<PAGE>
As filed with the Securities and Exchange Commission on August 1, 1996 File
--------------
No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------
CABLETRON SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2797263
- ----------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
35 Industrial Way
Rochester, New Hampshire 03867
--------------------------------------------------
(Address of principal executive offices, including zip code)
AMENDED AND RESTATED NETWORK EXPRESS, INC. 1991 STOCK OPTION PLAN;
NETWORK EXPRESS, INC. 1995 OMNIBUS EQUITY PLAN; and
AN INDIVIDUAL OPTION AGREEMENT WITH
KEVIN KALKHOVEN
------------------------
(Full title of the plans)
David J. Kirkpatrick
Director of Finance and
Chief Financial Officer
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
(603) 332-9400
-----------------------------------------------------------
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Title of Amount Proposed Proposed Amount of
Securities to be maximum maximum registration
to be registered offering aggregate fee
registered price per offering
share/(1)/ price/(1)/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 144,358 $33.43 $4,825,887.94 $1680.00
par value $0.01 shares
</TABLE>
________________________________________________________________________________
/(1)/The offering price for the shares of Cabletron Systems, Inc. common stock,
par value $0.01 (the "Shares") subject to options on the date hereof is the
average per share exercise price of such options. The average per share exercise
price is equal to the aggregate exercise price for Network Express, Inc.
("Network Express") common stock purchasable pursuant to all options under the
Network Express, Inc. 1995 Omnibus Equity Plan; Amended and Restated 1991
Network Express, Inc. Stock Option Plan; and an Individual Option Agreement with
Kevin Kalkhoven (collectively, the "Network Express Stock Option Plans") divided
by the number of shares purchasable to all such Network Express options and
rounded to the nearest whole cent.
Exhibit Index on page 6
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
Cabletron Systems, Inc. (the "Registrant" or the "Company") hereby incorporates
the following documents herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
February 29, 1996 (File No. 1-10288).
(b) The Registrant's Quarterly Report on Form 10-Q for the Quarter ended
May 31, 1996 (File No.01-10228) and as amended by Form 10-QA filed
with the Commission on July 18, 1996.
(c) The Registrant's Current Report on Form 8-K dated January 29, 1996
(File No. 1-10228).
(d) All other reports filed by the Registrant with the Commission pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") since the end of the fiscal year covered by
the Registrant's Annual Report referred to above.
(e) The description of the common stock of the Registrant contained in the
Registrant's Registration Statement on Form 8-A (File No. 1-10288)
filed with the Commission under Section 12 of the Exchange Act on
April 19, 1989, including all amendments and reports filed for the
purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Section
13(a), Section 13(c), Section 14 and Section 15(d) of the Exchange Act prior to
the filing of a post-effective amendment to this registration statement that
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed incorporated herein by
reference from the date of filing of such documents.
Item 4. Description of Securities.
-------------------------
Not required.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
No material interests.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal or investigative (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or
<PAGE>
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or such other court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law (relating to unlawful payment of dividends and
unlawful stock purchase and redemption), or (iv) for any transaction from which
the director derived an improper personal benefit.
The Registrant's Restated Certificate of Incorporation, as amended,
provides that the Company's Directors shall not be liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that exculpation from liabilities is not
permitted under the Delaware General Corporation Law as in effect at the time
such liability is determined. The Restated Certificate of Incorporation, as
amended, further provides that the Registrant shall indemnify its directors and
officers to the full extent permitted by the law of the State of Delaware.
Item 7. Exemption From Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
Exhibit
4.1. Specimen stock certificate representing Cabletron Common Stock which
is incorporated by reference to Exhibit 4.1 of Cabletron's
Registration Statement on Form S-1 (File No. 33-28055).
5. Opinion of Ropes & Gray.
23.1. Consent of KPMG Peat Marwick LLP.
23.2. Consent of Ropes & Gray (contained in the opinion filed as Exhibit 5
to this Registration Statement).
24. Powers of Attorney (included in Part II of this registration statement
under the caption "Signatures").
99.1. Amended and Restated Network Express, Inc. 1991 Stock Option Plan.
99.2. Network Express, Inc. 1995 Omnibus Equity Plan.
99.3. Form of Stock Option Agreement used in connection with the Amended and
Restated Network Express, Inc. 1991 Stock Option Plan
99.4. Form of Stock Option Agreement used in connection with the Network
Express, Inc. 1995 Omnibus Equity Plan
<PAGE>
99.5. Form of Stock Option Assumption Agreement used in connection with the
Amended and Restated Network Express, Inc. 1991 Stock Option Plan.
99.6. Form of Stock Option Assumption Agreement used in connection with the
Network Express, Inc. 1995 Omnibus Equity Plan.
99.7. Form of Stock Option Assumption Agreement used in connection with the
option granted to Kevin Kalkhoven.
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 Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the 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 the registration statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement; provided, however, that paragraphs
-------- -------
(a)(1)(i) and (a)(1)(ii) shall not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(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 offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rochester, State of New Hampshire on July 31, 1996.
By: /s/ S. Robert Levine
-----------------------------
S. Robert Levine
President, Chief Executive Officer and Director
Each person whose signature appears below constitutes and appoints S.
Robert Levine, Craig R. Benson and David J. Kirkpatrick, and each of them
individually, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement on Form S-8 to be filed by Cabletron
Systems, Inc., and to file the 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 full power and authority to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or their substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-8 has been signed below by the following
persons in the capacities shown on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ S. Robert Levine President, Chief Executive July 31, 1996
- --------------------------- Officer (principal executive
S. Robert Levine officer) and Director
/s/ David J. Kirkpatrick Director of Finance and July 31, 1996
- --------------------------- Chief Financial Officer
David J. Kirkpatrick (principal financial and
accounting officer)
/s/ Craig R. Benson Chairman, Chief Operating July 31, 1996
- --------------------------- Officer and Director
Craig R. Benson
/s/ Michael D. Myerow Secretary and Director July 31, 1996
- ---------------------------
Michael D. Myerow
/s/ Paul R. Duncan Director July 31, 1996
- ---------------------------
Paul R. Duncan
/s/ Donald F. McGuinness Director July 31, 1996
- ---------------------------
Donald F. McGuinness
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Page
- ------- ----
Title of Exhibit
----------------
<S> <C> <C>
4.1. Specimen stock certificate representing Cabletron
Common Stock which is incorporated by reference
to Exhibit 4.1 of Cabletron's Registration Statement
on Form S-1 (File No. 33-28055).
Opinion of Ropes & Gray.
