10) years from the date of the granting thereof, but shall be subject to earlier termination as hereinafter provided. No option granted pursuant to the Plan to a person then owning more than 10 percent of the voting power of the Corporation's voting stock shall be exercisable after the expiration of five years from the date the option is first granted. For the purposes of the preceding sentence (a) the employee shall be considered as Owning the stock owned directly or indirectly by or for himself, the stock which the employee may purchase under outstanding options and the stock owned, directly or indirectly, by or for his brothers and sisters (whether of the whole or half blood), spouse, ancestors, and lineal descendants and (b) stock owned directly or indirectly, by or for a corporation, partnership, estate, or trust shall be considered an being owned proportionately by or for its shareholders, partners or beneficiaries. 2 3 8. EXERCISE OF OPTIONS The Board of Directors of the Corporation shall fix the manner in which an Option may be exercised including the terms for the payment of the purchase price at time of exercise. Except as provided in Paragraphs 12 and 13 hereof, an Option may not be exercised at any time unless the holder thereof shall have been in continuous employ of Summa Four and/or of one or more of its subsidiaries, from the date of the granting of the option to the date of its exercise. Approved leaves of absence will not be considered as interruptions of continuity of employment. The holder of an option shall not have any of the rights of a shareholder with respect to the shares covered by this Option, except to the extent that one or more of the certificates for such shares shall be delivered to him upon the due exercise of the Option. 9. INVESTMENT LETTER No Option granted under this Plan may be exercised unless the employee or successor to said employee under Paragraph 12 or Paragraph 13, shall execute an Investment Letter substantially in the form of Exhibit B attached hereto and said letter has been complied with by Summa Four and the employee or his successor. 10. NON-TRANSFERABILITY An Option shall not be transferable otherwise than by Will or the laws of descent and distribution, and an Option may be exercised, during the lifetime of the employee, only by him. 11. TERMINATION OF EMPLOYMENT In the event that the employment of an employee to whom an Option shall have been granted shall be terminated (otherwise than by reason of death), an Option or Options held by him, to the extent not theretofore exercised, shall forthwith terminate. So long as the holder of an Option shall continue to be an employee of Summa Four or one or more of its subsidiaries, his Options shall not be affected by any change of duties or position. Nothing in the Plan or in any option agreement shall confer upon any employee any right to continue in the employ of Summa Four or any of its subsidiaries, or interfere in any way with the right of Summa Four or any such subsidiary to terminate his employment. 12. DEATH OF AN EMPLOYEE If any employee to whom an option shall have been granted shall die while he shall be employed by Summa Four or one or more of its subsidiaries, such Option may be exercised (to the extent that the employee shall have been entitled to do so at the date of his death) by a legatee or legatees of the employee under his last Will or by his personal representatives or distributes, at any time within three months after his death, unless otherwise determined by the Directors. 13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION In the event of changes in the outstanding Common Shares of Summa Four by reason of share dividends, split-ups, recapitalizations, mergers, consolidations, combinations, or exchange of shares, separation, re-organizations, or liquidations, the number and class of shares available 3 4 under the Plan in the aggregate and in any Plan Year and the maximum number of shares to which Option way be granted to any employee shall be correspondingly adjusted by the Board of Directors. No adjustment shall be made in the minimum number of shares which may be purchased at any time. 14. EFFECTIVENESS OF PLAN The Plan shall become effective on such date as the Board of Directors shall determine. The shareholders of Summa Four shall, by the affirmative vote of a majority in interest of the Common Shares, approve the Plan within twelve months of its adoption by the Board of Directors. 15. TIME OF GRANTING OPTIONS The granting of an Option shall take place only when a written Option agreement substantially in the form of the Option agreement which is attached hereto marked Exhibit A shall have been duly executed and delivered by or on behalf of Summa Four and the employee to whom such Options shall be granted. 16. TERMINATION AND AMENDMENT OF PLAN The Plan shall terminate on July 31, 2002, and an Option shall not be granted under the Plan after that date. The Plan (including the form of Option agreement which is attached hereto marked Exhibit A) may at any time or from time to time be terminated, modified, or amended by the shareholders of Summa Four, by the affirmative vote of a majority in interest of the Common Shares. The Board of Directors may at any time and from time to time modify or amend the Plan (including such form of Option agreement) in such respects as it shall deem advisable to conform to any change in the law. SUMMA FOUR, INC. BOARD OF DIRECTORS MEETING FEBRUARY 3, 1993 . . . The Board, by unanimous vote, confirmed its interpretation of the 1992 Employee Incentive Stock Option Plan consistent with prior option plans that the intent and language of the 1992 Employee Incentive Stock Option Plan that in the event of the proposed merger, dissolution or liquidation of the corporation or in the event of a proposed sale of substantially all of the assets of the corporation each holder of an outstanding option shall receive written notice of a thirty day period prior to the date of such merger, dissolution, liquidation or sale during which each optionee shall have the right to exercise his option as to all or any part of the shares covered thereby, including shares as to which such option would not otherwise be exercisable. To the extent that any such exercise relates to the shares which are not otherwise purchasable by the employee at such time such exercise shall be contingent upon the consummation of such merger, dissolution or sale. . . . 4 5 EXHIBIT A EMPLOYEE OPTION AGREEMENT OPTION AGREEMENT made this _____ day of _____________, _______ between Summa Four, Inc., a Delaware corporation, hereinafter called the Corporation, and _________________ an employee of the Corporation or one or more of its subsidiaries, hereinafter called the Employee. The Corporation desires, by affording the Employee an opportunity to purchase its Common Shares, of the par value of $.01 per share, hereinafter called the Common Shares, as hereinafter provided, to carry out the purpose of the Incentive Stock Option Plan of August 1, 1992, approved by its shareholders. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. GRANT OF OPTION: The Corporation hereby irrevocably grants to the Employee the right and Option, hereinafter called the Option, to purchase all or any part of an aggregate of Common Shares (such number being subject to adjustment as provided in paragraph 8 hereof) on the terms and conditions herein set forth. 2. PURCHASE-PRICE: The Purchase Price of the Common Shares covered by the Option shall be $________ per share flat or exdividend. 3. TERM OF OPTION: The Term of the option shall be for a period of ten (10) years from the date hereof, subject to earlier termination as provided in Paragraphs 5 and 6 hereof. The option may be exercised in accordance with the following schedule: ___________ on or after ___________; an additional __________ on or after _______________; an additional ________on or after ____________; an additional _______ on or after ___________; and an additional ________ on or after ___________. The Purchase Price of the shares as to which the Option shall be exercised shall be paid in full at the time of exercise. Except as provided in Paragraphs 5 and 7 hereof, the Option may not be exercised at any time unless the Employee shall have been in continuous employ of the corporation, and/or one or more of its subsidiaries, from the date hereof to the date of the exercise of the Option. The Holder of the Option shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such shares shall be delivered to him upon the due exercise of the Option. 4. INVESTMENT LETTER: This Option may not be exercised unless and until an Investment Letter substantially in the form of Exhibit B, attached hereto, is signed by the Employee or successor to the Employee under the Plan and such letter has been complied with by the Corporation. 5. NON-TRANSFERABILITY: The Option shall not be transferable otherwise than by Will or the laws of descent and distribution, and the Option way be exercised, during the 6 lifetime of the Employee, only by him. More particularly (but without limiting the generality of the foregoing), the option may not be assigned, transferred (except as provided above), pledged or hypothecated in any way, shall not be assignable by operation of law, and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option shall be null and void and without effect. 6. TERMINATION OF EMPLOYMENT: In the event that the employment of the Employee shall be terminated (otherwise than by reason of death), any option or options held by him, to the extent not theretofore exercised, shall forthwith terminate. So long as the Employee shall continue to be an employee of the Corporation or one or more of its subsidiaries, the Option shall not be affected by any change of duties or position. Nothing in this Option Agreement shall confer upon the Employee any right to continue in the employ of the Corporation or of any of its subsidiaries or interfere in any way with the right of the corporation or any such subsidiary to terminate his employment. 7. DEATH OF EMPLOYEE: If the Employee shall die while he shall be employed by the Corporation or one or more of its subsidiaries, the option may be exercised (to the extent that the employee shall have been entitled to do so at the time of his death) by a legatee or legatees of the Employee under his last Will, or by his personal representatives or distributees, any time within three months after his death unless otherwise extended by the Board of Directors. 