Consent of KPMG Peat Marwick LLP.
5. Opinion of Ropes & Gray.
23.1. Consent of KPMG Peat Marwick LLP.
23.2. Consent of Ropes & Gray (contained in the opinion
filed as Exhibit 5 to this registration statement).
24. Powers of Attorney (included in Part II of this registration
statement under the caption "Signatures").
99.1. Amended and Restated Network Express, Inc. 1991 Stock Option Plan.
99.2. Network Express, Inc. 1995 Omnibus Equity Plan.
99.3. Form of Stock Option Agreement used in connection with the Amended
and Restated Network Express, Inc. 1991 Stock Option Plan
99.4. Form of Stock Option Agreement used in connection with the 1995
Omnibus Equity Plan
99.5. Form of Stock Option Assumption Agreement used in connection with
the Amended and Restated Network Express, Inc. 1991 Stock Option
Plan.
99.6. Form of Stock Option Assumption Agreement used in connection with
the Network Express, Inc. 1995 Omnibus Equity Plan.
99.7. Form of Stock Option Assumption Agreement used in connection with
the option granted to Kevin Kalkhoven.
</TABLE>
<PAGE>
Exhibit 5
August 1, 1996
Cabletron Systems, Inc.
35 Industrial Way
Rochester, NH 03867
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-8 (the "Registration Statement") to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, for the registration of 144,358 shares of common stock,
$0.01 par value per share (the "Shares"), of Cabletron Systems, Inc., a Delaware
corporation (the "Company"), issuable upon exercise of options assumed by the
Company that had previously been issued under the Network Express 1995 Omnibus
Equity Plan; the Amended and Restated Network Express, Inc. 1991 Stock Option
Plan; and an Individual Option Agreement with Kevin Kalkhoven (collectively, the
"Plans").
We have acted as counsel for the Company in connection with the assumption
of the Options and are familiar with the actions taken by the Company in
connection therewith. For purposes of this opinion we have examined the
Registration Statement, the Plans and such other documents as we have deemed
appropriate.
Based upon the foregoing, we are of the opinion that (i) the Shares have
been duly authorized and (ii) the Shares, when issued and sold in accordance
with the terms of the Options and Plans, will have been validly issued and will
be fully paid and non-assessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
Cabletron Systems, Inc.:
We consent to the use of our reports incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
August 1, 1996
<PAGE>
Ex 99.1
FEBRUARY 1, 1995
AMENDED AND RESTATED NETWORK EXPRESS, INC.
------------------------------------------
1991 STOCK OPTION PLAN
----------------------
1. Certain Definitions.
-------------------
The "Code" is the Internal Revenue Code of 1986, as amended.
The "Committee" is a committee of two or more directors of the
Company, each of whom is Disinterested.
The "Common Stock" is the common stock, $.10 par value per share, of
the Company.
The "Company" is Network Express, Inc., a Michigan corporation.
"Disabled" or "Disability" means permanently disabled as defined in
Section 22(e)(3) of the Code.
"Disinterested" shall have the same meaning as defined in Rule 16b-3
promulgated under the Exchange Act.
"Employee" means an individual with an "employment relationship" with
the Company, or any Parent or Subsidiary, as defined in Regulation 1.421-7(h)
promulgated under the Code, and shall include, without limitation, employees who
are directors of the Company, or any Parent or Subsidiary.
"Employment" means the state of being an Employee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the average of the high and low sale
prices per share of the Common Stock reported in the Wall Street Journal for the
last preceding day on which the Common Stock was traded prior to the date with
respect to which the fair market value is to be determined, as determined by the
Committee in its sole discretion.
An "Incentive Stock Option" is an option intended to meet the
requirements of Section 422 of the Code.
A "Nonqualified Stock Option" is an option granted under the Plan
other than an Incentive Stock Option.
"Parent" means any "parent corporation" of the Company as defined in
Section 424(e) of the Code.
1
<PAGE>
The "Plan" is the 1991 Stock Option Plan.
"Subsidiary" means any "subsidiary corporation" of the Company as
defined in Section 424(f) of the Code.
2. Purpose. The purpose of the Plan is to promote the best
-------
interests of the Company and its shareholders by encouraging participants to
acquire a proprietary interest in the Company, thus identifying their interests
with those of its shareholders and encouraging the participants to make greater
efforts on behalf of the Company.
3. Administration. The selection of participants in the Plan and
--------------
decisions concerning the timing, pricing and amount of any grant of options
under the Plan shall be made by the Committee. Except as provided in Section 13
of the Plan, the Committee shall interpret the Plan, prescribe, amend, and
rescind rules and regulations relating to the Plan, and make all other
determinations necessary or advisable for its administration. The decision of
the Committee on any question concerning the interpretation of the Plan or any
option granted under the Plan shall be final and binding upon all participants.
4. Participants. Participants in the Plan shall be such Employees
------------
as the Committee may select from time to time. The Committee may grant options
to an individual upon the condition that the individual become an Employee,
provided that the option shall be deemed to be granted only on the date the
individual becomes an Employee.
5. Stock. The stock to be issued under the Plan shall be shares
-----
of Common Stock of the Company (the "Stock"). The total amount of stock on which
options may be granted under the Plan shall not exceed 1,000,000 shares, subject
to adjustment as provided in Section 12 hereof. Stock released from option upon
the termination, expiration or surrender of any option prior to complete
exercise of the option may again be subjected to options under the Plan.
6. Grant of Options. The Committee, at any time and from time to
----------------
time prior to the termination of the Plan as provided in Section 14 hereof, may
grant options to such employees of the Company or its subsidiaries as the
Committee may select and for such number of shares as the Committee shall
designate. The Committee may designate any option granted as either an incentive
stock option or a nonqualified stock option, or the Committee may designate a
portion of an option as an incentive stock option or a nonqualified stock
option. An incentive stock option is an option intended to meet the requirements
of Section 422A of the Internal Revenue Code of 1986 (the "Code"). A
nonqualified stock option is an option granted under the Plan other than an
incentive stock option. Each option granted under the Plan shall meet all of the
terms and conditions of the Plan, except that an incentive stock option shall
comply with the addition requirements of Section 5. The date on which an option
shall be granted shall be the date of the Committee's authorization of the
option or such later date as may be determined by the Committee at the time the
option is authorized. Any individual may hold more than one option under this
Plan. No individual shall be ineligible for an option under this Plan because he
or she has received or is eligible to receive an option under any other plan or
arrangement of the Company. Each option shall be evidenced by a stock option
agreement in such form and containing such provisions not inconsistent with the
Plan as the Committee shall approve.