8. CHANGES IN CAPITAL STRUCTURE. If all or any portion of the Option shall be exercised subsequent to any share dividend, split-up, recapitalization, merger, consolidation, combination or exchange of shares, separation, reorganization or liquidation occurring after the date hereof, as a result of which shares of any class shall be issued in respect of outstanding Common Shares or Common Shares shall be changed into the same class or classes, the person or persons so exercising the option shall receive, for the aggregate price paid upon such exercise, the aggregate number and class of shares which, if Common Shares (as authorized at the date hereof) had been purchased at the date hereof for the same aggregate price (on the basis of the price per share set forth in Paragraph 2 hereof) and had not been disposed of, such person or persons would be holding, at the time of such exercise, as a result of such purchase and all such shared dividends, split-ups, recapitalizations. mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations; provided, however, that no fractional share shall be issued upon any such exercise, and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued. 9. LIMITATION: The Employee shall not exercise any one or more Options hereunder if and to the extent that the Employee would thereby be entitled to purchase common shares in any one calendar year the value of which, determined at the time of the grant of the Option or Options, would exceed $100,000; provided, however, that such exercise shall nonetheless be permitted if and to the extent that the right to first exercise said options shall have accumulated over a number of years rather than having first occurred in the year of exercise. 2 7 10. METHOD OF EXERCISING OPTION: Subject to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Corporation at the office of the Corporation now located at 25 Sundial Avenue, Manchester, New Hampshire and by compliance with the provisions of Paragraph 4 of this Agreement. Such notice shall state the election to exercise the option and the number of shares in respect of which it is being exercised, and shall be signed by the person or persons so exercising the option. Such notice shall either: (a) be accompanied by payment of the full Purchase Price of such shares, in which event the Corporation shall deliver a certificate or certificates representing such shares as soon as practicable after the notice shall be received; or (b) fix a date (not less than five (5) nor more than ten (10) business days from the date such notice shall be received by the Corporation) for the payment of the full Purchase Price of such shares at the Corporation, against delivery of a certificate or certificates representing such shares. Payment of such Purchase Price shall, in either case, be made by check payable to the order of the Corporation. The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option (or, if the Option shall be exercised by the Employee and if the Employee shall so request in the notice exercising the option, shall be registered in the name of the employee and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person or persons exercising the option. In the event the option shall be exercised, pursuant to Paragraph 7 hereof, by any person or persons other than the Employee, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable. 11. GENERAL: The Corporation shall at all times during the Term of the Option reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of this Option Agreement, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Corporation in connection therewith, and will from time to time use its best efforts to comply with all laws and regulations which in the opinion of counsel for the Corporation, shall be applicable thereto. 12. SUBSIDIARY: As used herein, the term "Subsidiary" shall mean a present or future corporation which should be a "subsidiary corporation" of the Corporation, as that term is defined in Section 424 of the internal Revenue Code of 1986. 3 8 IN WITNESS WHEREOF, the Corporation has caused the Option Agreement to be duly executed by its officers thereunto duly authorized and the employee has hereunto set his hand and seal, all as of the day and year first above written. Corporate Seal SUMMA FOUR, INC. Attest By: ------------------------------ - ----------------------------------- --------------------------------- Secretary Employee 4 9 EXHIBIT B SUMMA FOUR, INC. 25 Sundial Avenue Manchester, New Hampshire 03103 Gentlemen: This letter is being delivered to you in connection with the sale to me by you this date of ___________________________________ shares of your common stock, par value $.01 per share (the "Shares") , and as an inducement to you to make such sale. In connection therewith, I hereby represent and warrant to and agree with you as follows: 1. I have reviewed the current _______ financial data of the Corporation and have had access to all marketing projections and product descriptions dealing with the Corporation's current and future business and have received copies of those documents which I requested. 2. I have had such opportunity as I deemed adequate to obtain from you such information as is necessary to permit the evaluation of the merits and risks of my purchase of the Shares. In this connection, during the course of the negotiations leading up to my purchase of the Shares, you also have made available to me (a) adequate opportunity to meet with, to ask questions of and to receive answers from your executive officers regarding any matters relating (i) to my purchase of the Shares and (ii) to you, your past and current operations and financial condition as well us your future plans, - all to the extent that such information is required by Schedule A of the Securities Act of 1933, as amended (the "Securities Act"), and (b) adequate access to such of your books, records, properties and installations an seemed appropriate, based upon my present knowledge, to verify the accuracy of the information obtained as specified above. 3. I am sufficiently experienced in business, financial and investment matters to be capable of utilizing all of the information which I have received as specified above, evaluating risks involved in my acquisition of the Shares and making an informed investment decision relative to that acquisition. 4. I understand that I must bear the economic risk of my investment in the Shares for an indefinite period of time inasmuch as the Shares have not been registered under the Securities Act and, therefore, cannot be sold, pledged or transferred unless they are subsequently registered under the Securities Act or, subject to compliance with the provisions of Section 6, below, an exemption from such registration is available. I understand that you have no obligation, and do not presently intend, to register the Shares. I also understand that in the absence of such registration, I may effect limited sales of the Shares in reliance upon the exemption from registration defined or granted by Rule 144 under the Securities Act if, and only 10 if, at the time of such proposed sale, such Rule is then applicable and all the terms and conditions of such Rule are complied with. and that if such Rule then applies, compliance with Regulation A under the Act or some other disclosure exemption will be required. I understand that you have no present obligation, and do not presently intend, to make available such adequate current public information as is necessary in order to permit transfer of the Shares in accordance with the provisions of said Rule 144. 5. I can at this time afford complete loss of my investment in the Shares, and I am able to bear the economic risk of holding the Shares for an indefinite period. 6. I am not an "underwriter" within the meaning of Section 2 (11) of the Securities Act. I will acquire the Shares f or my own account for investment and not with a view to distribution or on behalf of other persons. I will not sell, pledge, transfer or otherwise dispose of all or any of the Shares, and I agree that you may refuse to transfer any of the Shares on your transfer books unless and until either: (a) a registration statement under the Securities Act, or a post-effective amendment to such a registration statement, covering the Shares proposed to be sold, pledged, transferred or otherwise disposed of, describing the manner and terms of the proposed sale, pledge, transfer or other disposition shall be in effect and effective under the Securities Act; or (b) a representative of the Securities and Exchange Commission (the "Commission") authorized to give such advice shall have rendered written advice to you or to me, to the effect that the Commission would take no action, or that the staff of the Commission would not recommend to the Commission that it take action, with respect to the proposed sale, pledge, transfer or other disposition if consummated, and such proposed sale, pledge, transfer or other disposition shall be consummated as specified in such request; or (c) counsel representing me and satisfactory to you shall have advised you in a written opinion satisfactory to you that no registration under the Securities Act would be required in connection with the proposed sale, pledge, transfer or other disposition, and such opinion shall have been delivered to you at least 15 calendar days in advance of the proposed sale, pledge, transfer or other disposition; or (d) I shall have filed with the Commission and with the principal national securities exchange, if any, on which your common stock may be admitted to trading, the required number of copies of Form 144 and all required amendments thereto, and shall have delivered to you such additional information as you may have reasonably requested establishing my bona fide intention to sell the Shares referred to in such Form 144 and establishing that the sale is exempt from the registration provisions of the Securities Act by reason of Rule 144 thereunder. You shall place on certificates representing the Shares (and on any certificate subsequently issued in substitution therefore unless one of the conditions specified in paragraphs (a), (b), (c) or (d) above, shall have occurred) a legend stating in substance: "The Shares evidenced by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933. These Shares may not be sold, pledged, 2 11 transferred or otherwise disposed of in the absence of such registration or exemption therefrom under such Act. The shares are restricted pursuant to the provisions of an agreement between Summa Four, Inc. and _______________, a copy of which will be furnished by the Corporation to the holder of this certificate upon written request and without charge." You may, at your discretion, cause stop transfer orders to be placed with your transfer agent(s) with respect to the certificates for the Shares on which such legend has been placed. When one or more of the conditions not forth in paragraphs (a), (b), (c) or (d) above shall have occurred, you shall instruct in writing the transfer agent(s) of your common stock to remove any and all stop transfer orders with respect to the certificates for the subject Shares (delivering to you, or in the case of a proposed sale of Shares pursuant to Rule 144, any other person or entity referred to in Rule 144 (a)(2), copies of such written instructions) and shall arrange for the prompt delivery to me or such other person or entity, as the case may be, in exchange for outstanding certificates for such Shares, of certificates (representing the appropriate number of Shares) issued without any legend endorsed thereon. 7. I HAVE READ THIS AGREEMENT CAREFULLY AND FULLY UNDERSTAND ITS PROVISIONS. WITNESS: - ------------------------------------- --------------------------------- Employee 3 EX-99.7 10 FORM OF INCENTIVE STOCK OPTION PLAN OF AUG.1, 1992 1 EXHIBIT 99.7 EMPLOYEE OPTION AGREEMENT OPTION AGREEMENT made this ___ day of ______, ________ between Summa Four, Inc., a Delaware Corporation, hereinafter called the Corporation, and _____________, an employee of the corporation or one or more of its subsidiaries, hereinafter called the employee. The Corporation desires, by affording the employee an opportunity to purchase its Common Shares, of the par value of $.0l per share, hereinafter called the Common Shares, as hereinafter provided, to carry out the purpose of the Incentive Stock Option Plan of August 1, 1992, approved by its shareholders. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. Grantive Option: The Corporation hereby irrevocably grants to the employee the right and Option, hereinafter called the Option, to purchase all or any part of an aggregate of _________ Common Shares (such number being subject to adjustment as provided in paragraph 8 hereof) on the terms and conditions herein set forth. 2. Purchase Price: The Purchase Price of the Common Shares covered by the Option shall be $__________ per share flat or exdividend. 3. Term of Option: The Term of the Option shall be for a period of ten (10) years from the date hereof, subject to earlier termination as provided in Paragraphs 5 and 6 hereof. The Option may be exercised in accordance with the following schedule: ____% on or after _____________; an additional _________% on or after ____________; an additional ______% on or after _____________; an additional _____% on or after ___________; and an 2 additional _______% on or after ______________. The Purchase Price of the shares as to which the Option shall be exercised shall be paid in full in cash at the time of exercise. Except as provided in Paragraphs 5 and 7 hereof, the Option may not be exercised at any time unless the employee shall have been in continuous employ of the Corporation, or one or more of its subsidiaries, from the date hereof to the date of the exercise of the Option. The Holder of the Option shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such shares shall be delivered to him upon the due exercise of the Option. No incentive stock option shall be exercisable by a participant while there is outstanding any incentive stock Option, within the meaning of Section 422A of the Code, which was granted before the granting of such Option to such participant to purchase shares in the Corporation or in a corporation which (at the time of the granting of such Option) is a parent or subsidiary corporation of the Corporation, or in a predecessor corporation of any such corporation. For purposes of this section, any incentive stock Option shall be treated as outstanding until such Option is exercised in full or expires by reason of lapse of time. 4. Investment Letter: This Option may not be exercised unless and until an Investment Letter substantially in the form of Exhibit 1, attached hereto, is signed by the employee or successor to the employee under the Plan and such letter has been complied with by the Corporation. 5. Non-transferability: The Option shall not be transferable otherwise than by Will or the laws of descent and distribution, and the Option may be exercised, during the lifetime of the employee, only by him. More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided above), pledged or hypothecated in any way, shall not be assignable by operation of law, and shall not be subject to 2 3 execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option shall be null and void and without effect. 6. Termination of Employment: In the event that the employment of the employee shall be terminated (otherwise than by reason of death), any Option or Options held by him, to the extent not theretofore exercised, shall forthwith terminate. So long as the employee shall continue to be an employee of the Corporation or one or more of its subsidiaries, the Option shall not be affected by any change of duties or position. Nothing in this Option Agreement shall confer upon the employee any right to continue in the employ of the Corporation or of any of its subsidiaries or interfere in any way with the right of the Corporation or any such subsidiary to terminate his employment. 7. Death of Employee: If the employee shall die while he shall be employed by the Corporation or one or more of its subsidiaries, the Option may be exercised (to the extent that the employee shall have been entitled to do so at the time of his death) by a legatee or legatees of the employee under his last Will, or by his personal representatives or distributees, any time within three months after his death unless otherwise extended by the Board of Directors. 8. Changes in Capital Structure: If all or any portion of the Option shall be exercised subsequent to any share dividend, split-up, recapitalization, merger, consolidation, combination or exchange of shares, separation, reorganization or liquidation occurring after the date hereof, as a result of which shares of any class shall be issued in respect of outstanding Common Shares or Common Shares shall be changed into the same class or classes, the person 3 4 or persons so exercising the Option shall receive, for the aggregate price paid upon such exercise, the aggregate number and class of shares which, if Common Shares (as authorized at the date hereof) had been purchased at the date hereof for the same aggregate price (on the basis of the price per share set forth in Paragraph 2 hereof) and had not been disposed of, such person or persons would be holding, at the time of such exercise, as a result of such purchase and all such shared dividends, split-ups, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations; provided, however, that no fractional share shall be issued upon any such exercise, and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued. No adjustment shall be made in the minimum number of shares which may be purchased at any one time, as fixed by Paragraph 3 hereof. 9. Method of Exercising Option: Subject to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Corporation at the office of the Corporation now located at 25 Sundial Avenue, Manchester, New Hampshire and by compliance with the provisions of Paragraph 4 of this Agreement. Such notice shall state the election to exercise the Option and the number of shares in respect of which it is being exercised, and shall be signed by the person or persons so exercising the Option. Such notice shall either: (a) be accompanied by payment of the full Purchase Price of such shares, in which event the Corporation shall deliver a certificate or certificates representing such shares as soon as practicable after the notice shall be received; or (b) fix a date (not less than five (5) nor more than ten (10) business days from the date such notice shall be received by the Corporation) for the payment of the full Purchase Price of such shares at the corporation, against delivery of a certificate or certificates representing such shares. Payment of such Purchase Price shall, in 4 5 either case, be made by check payable to the order of the Corporation. The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option (or, if the Option shall be exercised by the employee and if the employee shall so request in the notice exercising the Option, shall be registered in the name of the employee and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised, pursuant to Paragraph 7 hereof, by any person or persons other than the employee, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable. 10. General: The Corporation shall at all times during the Term of the Option reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of this Option Agreement, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Corporation in connection therewith, and will from time to time use its best efforts to comply with all laws and regulations which in the opinion of counsel for the Corporation, shall be applicable thereto. 11. Subsidiary: As used herein, the term "Subsidiary" shall mean a present or future corporation which should be a "subsidiary corporation" of the Corporation, as that term is defined in section 425 of the Internal Revenue Code of 1986. 5 6 IN WITNESS WHEREOF, the Corporation has caused the Option Agreement to be duly executed by its officers thereunto duly authorized and the employee has hereunto set his hand and seal, all as of the day and year first above written. Corporate Seal SUMMA FOUR, INC. Attest By:_________________________________ __________________________________ ____________________________________ Secretary 6 EX-99.8 11 FORM OF INCENTIVE STOCK OPTION PLAN OF AUG 1, 1992 1 EXHIBIT 99.8 SUMMA FOUR, INC. INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992 INCENTIVE STOCK OPTION AGREEMENT 1. GRANT OF OPTION. Summa Four, Inc., a Delaware corporation (the "Company"), hereby grants to ______________ (the "Optionee"), an option, pursuant to the Company's Incentive Stock Option Plan of August 1, 1992 (the "Plan"), to purchase an aggregate of _______ shares of Common Stock ("Common Stock") of the Company at a price of $_________ per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term "Company" shall include all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. INCENTIVE STOCK OPTION. This option is intended to qualify as an incentive stock option ("Incentive Stock Option") within the meaning of Section 422 of the Code. 3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date") in installments as to not more than the number of shares set forth in the table below during the respective installment periods set forth in the table below. Number of Shares as to which Exercise Period Option is Exercisable --------------- ---------------------