2
<PAGE>
5. Incentive Stock Options. Any option intended to constitute an
-----------------------
incentive stock option shall comply with the requirements of this Section 5. No
incentive stock option shall be granted to any participant who owns (within the
meaning of Section 425(d) of the Code) stock of the Company or any subsidiary
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or a subsidiary unless, at the date of grant, the exercise
price for the option is at least 110% of the fair market value of the shares
subject to the option and the option, by its terms, is not exercisable more than
five years after the date of grant. The aggregate fair market value of the
underlying common stock (determined as of the time the options are granted) as
to which incentive stock options under the Plan (or a plan of a subsidiary
corporation) may first be exercised by a participant in any one calendar year
shall not exceed $100,000.
6. Option Price. The Committee shall determine the option price
------------
per share for each option granted under the Plan. The option price for each
share of stock for which an option is granted under the Plan shall not be less
than one dollar per share. All incentive stock options shall have an option
price equal to the greater of $1.00 per share or 100% of the fair market value
of the Company's common stock on the date of grant (with fair market value
calculated by the Committee in a manner consistent with Section 422A of the
Code).
7. Term of Options and Rights. The Committee, at its discretion,
--------------------------
shall determine the general terms and conditions of exercise options granted
under the Plan. However, no option shall be exercisable prior to one year from
the date of grant or after the tenth anniversary of the date of grant.
8. Termination of Employment. Upon the expiration of a period of
-------------------------
three months after the termination of the employment of an optionee for any
reason other than death or disability as defined in Section 22(e)(3) of the
Internal Revenue Code, all rights to purchase shares pursuant to an exercisable
option shall expire and terminate. Absence of an employee from the Company or a
subsidiary as a result of authorized leaves of absence for military or
government service or for other special purposes approved by the Committee shall
not constitute a termination of employment under this Section.
In the event of an optionee's (a) termination of employment due to
disability, as defined above, or (b) the death of an optionee while an employee
of the Company or within the three-month period following termination of
employment during which the option may be exercised, such option may, subject to
the terms thereof and the other terms of the Plan (specifically including
Section 7 hereof), be exercised by the optionee or the legal representative of
such optionee's estate (on behalf of the estate or the person or persons to whom
the option passed by will or by the laws of descent and distribu- tion) at any
time prior to the first anniversary of the optionee's termination of employment
due to disability or the death of such optionee, but only to the extent that
such optionee was entitled to exercise such option at the date of death or
termination of employment due to disability.
9. Exercise of Options. Full payment for shares purchased pursuant
--------------------
to options granted under the Plan shall be made at the time of exercise of the
options. Options may be exercised in whole or in part. Payment for shares
being purchased upon the exercise of options granted under the Plan may be made
in cash or by personal check, certified or bank cashier's check. A person
exercising an option shall also reimburse the Company for any
3
<PAGE>
income or employment tax withholding requirements and provide the Company such
information and data as the Company may deem necessary.
The Company may require an optionee, as a condition of exercise, to
establish to the satisfaction of the Company that all shares acquired upon the
exercise of an option will be acquired for investment and not for resale. The
Company may permit the subsequent sale or other disposition of any Stock so
acquired if it is satisfied that such sale or other disposition would not
contravene applicable securities law. Anything to the contrary herein
notwithstanding, the Company's obligation to sell and deliver Stock pursuant to
the exercise of an option is subject to such compliance with federal and state
laws, rules and regulations applying to the authorization, issuance or sale of
securities as the Company deems necessary or advisable. The Company shall not be
required to sell and deliver Stock unless and until it receives satisfactory
assurance that the issuance or transfer of such shares will not violate any of
the provisions of the Securities Act of 1933 or the rules and regulations of the
Securities Exchange Commission promulgated thereunder or those of any stock
exchange or nationally-recognized trading market on which the stock may be
listed or traded, the provisions of any state laws governing the sale of
securities, or that there has been compliance with the provisions of such acts,
rules, regulations and laws.
Certificates for shares purchased pursuant to options granted under
the Plan will bear the following legend if the shares are issued pursuant to an
exemption from registration under applicable securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE ACT.
10. Options Not Transferable. No option granted under the Plan
------------------------
shall be transferable by the optionee other than by will or the laws of descent
and distribution, and an option may be exercised during an optionee's lifetime
only by the optionee.
11. Adjustments. In the event of any stock dividend on the Stock,
-----------
subdivision or combination of shares of the Stock, reclassification of the
Stock, and (in accordance with the provisions of the next paragraph of this
Section 11) in the event of a merger in which the Company shall be the surviving
corporation, the aggregate number and class of shares available for the granting
of options under the Plan, the number and class of shares subject to each
outstanding option, and the option prices shall be proportionately adjusted.
After any merger of one or more corporations into the Company, in
which the Company is the surviving corporation, each optionee shall, at no
additional cost, be entitled upon any exercise of the option, to receive
(subject to any required action by shareholders), in lieu of the number of
shares as to which such option shall then be so exercised, the number and class
of shares of stock or other securities to which such optionee would have been
entitled pursuant to the terms of the agreement of merger if at the time of such
merger such
4
<PAGE>
optionee had been a holder of record of a number of shares of Stock of the
Company equal to the number of shares as to which such option shall then be so
exercised. Comparable rights shall accrue to each optionee in the event of
successive mergers of the character described above. Anything contained herein
to the contrary notwithstanding, upon the dissolution or liquidation of the
Company or upon any merger or plan of share exchange in which the Company is not
the surviving corporation, any option granted under this Plan shall terminate;
but if a period of 12 months from the date of the grant of any such option shall
have expired, each optionee who is then an employee of the Company shall have
the right, immediately prior to such dissolution, liquidation, merger, or plan
of share exchange, to exercise his or her option in full to the extent not
theretofore exercised regardless of any installment provision applicable to the
option.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.
12. No Rights as Shareholder. The holder of an option shall not
-------------------------
have any rights as a shareholder of the Company with respect to any of the
shares covered by such option until issuance of a stock certificate or
certificates upon the exercise of such option in full or in part and then only
with respect to the shares represented by such certificate or certificates. No
adjustment shall be made for dividends or other rights with respect to such
shares for which the record date is prior to the date the certificate is issued.