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date. (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the Company of such written notice together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. 2 (c) Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424(a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the "Successor Corporation") shall be considered for all purposes of this option to be employment by the Company. (d) Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements, arising by reason of this option being treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as the result of a discharge for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Optionee", as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. (f) Discharge for Cause. If the Optionee, prior to the Expiration Date, is discharged by the Company for "cause" (as defined below), the right to exercise this option shall terminate immediately upon such cessation of employment. "Cause" shall mean willful misconduct in connection with the Optionee's employment or willful failure to perform his or her employment responsibilities in the best interests of the Company (including, without limitation, breach by the Optionee of any provision of any employment, nondisclosure, non-competition or other similar agreement between the Optionee and the Company), as determined by the Company, which determination shall be conclusive. The Optionee shall be considered to have been discharged "for cause" if the Company determines, within 30 days after the Optionee's resignation, that discharge for cause was warranted. 2 3 4. PAYMENT OF PURCHASE PRICE. (a) Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (iv) by any combination of such methods of payment. (b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company's Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. (c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this option. (d) Restrictions on Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. 5. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC. (a) General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action. (b) Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure 3 4 or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such other condition. 6. NONTRANSFERABILITY OF OPTION. Except as provided in paragraph (e) of Section 3, this option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 7. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised. 8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. ADJUSTMENT PROVISIONS. (a) General. If, through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification. stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. (b) Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued pursuant to this option on account of any such adjustments. (c) Limits on Adjustments. No adjustment shall be made under this Section 9 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of this option or a grant of additional benefits to the Optionee. 10. CHANGE OF CONTROL. In the event of a Change of Control (as defined below), this option, as of the date such "Change in Control" occurs, shall be become exercisable in full, whether or not it was otherwise fully exercisable on such date. A "Change in Control" shall occur or be 4 5 deemed to have occurred only if any of the following events occur: (i) any "person", as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or securities of the company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) individuals who, as of the Plan was adopted, constituted the Board of Directors of the Company (as of the date thereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date thereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act), shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 11. WITHHOLDING TAXES. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. 12. LIMITATIONS ON DISPOSITION OF INCENTIVE STOCK OPTION SHARES. It is understood and intended that this option shall qualify as an "incentive stock option" as defined in Section 422 of the Code. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Optionee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition. 13. MISCELLANEOUS. (a) Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. 5 6 (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. (c) This option shall be governed by and construed in accordance with the laws of the State of New Hampshire. Date of Grant: SUMMA FOUR, INC. By:_________________________________ Title:______________________________ Address: 25 Sundial Avenue Manchester, NH 03103 OPTIONEE'S ACCEPTANCE The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 1992 Stock Option Plan. Grant No. OPTIONEE ____________________________________ Address: ___________________________ ___________________________ 6 EX-99.9 12 FORM OF INCENTIVE STOCK OPTION PLAN OF AUG 1, 1992 1 EXHIBIT 99.9 SUMMA FOUR, INC. 1992 STOCK INCENTIVE PLAN NON-STATUTORY STOCK OPTION AGREEMENT 1. GRANT OF OPTION. Summa Four, Inc., a Delaware corporation (the "Company"), hereby grants to _______________ (the "Optionee"), an option, pursuant to the Company's 1993 Stock Incentive Plan (the "Plan"), to purchase an aggregate of __________ shares of Common Stock ("Common Stock") of the Company at a price of $_______ per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 242(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. NON-STATUTORY STOCK OPTION. This option is not intended to qualify as an incentive stock option ("Incentive Stock Option") within the meaning of Section 422 of the Code. 3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date") in installments as to not more than the number of shares set forth in the table below during the respective installment periods set forth in the table below. Number of Shares as to which Exercise Period Option is Exercisable --------------- ---------------------
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date. (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the Company of such written notice together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. 2 (c) Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, a director of the Company. (d) Exercise Period. If the Optionee ceases to be a director of the Company for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate twelve (12) months after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements, arising by reason of this option being treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company; the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is a director of the Company, or if the Optionee dies within three months after the Optionee ceases to be a director of the Company (other than as a result of a discharge for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Optionee", as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. 4. PAYMENT OF PURCHASE PRICE. (a) Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made by delivery of cash or check in an amount equal to the exercise price of such options or, with the prior consent of the Company (which may be withheld in its sole discretion), by (A) delivery of shares of Common Stock owned by the Optionee for at least six months, valued at their fair market value, as determined in (b) below, (B) delivery of a promissory note of the optionee to the Company on terms determined by the Board, c delivery of an irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price or delivery of irrevocable instructions to a broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price, (D) payment of such other lawful consideration as the Board may determine, or (E) any combination of the foregoing. (b) Valuation of Shares or Other Not-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company's Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this 2 3 option shall be determined in good faith or in the manner determined by the Board of Directors of the Company from time to time. (c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this option. (d) Restrictions on use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within six months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. 5. DELIVERY OF SHARES: COMPLIANCE WITH SECURITIES LAWS, ETC. The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove restriction from shares previously delivered under the Plan (i) until all conditions of the option have been satisfied or removed, (ii) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, (iii) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of notice of issuance, and (iv) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. 6. NONTRANSFERABILITY OF OPTION. This option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process, except that this option may be transferred (i) by will or the laws of descent and distribution or (ii) pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 7. NO SPECIAL EMPLOYMENT OR SIMILAR RIGHTS. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue of the Optionee with the Company for the period within which this option may be exercised. The Company expressly reserves the fight at any time to dismiss the Optionee free from any liability or claim under the Plan, except as otherwise expressly provided in this Agreement. 8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) 3 4 unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. ADJUSTMENT PROVISIONS. In the event that the Board, in its sole discretion, determines that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or other similar transaction affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under the Plan, then the Board shall equitably adjust either or both (i) the number and kind of shares subject to this option, and (ii) the award, exercise or conversion price with respect to the foregoing, and if considered appropriate, the Board may make provision for a cash payment with respect to this option, provided that the number of shares subject to this option shall always be a whole number. 10. MERGERS, ETC. (X) Except as set forth in subparagraph (Y) below, in the event of a consolidation, merger or other reorganization in which all of the outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity (an "Acquisition") or in the event of a liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions as to this Option: (i) provide that this Option shall be assumed, or a substantially equivalent Option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) on such terms as the Board determines to be appropriate, (ii) upon written notice to Optionee, provide that if unexercised, this Option will terminate immediately prior to the consummation of such transaction unless exercised by the Optionee within a specified period following the date of such notice, (iii) in the event of an Acquisition under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the Acquisition (the "Acquisition Price"), make or provide for a cash payment to the Optionee equal to the difference between (A) the Acquisition Price times the number of shares of Common Stock subject to outstanding Options (to the extent then exercisable at prices not in excess of the Acquisition Price) and (B) the aggregate exercise price of all such outstanding Options in exchange for the termination of such Options, and (iv) provide that all or any outstanding Options shall become exercisable or realizable in full prior to the effective date of such Acquisition. (Y) Notwithstanding any other provision to the contrary, in the event of a Change of Control (as defined below), all options outstanding as of the date such Change in Control occurs shall become exercisable in full, whether or not exercisable in accordance with their terms. A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) individuals who, as of the date the Plan was adopted, constitute the Board of Directors of the Company (as of the date thereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person 4 5 becoming a director subsequent to the date thereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 11. WITHHOLDING TAXES. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. The Optionee shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in respect of options under the Plan no later than the rate of the event creating the tax liability. In the Board's discretion, and subject to such conditions as the Board may establish, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the option creating the tax obligation, valued at their fair market value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Optionee. 12. MISCELLANEOUS. (a) The Board may amend, modify or terminate any outstanding option, including substituting therefor another option of the same or a different type, changing the date of exercise or realization, provided that the Optionee's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Optionee. The Board may at any time accelerate the time at which all or any part of an Option may be exercised. (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. 5 6 (c) This option shall be governed by and construed in accordance with the laws of the State of New Hampshire. SUMMA FOUR, INC. By: ____________________________ Title: ____________________________ Address:____________________________ ____________________________ OPTIONEE'S ACCEPTANCE The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 1992 Stock Incentive Plan. Option # By: ____________________________ Address:____________________________ ____________________________ 6 EX-99.10 13 SUMMA FOUR, INC. 1993 DIRECTOR STOCK OPTION PLAN 1 EXHIBIT 99.10 SUMMA FOUR, INC. 1993 DIRECTOR STOCK OPTION PLAN, AS AMENDED 1. PURPOSE The purpose of this 1993 Director Stock Option Plan (the "Plan") of Summa Four, Inc. (the "Company") is to encourage ownership in the Company by outside directors of the Company whose continued services are considered essential to the Company's future progress and to provide them with a further incentive to remain as directors of the Company. 2. ADMINISTRATION The Board of Directors shall supervise and administer the Plan. Grants of stock options under the Plan and the amount and nature of the awards to be granted shall be automatic in accordance with Section 5. However, all questions of interpretation of the Plan or of any options issued under it shall be determined by the Board of Directors and such determination shall be final and binding upon all persons having an interest in the Plan. 3. PARTICIPATION IN THE PLAN Directors of the Company who are not employees of the Company or any subsidiary of the Company shall be eligible to participate in the Plan. 4. STOCK SUBJECT TO THE PLAN a. The maximum number of shares which may be issued under the Plan shall be 63,000 shares of the Company's Common Stock, par value $.0l per share ("Common Stock"), subject to adjustment as provided in Section 9 of the Plan. All share amounts set forth in this Plan reflect the 3.5-for-1 stock split approved by the Board of Directors on July 14, 1993. b. If any outstanding option under the Plan for any reason expires or is terminated without having been exercised in full, the shares allocable to the unexercised portion of such option shall again become available for grant pursuant to the Plan. c. All options granted under the Plan shall be nonstatutory options not entitled to special tax treatment under Section 422, of the Internal Revenue Code of 1986, as amended to date and as it may be amended from time to time (the "Code"). 2 5. TERMS, CONDITIONS AND FORM OF OPTIONS Each option granted under the Plan shall be evidenced by a written agreement in such form as the Board of Directors shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions: a. OPTION GRANT DATES. i. Upon the initial election of any eligible director as a director of the Company, the Company shall grant to such director an option to purchase 7,000 shares of Common Stock (the "Initial Option"). ii. On the date of each annual meeting of stockholders of the Company, the Company shall grant to each eligible director an option to purchase 2,500 shares of Common Stock (the "Annual Option"). b. OPTION EXERCISE PRICE. The option exercise price per share for each option granted under the Plan shall equal (i) the last reported sales price per share of the Company's Common Stock on the NASDAQ National Market System (or, if the Company is traded on a nationally recognized securities exchange on the date of grant, the reported closing sales price per share of the Company's Common Stock by such exchange) on the date of grant (or if no such price is reported on such date such price as reported on-the nearest preceding day) or (ii) if the Common Stock is not traded on NASDAQ or an exchange, the fair market value per share on the date of grant as determined by the Board of Directors. c. OPTIONS NON-TRANSFERABLE. Each option granted under the Plan by its terms shall not be transferable by the optionee otherwise than by will, or by the laws of descent and distribution, and shall be exercised during the lifetime of the optionee only by him. No option or interest therein may be transferred, assigned, pledged or hypothecated by the optionee during his lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process. d. EXERCISE PERIOD. Each Initial Option shall become exercisable on a cumulative basis as to one-fifth of the shares subject to the option on the date of grant of such option and each of the first, second, third and fourth anniversaries of the date of grant. Each Annual Option shall be fully exercisable on the date of grant. In the event an optionee ceases to serve as a director, each such option may be exercised by the optionee (or, in the event of his death, by his administrator, executor or heirs), at any time within 12 months after the optionee ceases to serve as a director, to the extent such option was exercisable at the time of such cessation of service. Notwithstanding the foregoing, no option shall be exercisable after the expiration of ten years from the date of grant. 2 3 e. EXERCISE PROCEDURE. Options may be exercised only by written notice to the Company at its principal office accompanied by (i) payment in cash of the full consideration for the shares as to which they are exercised or (ii) an irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price or delivery of irrevocable instructions to a broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price. 6. ASSIGNMENTS The rights and benefits of participants under the Plan may not be assigned, whether voluntarily or by operation of law, except as provided in Section 5(d). 7. EFFECTIVE DATE The Plan shall become effective immediately upon its adoption by the Board of Directors, but all grants of options shall be conditional upon the approval of the Plan by the stockholders of the Company within 12 months after adoption of the Plan by the Board of Directors. 8. LIMITATION OF RIGHTS a. NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting of an option nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a director for any period of time. b. NO STOCKHOLDERS' RIGHTS FOR OPTIONS. An optionee shall have no rights as a stockholder with respect to the shares covered by his options until the date of the issuance to him of a stock certificate therefor, and no adjustment will be made for dividends or other rights (except as provided in Section 9) for which the record date is prior to the date such certificate is issued. 9. CHANGES IN COMMON STOCK If the outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to such shares of Common Stock or other securities, through merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to such shares of Common Stock, or other securities, an appropriate and proportionate adjustment will be made in (i) the maximum number and kind of shares reserved for issuance under the Plan, (ii) the number and kind of shares or other securities subject to then outstanding options under the Plan and (iii) the price for each share subject to any then outstanding options under the Plan, without changing the aggregate 3 4 purchase price as to which such options remain exercisable. No fractional shares will be issued under the Plan on account of any such adjustments. 10. CHANGE IN CONTROL Notwithstanding any other provision to the contrary in this Plan, in the event of a Change of Control (as defined below), all options outstanding as of the date such Change in Control occurs shall become exercisable in full, whether or not exercisable in accordance with their terms. A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) individuals who, as of the date this Plan is adopted, constitute the Board of Directors of the Company (as of the date thereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date thereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 11. AMENDMENT OF THE PLAN The Board of Directors may suspend or discontinue the Plan or review or amend it in any respect whatsoever; provided, however, that without approval of the 4 5 stockholders of the Company no revision or amendment shall change the number of shares subject to the Plan (except as provided in Section 9), change the designation of the class of directors eligible to receive options, or materially increase the benefits accruing to participants under the Plan. The Plan may not be amended more than once in any six-month period. 12. NOTICE Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the Treasurer of the Company and shall become effective when it is received. 13. GOVERNING LAW The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of New Hampshire. 5 EX-99.11 14 FORM OF 1993 DIRECTOR STOCK OPTION PLAN 1 EXHIBIT 99.11 SUMMA FOUR, INC. NON-STATUTORY STOCK OPTION AGREEMENT 1. Grant of Option. Summa Four, Inc., a Delaware corporation (the "Company"), hereby grants to ________________ (the "Optionee") an option, pursuant to the Company's 1993 Director Stock Option Plan (the "Plan"), to purchase an aggregate of shares of Common Stock ("Common Stock") of the Company at a price of_________ per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. Non-Statutory Stock Option. This option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the code. 3. Exercise of Option and Provisions for Termination. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date"). The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date, except as otherwise provided in Section 3(e) below. (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the Company of such written notice together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. (c) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee, officer, or director of, or consultant or advisor to, the Company (an "Eligible Optionee"). (d) Termination of Relationship with the Company. If the Optionee ceases to be an Eligible Optionee for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate twelve (12) months after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. 2 Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22 (e) (3) of the Code) prior to the Expiration Date while he or she is an Eligible Optionee, or if the Optionee dies within three months after the Optionee ceases to be an Eligible Optionee (other than as a result of a termination of such relationship by the Company for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of twelve months following the date of death or disability of the Optionee (whether or not such exercise occurs before the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Optionee", as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. (f) Discharge for Cause. If the Optionee, prior to the Expiration Date, ceases his or her relationship with the Company because such relationship is terminated by the Company for "cause" (as defined below), the right to exercise this option shall terminate immediately upon such cessation. "Cause" shall mean willful misconduct by the Optionee or willful failure to perform his or her responsibilities in the best interests of the Company (including, without limitation, breach by the Optionee of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Optionee and the Company), as determined by the Company, which determination shall be conclusive. 4. Payment of Purchase Price. (a) Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (iv) by any combination of such methods of payment. (b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company's Common Stock or other non-cash consideration which may be delivered to the 2. 3 Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. (c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises this option by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this option. (d) Restrictions on Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. 5. Delivery of Shares; Compliance With Securities Laws, Etc. (a) General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action. (b) Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification or disclosure, or to satisfy such other condition. 6. Nontransferability of Option. This option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process, except that this option may be transferred (i) by will or the laws of descent and distribution or (ii) pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 3. 4 7. No Special Employment or Similar Rights. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment or other relationship of the Optionee with the Company for the period within which this option may be exercised. 8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. Adjustment Provisions. (a) General. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. (b) Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued pursuant to this option on account of any such adjustments. 10. Change in Control. In the event of a Change in Control as defined in Section 10 of the Plan, prior to the Expiration Date or termination of this option, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 10 of the Plan. 11. Withholding Taxes. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Optionee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. 12. Miscellaneous. (a) Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. 4. 5 (c) This option shall be governed by and construed in accordance with the laws of the State of New Hampshire. Date of Grant: SUMMA FOUR, INC. Grant No. By: ____________________________ Title: _________________________ Address: 25 Sundial Avenue Manchester, NH 03103
OPTIONEE'S ACCEPTANCE The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 1993 Director Stock Option Plan. OPTIONEE ____________________________________________ Address: __________________________________ __________________________________ EX-99.12 15 FORM OF ACCELERATION WAIVER LETTER AGREEMENT 1 EXHIBIT 99.12 [SUMMA FOUR, INC. LETTERHEAD] August 24, 1998 Dear _______________: As you know, Cisco Systems, Inc. ("Cisco") is in the process of acquiring Summa Four, Inc. (the "Company"). Under the terms of the acquisition (the "Acquisition"), Cisco has agreed to assume the outstanding options held by certain employees of the Company. However, in order to facilitate the completion of the Acquisition, the vesting acceleration provisions currently in effect for those options need to be revised so none of those options will vest on an accelerated basis in connection with the Acquisition. You currently hold the following stock option(s) (collectively the "Options") to acquire shares of the Company's common stock:
Number of Remaining Option Grant Date Exercise Price Unvested Shares Plan - ---------- -------------- --------------- ------ 4~ 5~ 6~ ________
As indicated above, your Options have been granted under one or more of the following stock option plans of the Company (collectively, the "Option Plans"): (i) the 1995 Stock Option Plan (the "1995 Plan"), (ii) the 1993 Stock Incentive Plan (the "1993 Plan"), and/or (iii) the Incentive Stock Option Plan of 1992, as amended by the Board of Directors on February 3, 1993 (the "1992 Plan"). Pursuant to the vesting provisions currently in effect under each of those Option Plans, full and immediate vesting of all options outstanding under such Option Plans, including each of your Options, will occur upon certain changes in control of the Company, such as the proposed Acquisition. Specifically, such accelerated vesting is provided under Section 16 of the 1995 Plan, Section 10(y) of the 1993 Plan and, for purposes of the 1992 Plan, by virtue of the Board resolution dated February 3, 1993. In addition, a comparable vesting acceleration provision is contained in each of the applicable stock option agreements issued under the Option Plans (the "Option Agreements"). For purposes of this letter, the vesting acceleration provisions of the Option Plans and the applicable Option Agreements are referred to collectively as the "Vesting Acceleration Provisions." In order to facilitate the completion of the Acquisition, the Vesting Acceleration Provisions of your existing Options must be amended so that those Options will NOT vest on an accelerated basis at the time of the Acquisition and may NOT be exercised on an accelerated basis 2 for any currently unvested option shares. Instead, because Cisco has agreed to assume your Options in the Acquisition, those Options will continue to vest and become exercisable for the unvested option shares in accordance with the normal installment vesting schedule currently in effect for the Options, as if no change in control of the Company had occurred by reason of the Acquisition. This first amendment to the Vesting Acceleration Provisions of your Options is to be effected pursuant to the following provisions: AMENDMENT OF THE VESTING ACCELERATION PROVISIONS As a condition to closing the Acquisition, you hereby agree that the Vesting Acceleration Provisions applicable to your Options are hereby amended in their entirety so that your Options will NOT vest in full on an accelerated basis at the time of the Acquisition. As amended, the Vesting Acceleration Provisions will now provide that your Options will only accelerate upon a change in control of the Company (or any successor, including Cisco) to the extent those Options are neither assumed by the successor corporation nor replaced with a comparable option or cash incentive program. Accordingly, as a result of Cisco's agreement to assume your Options in the Acquisition so that they will be converted into options to purchase shares of Cisco common stock, vesting of your Options will NOT accelerate upon the Acquisition, and those Options may not be exercised on an accelerated basis for any shares which are currently unvested under the existing installment vesting provisions applicable to the Options. Accordingly, the Vesting Acceleration Provisions for your Options are hereby amended in their entirety, effective immediately, to read as follows: "CHANGE IN CONTROL. In the event of a Change in Control of the Company (or any successor), the Option shall automatically accelerate so that such Option shall, immediately prior to the effective date of the Change in Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such Option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, the Option shall NOT vest and become exercisable on such an accelerated basis if and to the extent: (i) such Option is, in connection with the Change in Control, either to be assumed by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) such Option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Change in Control and provides for subsequent payout in accordance with the same vesting schedule applicable to those option shares. The determination of option comparability under clause (i) above shall be made by the Company's stock plan administrator, and its determination shall be final, binding and conclusive. For purposes of this Agreement, a "Change in Control" shall mean (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's (or its successor's) outstanding securities are transferred to a person or persons different from the persons holding those 3 securities immediately prior to such transaction, or (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company (or its successor) in complete liquidation or dissolution of the Company (or its successor)." In consideration for terminating the existing Vesting Acceleration Provisions and replacing them with the above provision, each of your Option Agreements will be further amended to provide that your Options will vest and become exercisable for all of the option shares on an accelerated basis if your employment with the Company or Cisco terminates under certain circumstances within one (1) year following the effective date