13. Termination and Amendment of Plan. The Committee may terminate
----------------------------------
the Plan at any time, but the Plan shall in any event terminate on the date ten
years after the approval of this Plan by the Committee, provided, however, that
the Plan and the powers of the Committee shall continue in effect with respect
to options outstanding under the Plan at the time the Plan terminates. No option
may be granted after the termination of the Plan, but the termination of the
Plan shall not affect the rights of the holders of any option theretofore
granted and then outstanding. The Committee may amend or modify the Plan at any
time, but no such amendment or modification, without the approval of the
shareholders, shall increase the amount of Stock on which options may be
granted, except as permitted under Section 11. No such amendment or modification
shall affect the rights of the holder of any option theretofore granted and then
outstanding without his or her consent or the consent of the transferee of the
option or right.
14. Effect of Plan on Employment. Neither the adoption of the Plan
-----------------------------
nor the granting of any option pursuant to it shall be deemed to create any
right in any individual to be retained or continued in the employment of the
Company or any of its subsidiaries.
15. Use of Proceeds. The proceeds received from the sale of stock
---------------
pursuant to the Plan will be used for general corporate purposes.
5
<PAGE>
Ex 99.2
EXECUTION COPY
--------------
NETWORK EXPRESS, INC. 1995 OMNIBUS EQUITY PLAN
ARTICLE 1. GENERAL
1.1 Purpose. The purpose of the Network Express, Inc. 1995 Omnibus
-------
Equity Plan (the "Plan") is to provide for certain officers, directors and
key personnel, as defined in Section 1.3, of Network Express, Inc. (the
"Company") an equity-based incentive to maintain and enhance the
performance and profitability of the Company. It is the further purpose of
this Plan to permit the granting of awards that will constitute performance
based compensation for certain executive officers, as described in Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder.
1.2 Administration.
--------------
(a) The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company (the "Board"),
comprised of no fewer than two (2) disinterested members of the Board, as
defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934
(the "Act") and "outside directors" (within the meaning of Code section
162(m)); however, the mere fact that a Committee member shall fail to
qualify under either of these requirements shall not invalidate any award
made by the Committee which award is otherwise validly made under the Plan.
The members of the Committee shall be appointed by, and may be changed at
any time and from time to time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all
of the powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan agreements executed pursuant to the Plan,
(iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to
make any determination necessary or advisable in administering the Plan,
and (v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan.
(c) The determination of the Committee on all matters relating
to the Plan or any Plan agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
hereunder.
(e) Notwithstanding anything to the contrary contained herein,
the Board may, in its sole discretion, at any time and from time to time,
resolve to administer the Plan, in which case, the term Committee as used
herein shall be deemed to mean the Board.
1.3 Persons Eligible for Awards. Awards under the Plan may be made
---------------------------
to such officers, directors and executive, managerial or professional
employees ("key
<PAGE>
personnel") of the Company or its Affiliates as the Committee shall from
time to time in its sole discretion select; provided, that officers and
directors who are not employees of the Company shall not be eligible to
receive awards under the Plan.
1.4 Types of Awards Under Plan.
--------------------------
(a) Awards may be made under the Plan in the form of (i) stock
options ("options"), (ii) stock appreciation rights related to an option
("related stock appreciation rights"), (iii) stock appreciation rights not
related to an option ("unrelated stock appreciation rights"), (iv)
restricted stock awards, (v) recognition shares (including but not limited
to unrestricted stock awards), (vi) performance units, (vii) payment rights
and (viii) tax benefit rights, all as more fully set forth in Articles 2
and 3.
(b) Options granted under the Plan may be either (i)
"nonqualified" stock options subject to the provisions of Code section 83
or (ii) options intended to qualify for incentive stock option treatment
described in Code section 422.
(c) All options when granted are intended to be nonqualified
stock options, unless the applicable Plan agreement explicitly states that
the option is intended to be an incentive stock option. If an option is
intended to be an incentive stock option, and if for any reason such option
(or any portion thereof) shall not qualify as an incentive stock option,
then, to the extent of such nonqualification, such option (or portion)
shall be regarded as a nonqualified stock option appropriately granted
under the Plan provided that such option (or portion) otherwise meets the
Plan's requirements relating to nonqualified stock options.
1.5 Shares Available for Awards.
---------------------------
(a) Subject to Section 4.5 (relating to adjustments upon changes
in capitalization), the total number of shares of Common Stock with respect
to which awards may be granted under the Plan, shall not exceed 440,000
shares.
In accordance with (and without limitation upon) the preceding
sentence, awards may be granted in respect of the following shares of
Common Stock: shares covered by previously-granted awards that have
expired, terminated or been canceled for any reason whatsoever (other than
by reason of exercise or vesting) and with respect to which shares a
grantee has received no benefits of ownership (other than voting rights and
dividends that were forfeited on such expiration, termination or
cancellation).
As a further limitation in addition to the foregoing, the total
number of shares of Common Stock with respect to which restricted stock and
recognition share awards may vest under the Plan shall not exceed (subject
to adjustments under Section 4.5) 2 percent of the number of shares of
Common Stock issued and outstanding on the date the Plan is initially
approved by the stockholders of the Company.
<PAGE>
(b) In any year, a person eligible for awards under the
Plan may not be granted options and/or unrelated stock appreciation rights
under the Plan covering a total of more than 50,000 shares of Common Stock.
(c) Shares of Common Stock that shall be subject to
issuance pursuant to the Plan shall be authorized and unissued shares of
Common Stock.
(d) Without limiting the generality of the foregoing, the
Committee may, with the grantee's consent, cancel any award under the Plan
and issue a new award in substitution therefor upon such terms as the
Committee may in its sole discretion determine, provided that the
substituted award shall satisfy all applicable Plan requirements as of the
date such new award is made.
1.6 Definitions of Certain Terms.
-----------------------------
(a) The term "Affiliate" as used herein means any person
or entity which, at the time of reference, directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
(b) The term "Common Stock" as used herein means the
shares of common stock of the Company as constituted on the effective date
of the Plan, and any other shares into which such common stock shall
thereafter be changed by reason of a recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like.
(c) Except as otherwise determined by the Committee in
its sole discretion, the "fair market value" as of any date and in respect
of any share of Common Stock shall be:
(i) if the Common Stock is authorized for quotation
on the National Association of Securities Dealers Inc.'s NASDAQ
National Market System ("NASDAQ/NMS"), the last sale price of the
Common Stock on the NASDAQ/NMS, on the date of determination or,
if no such repor ted sale of the Stock shall have occurred on
such date on the NASDAQ/NMS, on the preceding date on which there
was such a reported sale on such exchange or NASDAQ/NMS; or
(ii) if the Stock is not authorized for quotation on
the NASDAQ/NMS, the average of the closing bid and asked prices
as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, if no such prices shall
have been so reported for such date, on the next preceding date
for which such prices were so reported.
1.7 Agreements Evidencing Awards.
----------------------------
(a) Options, stock appreciation rights and restricted
stock awards granted under the Plan shall be evidenced by written
agreements. Other awards granted
<PAGE>
under the Plan shall be evidenced by written agreements to the extent th
Committee may in its sole discretion deem necessary or desirable. Any such
written agreements shall (i) contain such provisions not inconsistent with
the terms of the Plan as the Committee may in its sole discretion deem
necessary or desirable and (ii) be referred to herein as "Plan agreements."
(b) Each Plan agreement shall set forth the number of
shares of Common Stock subject to the award granted thereby.
(c) Each Plan agreement with respect to the granting of a
related stock appreciation right shall set forth the number of shares of
Common Stock subject to the related option which shall also be subject to
the related stock appreciation right granted thereby.
(d) Each Plan agreement with respect to the granting of an
option shall set forth the amount (the "option exercise price") payable by
the grantee to the Company in connection with the exercise of the option
evidenced thereby. The option exercise price per share shall not be less
than 85% of the fair market value (in the case of a non-qualified option)
or the fair market value (in the case of an incentive stock option), of a
share of Common Stock on the date the option is granted.
(e) Each Plan agreement with respect to a stock
appreciation right shall set forth the amount (the "appreciation base")
over which appreciation will be measured upon exercise of the stock
appreciation right evidenced thereby. The appreciation base per share of
Common Stock subject to a stock appreciation right shall not be less than
(i) in the case of an unrelated stock appreciation right, the fair market
value of a share of Common Stock on the date the stock appreciation right
is granted, or (ii) in the case of a related stock appreciation right, the
option exercise price per share of Common Stock subject to the related
option.
ARTICLE 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 Grant of Stock Options. The Committee may grant options to
----------------------
purchase shares of Common Stock in such amounts and subject to such terms
and conditions as the Committee shall from time to time in its sole
discretion determine, subject to the terms of the Plan.
2.2 Grant of Stock Appreciation Rights.
----------------------------------
(a) RELATED STOCK APPRECIATION RIGHTS. The Committee may
grant a related stock appreciation right in connection with all or any part
of an option granted under the Plan, either at the time the related option
is granted or any time thereafter prior to the exercise, termination or
cancellation of such option, and subject to such terms and conditions as
the Committee shall from time to time in its sole discretion determine,
subject to the terms of the Plan. The grantee of a related stock
appreciation right shall, subject to the terms of the Plan and the
applicable Plan agreement, have the right to surrender to the Company for
cancellation all or a portion of the related option granted under the Plan,
but only to the
<PAGE>
extent that such option is then exercisable, and to be paid therefor an
amount equal to the excess (if any) of (i) the aggregate fair market value
of the shares of Common Stock subject to such option or portion thereof
(determined as of the date of exercise of such stock appreciation right),
over (ii) the aggregate appreciation base (determined pursuant to Section
1.7(e)) of the shares of Common Stock subject to such stock appreciation
right or portion thereof.
(b) UNRELATED STOCK APPRECIATION RIGHTS. The Committee may
grant an unrelated stock appreciation right in such amount and subject to
such terms and conditions as the Committee shall from time to time in its
sole discretion determine, subject to the terms of the Plan. The grantee of
an unrelated stock appreciation right shall, subject to the terms of the
Plan and the applicable Plan agreement, have the right to surrender to the
Company for cancellation all or a portion of such stock appreciation right,
but only to the extent that such stock appreciation right is then
exercisable, and to be paid therefor an amount equal to the excess (if any)
of: (i) the aggregate fair market value of the shares of Common Stock
subject to such stock appreciation right or portion thereof (determined as
of the date of exercise of such stock appreciation right); over (ii) the
aggregate appreciation base (determined pursuant to Section 1.7(e)) of the
shares of Common Stock subject to such stock appreciation right or portion
thereof.
(c) PAYMENT. Payment due to the grantee upon exercise of a
stock appreciation right shall be made in cash and/or in Common Stock
(valued at the fair market value thereof as of the date of exercise) as
determined by the Committee in its sole discretion.
2.3 Exercise of Related Stock Appreciation Right Reduces Shares
-----------------------------------------------------------
Subject to Option. Upon any exercise of a related stock appreciation right
-----------------
or any portion thereof, the number of shares of Common Stock subject to the
related option shall be reduced by the number of shares of Common Stock in
respect of which such stock appreciation right shall have been exercised.
2.4 Exercisability of Options and Stock Appreciation Rights. Subject
-------------------------------------------------------
to the other provisions of the Plan:
(a) EXERCISABILITY DETERMINED BY PLAN AGREEMENT. Each Plan
agreement shall set forth the period during which and the conditions
subject to which the option or stock appreciation right evidenced thereby
shall be exercisable, as determined by the Committee in its discretion,
provided, however, that options shall not be exercisable for twelve months
following a hardship distribution subject to Treasury Regulations (S) 1.40
1 (k)-I (d)(2)(iv)(B)(4).
(b) EXERCISE OF RELATED STOCK APPRECIATION RIGHT. Unless the
applicable Plan agreement otherwise provides, a related stock appreciation
right shall be exercisable at any time during the period that the related
option may be exercised.
(c) PARTIAL EXERCISE PERMITTED. Unless the applicable Plan
agreement otherwise provides, an option or stock appreciation right granted
under the Plan
<PAGE>
may be exercised from time to time as to all or part of the full number of
shares as to which such option or stock appreciation right shall then be
exercisable.
(d) NOTICE OF EXERCISE, EXERCISE DATE.
(i) An option or stock appreciation right shall be
exercisable by the filing of a written notice of exercise with the Company,
on such form and in such manner as the Committee shall in its sole
discretion prescribe, and by payment in accordance with Section 2.6.
(ii) Unless the applicable Plan agreement otherwise
provides, or the Committee in its sole discretion otherwise determines, the
date of exercise of an option or stock appreciation right shall be the date
the Company receives such written notice of exercise and payment.
2.5 Limitation on Exercise. Notwithstanding any other
----------------------
provision of the Plan, no Plan agreement shall permit an incentive stock
option to be exercisable more than 10 years after the date of grant.
2.6 Payment of Option Price.
-----------------------
(a) TENDER DUE UPON NOTICE OF EXERCISE. Unless the
applicable Plan agreement otherwise provides or the Committee in its sole
discretion otherwise determines, any written notice of exercise of an
option shall be accompanied by payment of the full purchase price for the
shares being purchased.