of the Acquisition. Accordingly, each of your Option Agreements is hereby amended to incorporate the following new vesting acceleration provision: ADDITIONAL AMENDMENT TO THE OPTION AGREEMENTS TO BE EFFECTIVE UPON THE CLOSING FOR EACH OF YOUR OPTIONS TERMINATION OF EMPLOYMENT FOLLOWING ACQUISITION BY CISCO. Immediately upon termination of Optionee's employment without Cause or Optionee's resignation from the Company (or any successor entity) for Good Cause within one (1) year following the effective date of the acquisition by Cisco Systems, Inc. ("Cisco") of the Company (the "Acquisition"), the option, to the extent outstanding at the time but not otherwise fully exercisable and vested, shall automatically accelerate so that such option shall immediately become exercisable for all of the option shares and may be exercised for any or all of those shares as fully-vested shares. For purposes of this Section, "Cause" shall mean any of the following acts or omissions of Optionee: (i) engaging in misconduct; (ii) being convicted of a crime; (iii) committing an act of fraud against, or the misappropriation of property belonging to, the Company (or any successor entity); or (iv) breaching, in a material manner, this agreement or any confidentiality or proprietary information agreement between Optionee and the Company (or any successor entity). For purposes of this Section, resignation for "Good Cause" shall mean Optionee's resignation from employment with the Company (or any successor entity) within thirty (30) days after the occurrence of any of the following events: (i) any reduction in Optionee's then current base salary, unless such reduction is pursuant to a change in the Company's (or any successor entity's) compensation policies generally; or (ii) a material reduction in those job duties assigned to the Optionee after the Closing Date pursuant to the Optionee's employment with Cisco; provided, however, that Optionee must specify in reasonable detail the basis for such resignation for Good Cause and give the Company (or any successor entity) at least twenty (20) business days in which to correct the circumstances prompting the resignation for Good Cause. A resignation by Optionee under any other circumstances will be considered a resignation without Good Cause. The above amendments (the "Amendments") to the Vesting Acceleration Provisions applicable to your Options are conditioned upon the closing of the Acquisition. Accordingly, should that Acquisition not be consummated, the Amendments will not take effect 4 and all of the terms and provisions of the Option Plans and the Option Agreements as in effect immediately prior to the Amendments will continue to govern your Options. To the extent that your Options are non-statutory options under the federal tax laws, you will recognize ordinary income at the time that Option is exercised in an amount equal to the excess of (i) the fair market value of the purchased shares on the exercise date over (ii) the exercise price paid for those shares. Such income will be subject to all applicable withholding taxes at that time. To indicate your agreement with the foregoing amendments to the Vesting Acceleration Provisions currently in effect for your Options and to confirm that no accelerated vesting will occur under your Options at the time the Acquisition closes, please sign and date the Acknowledgement section below and return it to me. For your records, you should attach a copy of this letter to each of your Option Agreements in order to evidence the revision to the acceleration provisions of your Options effected by this letter agreement. Very truly yours, By: Title: ACKNOWLEDGEMENT In order to facilitate the closing of the Acquisition, I hereby knowingly and freely agree to the foregoing amendments to the Vesting Acceleration Provisions of the Option Plans and the Option Agreements for each of my Options so that no accelerated vesting of those Options will occur at the time of the Acquisition. Date: _____________________________ Signature: ______________________________ EX-99.13 16 FORM OF OPTION ASSUMPTION AGREEMENT (EMPLOYEE) 1 EXHIBIT 99.13 CISCO SYSTEMS, INC. STOCK OPTION ASSUMPTION AGREEMENT SUMMA FOUR, INC. 1995 STOCK OPTION PLAN 1993 STOCK INCENTIVE PLAN INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992 OPTIONEE: This STOCK OPTION ASSUMPTION AGREEMENT is effective as of the 4th day of November, 1998 by Cisco Systems, Inc., a California corporation ("Cisco"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of Summa Four, Inc., a Delaware corporation ("Summa Four"), which were granted to Optionee under one or more of the following option plans: the 1995 Stock Option Plan, the 1993 Stock Incentive Plan and the Incentive Stock Option Plan of August 1, 1992 (each individually the "Plan," and collectively the "Plans") and are each evidenced by the following agreements between Summa Four and Optionee: (i) a Stock Option Agreement (the "Option Agreement") and (ii) that certain letter agreement dated August 24, 1998 (the "Letter Agreement") amending the Option Agreement (and the relevant Plan, as incorporated into the Option Agreement). The Option Agreement, including the incorporated provisions of the relevant Plan as amended by the Letter Agreement, shall be referred to in this document as the "Amended Option Agreement." WHEREAS, Summa Four has on November 4, 1998 been acquired by Cisco through the merger of Agemo Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Cisco, with and into Summa Four (the "Merger") pursuant to the Agreement and Plan of Reorganization dated July 27, 1998, by and among Cisco, Agemo Acquisition Corporation and Summa Four (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require Cisco to assume all obligations of Summa Four under all outstanding options under the Plans at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.268491 of a share of Cisco common stock ("Cisco Stock") for each outstanding share of Summa Four common stock ("Summa Four Stock"). WHEREAS, this Agreement is effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options under the Plans which have become necessary by reason of the assumption of those options by Cisco in connection with the Merger. 2 NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of Summa Four Stock subject to the options held by Optionee immediately prior to the Effective Time (the "Summa Four Options") and the exercise price payable per share are set forth in Exhibit A hereto. Cisco hereby assumes, as of the Effective Time, all the duties and obligations of Summa Four under each of the Summa Four Options. In connection with such assumption, the number of shares of Cisco Stock purchasable under each Summa Four Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of Cisco Stock subject to each Summa Four Option hereby assumed shall be as specified for that option in attached Exhibit A, and the adjusted exercise price payable per share of Cisco Stock under the assumed Summa Four Option shall also be as indicated for that option in attached Exhibit A. 2. The intent of the foregoing adjustments to each assumed Summa Four Option is to assure that the spread between the aggregate fair market value of the shares of Cisco Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, approximate the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the Summa Four Stock subject to the Summa Four Option and the aggregate exercise price in effect at such time under the Amended Option Agreement. Such adjustments are also designed to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the Summa Four Option immediately prior to the Merger. 3. The following provisions shall govern each Summa Four Option hereby assumed by Cisco: (a) Unless the context otherwise requires, all references in each Amended Option Agreement and in the relevant Plan (as incorporated into such Amended Option Agreement) (i) to the "Company" or "Summa Four" shall mean Cisco, (ii) to "Common Stock" or "Common Shares" shall mean shares of Cisco Stock, (iii) to the "Board of Directors" or the "Board" shall mean the Board of Directors of Cisco and (iv) to the "Committee" shall mean the Compensation Committee of the Cisco Board of Directors. (b) The grant date and the expiration date of each assumed Summa Four Option and all other provisions which govern either the exercise or the termination of the assumed Summa Four Option shall remain the same as set forth in the Amended Option Agreement applicable to that option, and the provisions of the Amended Option Agreement shall accordingly govern and control Optionee's rights under this Agreement to purchase Cisco Stock. (c) Pursuant to the terms of the Amended Option Agreement, because each Summa Four Option will be assumed by Cisco in connection with the Merger, such option will NOT vest and become exercisable on an accelerated basis because of the Merger. Each assumed Summa Four Option shall therefore remain exercisable in accordance with the same installment exercise schedule in effect under the applicable Amended Option Agreement immediately prior to the Effective Time, with the number of 2. 3 shares of Cisco Stock subject to each such installment adjusted to reflect the Exchange Ratio. No accelerated vesting of the Summa Four Options shall be deemed to occur by reason of the Merger. (d) Pursuant to the terms of the Amended Option Agreement, following the Merger, each assumed Summa Four Option shall become immediately exercisable on an accelerated basis for any unvested shares of Cisco Stock subject to that Option upon the termination of Optionee's employment with Summa Four (or any successor) without Cause or upon Optionee resignation from Summa Four (or any successor) for Good Cause (as the terms "Cause" and "Good Cause" are defined in the Amended Option Agreement) within one (1) year following the Effective Date. (e) For purposes of applying any and all provisions of the Amended Option Agreement and the relevant Plan relating to Optionee's status as an employee of Summa Four, Optionee shall be deemed to continue in such status as an employee for so long as Optionee renders services as an employee to Cisco or any present or future Cisco subsidiary. Accordingly, the provisions of the Amended Option Agreement governing the termination of the assumed Summa Four Options upon Optionee's cessation of service as an employee of Summa Four shall hereafter be applied on the basis of Optionee's cessation of service as an employee of Cisco and its subsidiaries, and each assumed Summa Four Option shall accordingly terminate, within the designated time period in effect under the Amended Option Agreement for that option, following such cessation of service as an employee of Cisco and its subsidiaries. (f) The adjusted exercise price payable for the Cisco Stock subject to each assumed Summa Four Option shall be payable in any of the forms authorized under the Amended Option Agreement applicable to that option. For purposes of determining the holding period of any shares of Cisco Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as Summa Four Stock prior to the Merger shall be taken into account. (g) In order to exercise each assumed Summa Four Option, Optionee must deliver to Cisco a written notice of exercise in which the number of shares of Cisco Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of Cisco Stock and should be delivered to Cisco at the following address: Cisco Systems, Inc. 255 West Tasman Drive, Building J San Jose, CA 95134 Attention: Option Plan Administrator 4. Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Amended Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. 3. 4 IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the 4th day of November, 1998. CISCO SYSTEMS, INC. By: ____________________________________________ ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her Summa Four Options hereby assumed by Cisco are as set forth in the Amended Option Agreement, the relevant Plan and such Stock Option Assumption Agreement. ____________________________________________ OPTIONEE DATED: __________________, 1998 4. 5 EXHIBIT A Optionee's Outstanding Options to Purchase Shares of Summa Four, Inc. Common Stock (Pre-Merger) and Optionee's Outstanding Options to Purchase Shares of Cisco Systems, Inc. Common Stock (Post-Merger) EX-99.14 17 FORM OF OPTION ASSUMPTION AGREEMENT (DIRECTOR) 1 EXHIBIT 99.14 CISCO SYSTEMS, INC. STOCK OPTION ASSUMPTION AGREEMENT SUMMA FOUR, INC. 1993 STOCK INCENTIVE PLAN INCENTIVE STOCK OPTION PLAN OF AUGUST 1, 1992 1993 DIRECTOR STOCK OPTION PLAN, AS AMENDED OPTIONEE: This STOCK OPTION ASSUMPTION AGREEMENT is effective as of the 4th day of November, 1998 by Cisco Systems, Inc., a California corporation ("Cisco"). WHEREAS, the undersigned individual ("Optionee") holds one or more outstanding options to purchase shares of the common stock of Summa Four, Inc., a Delaware corporation ("Summa Four"), which were granted to Optionee under one or more of the following option plans: the 1993 Stock Incentive Plan ("1993 Plan"), the Incentive Stock Option Plan of August 1, 1992 (the "1992 Plan") and the 1993 Director Stock Option Plan, As Amended (the "Director Plan") (each individually the "Plan," and collectively the "Plans") and are each evidenced by a Stock Option Agreement (the "Option Agreement") between Summa Four and Optionee. WHEREAS, Summa Four has on November 4, 1998 been acquired by Cisco through the merger of Agemo Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Cisco, with and into Summa Four (the "Merger") pursuant to the Agreement and Plan of Reorganization dated July 27, 1998, by and among Cisco, Agemo Acquisition Corporation and Summa Four (the "Merger Agreement"). WHEREAS, the provisions of the Merger Agreement require Cisco to assume all obligations of Summa Four under all outstanding options under the Plans at the consummation of the Merger and to issue to the holder of each outstanding option an agreement evidencing the assumption of such option. WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.268491 of a share of Cisco common stock ("Cisco Stock") for each outstanding share of Summa Four common stock ("Summa Four Stock"). WHEREAS, this Agreement is effective immediately upon the consummation of the Merger (the "Effective Time") in order to reflect certain adjustments to Optionee's outstanding options under the Plans which have become necessary by reason of the assumption of those options by Cisco in connection with the Merger. NOW, THEREFORE, it is hereby agreed as follows: 1. The number of shares of Summa Four Stock subject to the options held by Optionee immediately prior to the Effective Time (the "Summa Four Options") and the exercise price payable per share are set forth in Exhibit A hereto. Cisco hereby assumes, as of the 2 Effective Time, all the duties and obligations of Summa Four under each of the Summa Four Options. In connection with such assumption, the number of shares of Cisco Stock purchasable under each Summa Four Option hereby assumed and the exercise price payable thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of Cisco Stock subject to each Summa Four Option hereby assumed shall be as specified for that option in attached Exhibit A, and the adjusted exercise price payable per share of Cisco Stock under the assumed Summa Four Option shall also be as indicated for that option in attached Exhibit A. 2. The intent of the foregoing adjustments to each assumed Summa Four Option is to assure that the spread between the aggregate fair market value of the shares of Cisco Stock purchasable under each such option and the aggregate exercise price as adjusted pursuant to this Agreement will, immediately after the consummation of the Merger, approximate the spread which existed, immediately prior to the Merger, between the then aggregate fair market value of the Summa Four Stock subject to the Summa Four Option and the aggregate exercise price in effect at such time under the Option Agreement. Such adjustments are also designed to preserve, immediately after the Merger, on a per share basis, the same ratio of exercise price per option share to fair market value per share which existed under the Summa Four Option immediately prior to the Merger. 3. The following provisions shall govern each Summa Four Option hereby assumed by Cisco: (a) Unless the context otherwise requires, all references in each Option Agreement and in the relevant Plan (as incorporated into such Option Agreement) (i) to the "Company" or "Summa Four" shall mean Cisco, (ii) to "Common Stock" or "Common Shares" shall mean shares of Cisco Stock, (iii) to the "Board of Directors" or the "Board" shall mean the Board of Directors of Cisco and (iv) to the "Committee" shall mean the Compensation Committee of the Cisco Board of Directors. (b) The grant date and the expiration date of each assumed Summa Four Option and all other provisions which govern either the exercise or the termination of the assumed Summa Four Option shall remain the same as set forth in the Option Agreement applicable to that option, and the provisions of the Option Agreement shall accordingly govern and control Optionee's rights under this Agreement to purchase Cisco Stock. (c) Pursuant to the terms of the Option Agreement, the assumed Summa Four option shall VEST AND BECOME FULLY EXERCISABLE on an accelerated basis upon the consummation of the Merger. Each Summa Four Option, as so accelerated, shall be assumed by Cisco as of the Effective Time. (d) As to Options Granted under the 1993 Plan and the Director Plan. For purposes of applying any and all provisions of the Option Agreement and the relevant Plan relating to Optionee's status as an employee, officer or director of, or a consultant or advisor to Summa Four, Optionee shall be deemed to continue in such status for so long as Optionee renders services as an employee, officer or director of, or a consultant or advisor to Cisco or any present or future Cisco subsidiary. Accordingly, the provisions of the Option Agreement governing the termination of the assumed Summa Four Options 2. 3 upon Optionee's cessation of service as an employee, officer or director of, or a consultant or advisor to Summa Four shall hereafter be applied on the basis of Optionee's cessation of service as an employee, officer or director of, or a consultant or advisor to Cisco and its subsidiaries, and each assumed Summa Four Option shall accordingly terminate, within the designated time period in effect under the Option Agreement for that option, following such cessation of service as an employee, officer or director of, or a consultant or advisor to Cisco and its subsidiaries. As to Options Granted under the 1992 Plan. For purposes of applying any and all provisions of the Option Agreement and the 1992 Plan relating to Optionee's status as a director of Summa Four, Optionee shall be deemed to continue in such status for so long as Optionee renders services as director of Cisco or any present or future Cisco subsidiary. Accordingly, the provisions of the Option Agreement governing the termination of the assumed Summa Four Options upon Optionee's cessation of service as a director of Summa Four shall hereafter be applied on the basis of Optionee's cessation of service as a director of Cisco and its subsidiaries, and each assumed Summa Four Option shall accordingly terminate, within the designated time period in effect under the Option Agreement for that option, following such cessation of service as a director of Cisco and its subsidiaries. (e) The adjusted exercise price payable for the Cisco Stock subject to each assumed Summa Four Option shall be payable in any of the forms authorized under the Option Agreement applicable to that option. For purposes of determining the holding period of any shares of Cisco Stock delivered in payment of such adjusted exercise price, the period for which such shares were held as Summa Four Stock prior to the Merger shall be taken into account. (f) In order to exercise each assumed Summa Four Option, Optionee must deliver to Cisco a written notice of exercise in which the number of shares of Cisco Stock to be purchased thereunder must be indicated. The exercise notice must be accompanied by payment of the adjusted exercise price payable for the purchased shares of Cisco Stock and should be delivered to Cisco at the following address: Cisco Systems, Inc. 255 West Tasman Drive, Building J San Jose, CA 95134 Attention: Option Plan Administrator 4. Except to the extent specifically modified by this Option Assumption Agreement, all of the terms and conditions of each Option Agreement as in effect immediately prior to the Merger shall continue in full force and effect and shall not in any way be amended, revised or otherwise affected by this Stock Option Assumption Agreement. 3. 4 IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock Option Assumption Agreement to be executed on its behalf by its duly-authorized officer as of the 4th day of November, 1998. CISCO SYSTEMS, INC. By: -------------------------------------- ACKNOWLEDGMENT The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her Summa Four Options hereby assumed by Cisco are as set forth in the Option Agreement, the relevant Plan and such Stock Option Assumption Agreement. ----------------------------------------- OPTIONEE DATED: , 1998 -------------- 4. 5 EXHIBIT A Optionee's Outstanding Options to Purchase Shares of Summa Four, Inc. Common Stock (Pre-Merger) and Optionee's Outstanding Options to Purchase Shares of Cisco Systems, Inc. Common Stock (Post-Merger) -----END PRIVACY-ENHANCED MESSAGE-----