(b) MANNER OF PAYMENT. Payment of the option exercise
price shall be made in any combination of the following:
(i) by certified or official bank check payable to the
Company (or the equivalent thereof acceptable to the Committee);
(ii) by personal check (subject to collection), which may
in the Committee's discretion be deemed conditional;
(iii) if and to the extent provided in the applicable Plan
agreement, by delivery of previously acquired shares of Common Stock owned
by the grantee for at least six months (or such other period as the
Committee may prescribe) having a fair market value (determined as of the
option exercise date) equal to the portion of the option exercise price
being paid thereby, provided that the Committee may require the grantee to
furnish an opinion of counsel acceptable to the Committee to the effect
that such delivery would not result in the grantee incurring any liability
under Section 16(b) of the Act and does not require any Consent (as defined
in Section 4.2); and
(iv) with the consent of the Committee in its sole
discretion, by the full recourse promissory note and agreement of
the grantee providing for
<PAGE>
payment with interest on the unpaid balance accruing at a rate
not less than that needed to avoid the imputation of income under
Code section 7872 and upon such terms and conditions (including
the security, if any, therefor) as the Committee may determine.
(c) CASHLESS EXERCISE. Payment in accordance with
Section 2.6(b) may be deemed to be satisfied, if and to the
extent provided in the applicable Plan agreement, by delivery to
the Company of an assignment of a sufficient amount of the
proceeds from the sale of Common Stock acquired upon exercise to
pay for all of the Common Stock acquired upon exercise and an
authorization to the broker or selling agent to pay that amount
to the Company, which sale shall be made at the grantee's
direction at the time of exercise, provided that the Committee
may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery
would not result in the grantee incurring any liability under
Section 16 of the Act and does not require any Consent (as
defined in Section 4.2).
(d) ISSUANCE OF SHARES. As soon as practicable after
receipt of full payment, the Company shall, subject to the
provisions of Section 4.2, deliver to the grantee one or more
certificates for the shares of Common Stock so purchased, which
certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the
shares in accordance with applicable securities laws, rules and
regulations or otherwise.
2.7 Default Rules Concerning Termination of Employment.
--------------------------------------------------
Subject to the other provisions of the Plan and unless the
applicable Plan agreement otherwise provides:
(a) GENERAL RULE. All options and stock appreciation
rights granted to a grantee shall terminate upon the grantee's
termination of employment for any reason except to the extent
post-employment exercise of the option or stock appreciation
right is permitted in accordance with this Section 2.7.
(b) TERMINATION FOR CAUSE. All options and stock
appreciation rights granted to a grantee shall terminate and
expire on the day a grantee's employment is terminated for cause,
the grantee resigns for cause or the grantee has committed an act
or omission upon which the Company could have terminated the
grantee's employment for cause.
(c) REGULAR TERMINATION; LEAVES OF ABSENCE. If the
grantee's employment terminates for reasons other than as
provided in subsections (b), (d), or (f) of this Section 2.7, the
portion of options and stock appreciation rights granted to such
grantee which were exercisable immediately prior to such
termination of employment may be exercised until the earlier of
90 days after the grantee's termination of employment or the date
on which such
<PAGE>
options and stock appreciation rights terminate or expire in
accordance with the provisions of the Plan (other than this
Section 2.7) and the Plan agreement. The Committee may, in its
sole discretion, determine (i) whether any leave of absence
(including short-term or long-term disability or medical leave)
shall constitute a termination of employment for purposes of the
Plan, and (ii) the impact, if any, of any such leave on
outstanding awards under the Plan.
(d) RETIREMENT. If a grantee's employment terminates by
reason of retirement (as defined in any pension plan maintained
by the Company in which the grantee participates, or in the
absence of such a plan, by the Committee in its sole discretion)
the options and stock appreciation rights exercisable by the
grantee immediately prior to the grantee's retirement shall be
exercisable by the grantee until the earlier of one year after
the grantee's retirement or the date on which such options and
stock appreciation rights terminate or expire in accordance with
the provisions of the Plan (other than this Section 2.7) and the
Plan agreement.
(e) DEATH AFTER TERMINATION. If a grantee's employment
terminates in the manner described in subsections (c) or (d) of
this Section 2.7 and the grantee dies within the period for
exercise provided for therein, the options and stock appreciation
rights exercisable by the grantee immediately prior to the
grantee's death shall be exercisable by the personal
representative of the grantee's estate or by the person to whom
such options and stock appreciation rights pass under the
grantee's will (or, if applicable, pursuant to the laws of
descent and distribution) until the earlier of 180 days after the
grantee's death, or the date on which such options and stock
appreciation rights terminate or expire in accordance with the
provisions of subsections (c) or (d) of this Section 2.7.
(f) DEATH BEFORE TERMINATION. If a grantee dies while
employed by the Company or any Affiliate, all options and stock
appreciation rights granted to the grantee but not exercised
before the death of the grantee, whether or not exercisable by
the grantee before the grantee's death, shall immediately become
and be exercisable by the personal representative of the
grantee's estate or by the person to whom such options and stock
appreciation rights pass under the grantee's will (or, if
applicable, pursuant to the laws of descent and distribution)
until the earlier of one year after the grantee's death or the
date on which such options or stock appreciation rights terminate
or expire in accordance with the provisions of the Plan (other
than this Section 2.7) and the Plan agreement.
<PAGE>
2.8 Special ISO Requirements. In order for a grantee to receive
------------------------
special tax treatment with respect to stock acquired under an
option intended to be an incentive stock option, the grantee of
such option must be, at all times during the period beginning on
the date of grant and ending on the day three months before the
date of exercise of such option, an employee of the Company or
any of the Company's parent or subsidiary corporations (within
the meaning of Code section 424), or of a corporation or a parent
or subsidiary corporation of such corporation issuing or
assuming, a stock option in a transaction to which Code section
424(a) applies. If an option granted under the Plan is intended
to be an incentive stock option, and if the grantee, at the time
of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the grantee's
employer corporation or of its parent or subsidiary corporation,
then (i) the option exercise price per share shall in no event be
less than 110 percent of the fair market value of the Common
Stock on the date of such grant and (ii) such option shall not be
exercisable after the expiration of five years after the date
such option is granted.
ARTICLE 3. AWARDS OTHER THAN STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
3.1 Restricted Stock Awards.
-----------------------
(a) GRANT OF AWARDS. The Committee may grant restricted
stock awards, alone or in tandem with other awards, under the
Plan in such amounts and subject to such terms and conditions as
the Committee shall from time to time in its sole discretion
determine. The vesting of a restricted stock award granted under
the Plan may be conditioned upon the completion of a specified
period of employment with the Company or any Affiliate, upon the
attainment of specified performance goals, and/or upon such other
criteria as the Committee may determine in its sole discretion.
(b) PAYMENT. Each Plan agreement with respect to a
restricted stock award shall set forth the amount (if any) to be
paid by the grantee with respect to such award. If a grantee
makes any payment for a restricted stock award which does not
vest, appropriate payment may be made to the grantee following
the forfeiture of such award on such terms and conditions as the
Committee may determine.
(c) FORFEITURE UPON TERMINATION OF EMPLOYMENT. Unless the
applicable Plan agreement otherwise provides or the Committee
otherwise determines, (i) if a grantee's employment terminates
for any reason (including death) before all of his restricted
stock awards have vested, such awards shall
<PAGE>
terminate and expire upon such termination of employment, and
(ii) in the event any condition to the vesting of restricted
stock awards is not satisfied within the period of time permitted
therefor, such unvested shares shall be returned to the Company.
(d) ISSUANCE OF SHARES. The Committee may provide that
one or more certificates representing restricted stock awards
shall be registered in the grantee's name and bear an appropriate
legend specifying that such shares are not transferable and are
subject to the terms and conditions of the Plan and the
applicable Plan agreement, or that such certificate or
certificates shall be held in escrow by the Company on behalf of
the grantee until such shares vest or are forfeited, all on such
terms and conditions as the Committee may determine. Unless the
applicable Plan agreement otherwise provides, no share of
restricted stock may be assigned, transferred, otherwise
encumbered or disposed of by the grantee until such share has
vested in accordance with the terms of such award. Subject to the
provisions of Section 4.2, as soon as practicable after any
restricted stock award shall vest, the Company shall issue or
reissue to the grantee (or to the grantee's designated
beneficiary in the event of the grantee's death) one or more
certificates for the Common Stock represented by such restricted
stock award.
(e) GRANTEES' RIGHTS REGARDING RESTRICTED STOCK. Unless
the applicable Plan agreement otherwise provides:
(i) a grantee may vote and receive dividends on
restricted stock awarded under the Plan; and
(ii) any stock received as a distribution with respect to
a restricted stock award shall be subject to the same
restrictions as such restricted stock.
3.2 Recognition Shares. The Committee may issue stock under the
------------------
Plan, alone or in tandem with other awards, in such amounts and
subject to such terms and conditions as the Committee shall from
time to time in its sole discretion determine. Recognition shares
under the Plan shall relate to a specified maximum number of
shares granted as, or in payment of, a bonus, or to provide
incentives or recognize special achievements or contributions.
3.3 Performance Units.
-----------------
(a) GRANT OF UNITS. The Committee may grant performance
units under the Plan to acquire shares of Common Stock in such
amounts and subject to such terms and conditions as the Committee
shall from time to time in its sole discretion determine, subject
to the terms of the Plan.
<PAGE>
(b) PERFORMANCE UNITS. Each performance unit under the
Plan shall relate to a specified maximum number of shares, and
shall be exchangeable for all or a portion of such shares, or
cash (or such other form of consideration as may be determined by
the Committee equivalent in value thereto) in up to an amount
equal to the fair market value of an equal number of unrestricted
shares, at the end of such specified period (a "performance
cycle") as may be established by the Committee. The number of
such shares which may be deliverable pursuant to such performance
unit shall be based upon the degree of attainment over such
performance cycle of such measure of the performance of the
Company, its subsidiaries or the participant as may be
established by the Committee. The Committee may provide for full
or partial credit, prior to completion of such performance cycle
or achievement of the degree of attainment of the measures of
performance specified in connection with such performance unit,
in the event of the participant's death, normal retirement, early
retirement, or total or permanent disability, or in such other
circumstances as the Committee may determine to be fair and
equitable to the participant or in the interest of the Company.
3.4 Payment Rights. Payment rights under the Plan shall
--------------
provide for the grant of a specified maximum number of shares or
for the grant of options, performance units or recognition shares
in payment of all or a portion of compensation under other or
additional compensation arrangements of the Company or in
consideration of the surrender of all or a portion of such
compensation; provided, however, that no grant of a payment right
shall be made at less than 85 percent of the fair market value of
a share of Common Stock as of the grant date.
3.5 Tax Benefit Rights. The Committee may, from time to time
------------------
and upon such terms and conditions as it may in its discretion
determine, grant rights ("tax benefit rights") under the Plan to
receive as a result of the receipt or exercise of any award
pursuant to this Plan (except an incentive stock option or a
stock appreciation right with respect thereto), an amount in cash
up to the then applicable maximum statutory federal income tax
rate for corporations multiplied by the amount of compensation,
if any, realized by the participant for federal income tax
purposes by reason of the receipt or exercise of such award.
ARTICLE 4. MISCELLANEOUS
4.1 Amendment of the Plan; Modification of Awards.
---------------------------------------------
(a) PLAN AMENDMENTS. The Board may, without shareholder
approval, at any time and from time to time suspend, discontinue
or amend the Plan in any respect whatsoever, except that no such
amendment shall impair any rights under any award theretofore
made under the Plan without the consent of the grantee of such
award. Furthermore, except as and to the extent otherwise
<PAGE>
permitted by Section 4.5 or 4.11, no such amendment shall,
without shareholder approval:
(i) materially increase the benefits accruing to grantees
under the Plan;
(ii) increase the maximum number of shares which may be
made subject to awards to an individual as options or stock
appreciation rights in any year;
(iii) increase the number of shares of Common Stock in
respect of which awards may be issued under the Plan;
(iv) materially modify the designation in Section 1.3 of
the class of persons eligible to receive awards under the Plan;
(v) provide for the grant of stock options or stock
appreciation rights having an option exercise price or
appreciation base per share of Common Stock less than 85 percent
of the fair market value of a share of Common Stock on the date
of grant; or
(vi) extend the term of the Plan beyond the period set
forth in Section 4.13.
(b) AWARD MODIFICATIONS. Subject to the terms and
conditions of the Plan (including Section 4.1(a)), the Committee
may amend outstanding Plan agreements with a grantee, including,
without limitation, any amendment which would (i) accelerate the
time or times at which an award may vest or become exercisable
and/or (ii) extend the scheduled termination or expiration date
of the award, provided, however, that no modification having a
material adverse effect upon the interest of a grantee in an
award shall be made without the consent of such grantee.
4.2 Restrictions.
------------
(a) CONSENT REQUIREMENTS. If the Committee shall at any
time determine that any Consent (as hereinafter defined) is
necessary or desirable as a condition of, or in connection with,
the granting of any award under the Plan, the acquisition,
issuance or purchase of shares or other rights hereunder or the
taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan
Action shall not be taken, in whole or in part, unless and until
such Consent shall have been effected or obtained to the full
satisfaction of the Committee. Without limiting the generality of
the foregoing, the Committee shall be entitled to determine not
to make any payment whatsoever until Consent has been given if
(i) the Committee may make any payment under the Plan in cash,
Common Stock or
<PAGE>
both, and (ii) the Committee determines that Consent is necessary or
desirable as a condition of, or in connection with, payment in any one
or more of such forms.
(b) CONSENT DEFINED. The term "Consent" as used herein with
respect to any Plan Action means (i) any and all listings,
registrations or qualifications in respect thereof upon any securities
exchange or other self-regulatory organization or under any federal,
state or local law, rule or regulation, (ii) the expiration,
elimination or satisfaction of any prohibitions, restrictions or
limitations under any federal, state or local law, rule or regulation
or the rules of any securities exchange or other self-regulatory
organization, (iii) any and all written agreements and representations
by the grantee with respect to the disposition of shares, or with
respect to any other matter, which the Committee shall deem necessary
or desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from the
requirement that any such listing, qualification or registration be
made, and (iv) any and all consents, clearances and approvals in
respect of a Plan Action by any governmental or other regulatory
bodies or any parties to any loan agreements or other contractual
obligations of the Company or any Affiliate.
4.3 Nontransferability. No award granted to any grantee under the
------------------
Plan or under any Plan agreement shall be assignable or transferable
by the grantee other than by will or by the laws of descent and
distribution. During the lifetime of the grantee, all rights with
respect to any award granted to the grantee under the Plan or under
any Plan agreement shall be exercisable only by the grantee.
4.4 Withholding Taxes.
-----------------
(a) Whenever under the Plan shares of Common Stock are to be
delivered pursuant to an award, the Committee may require as a
condition of delivery that the grantee remit an amount sufficient to
satisfy all federal, state and other governmental withholding tax
requirements related thereto. Whenever cash is to be paid under the
Plan (whether upon the exercise of a stock appreciation right or
otherwise), the Company may, as a condition of its payment, deduct
therefrom, or from any salary or other payments due to the grantee, an
amount sufficient to satisfy all federal, state and other governmental
withholding tax requirements related thereto or to the delivery of any
shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i) a
grantee may elect to satisfy all or part of the foregoing withholding
requirements by delivery of unrestricted shares of Common Stock owned
by the grantee for at least six months (or such other period as the
Committee may determine) having a fair market value (determined as of
the date of such delivery by the grantee) equal to all or part of the
amount to be so withheld, provided that the Committee
<PAGE>
may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee
to the effect that such delivery would not result in the grantee
incurring any liability under Section 16(b) of the Act and (ii) the
Committee may permit any such delivery to be made by withholding
shares of Common Stock from the shares otherwise issuable pursuant to
the award giving rise to the tax withholding obligation (in which
event the date of delivery shall be deemed the date such award was
exercised).
4.5 Adjustments Upon Changes in Capitalization. If and to the extent
------------------------------------------
specified by the Committee, the number of shares of Common Stock which
may be issued pursuant to awards under the Plan, the maximum number of
options and/or unrelated stock appreciation rights which may be
granted to any one person in any year, the number of shares of Common
Stock subject to awards, the 2 percent limitation on the number of
shares of Common Stock which may vest in respect of restricted stock
and recognition share awards under Section 1.5(a) above, the option
exercise price and appreciation base of options and stock appreciation
rights theretofore granted under the Plan, and the amount payable by a
grantee in respect of an award, shall be appropriately adjusted (as
the Committee may determine) for any change in the number of issued
shares of Common Stock resulting from the subdivision or combination
of shares of Common Stock or other capital adjustments, or the payment
of a stock dividend after the effective date of the Plan, or other
change in such shares of Common Stock effected without receipt of
consideration by the Company; provided that any award covering
fractional shares of Common Stock resulting from any such adjustment
shall be eliminated and provided further, that each incentive stock
option granted under the Plan shall not be adjusted in a manner that
causes such option to fail to continue to qualify as an "incentive
stock option" within the meaning of Code section 422. Adjustments
under this Section shall be made by the Committee, whose determination
as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive.
4.6 Right of Discharge Reserved. Nothing in the Plan or in any Plan
---------------------------
agreement shall confer upon any person the right to continue in the
employment of the Company or affect any right which the Company or an
Affiliate may have to terminate the employment of such person.
4.7 No Rights as a Shareholder. No grantee or other person shall
--------------------------
have any of the rights of a shareholder of the Company with respect to
shares subject to an award until the issuance of a stock certificate
to him for such shares. Except as otherwise provided in Section 4.5,
no adjustment shall be made for dividends, distributions or other
rights (whether ordinary or extraordinary, and whether in cash,
securities or other property) for which the record date is prior to
the date such stock certificate is issued. In the case of a grantee of
an award which has not yet vested, the grantee shall have the rights
of a shareholder of
<PAGE>
the Company if and only to the extent provided in the applicable Plan
agreement.
4.8 Nature of Payments.
------------------
(a) Any and all awards or payments hereunder shall be granted,
issued, delivered or paid, as the case may be, in consideration of
services performed for the Company by the grantee.
(b) No such awards and payments shall be considered special
incentive payments to the grantee or, unless otherwise determined by
the Committee, be taken into account in computing the grantee's salary
or compensation for the purposes of determining any benefits under (i)
any pension, retirement, life insurance or other benefit plan of the
Company or (ii) any agreement between the Company and the grantee.
(c) By accepting an award under the Plan, the grantee shall
thereby waive any claim to continued exercise or vesting of an award
or to damages or severance entitlement related to non-continuation of
the award beyond the period provided herein or in the applicable Plan
agreement, notwithstanding any contrary provision in any written
employment contract with the grantee, whether any such contract is
executed before or after the grant date of the award.
4.9 Non-Uniform Determinations. The Committee's determinations
--------------------------
under the Plan need not be uniform and may be made by it selectively
among persons who receive, or are eligible to receive, awards under
the Plan (whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be
entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Plan
agreements, as to (a) the persons to receive awards under the Plan,
(b) the terms and provisions of awards under the Plan, (c) the
exercise by the Committee of its discretion in respect of the exercise
of stock appreciation rights pursuant to the terms of the Plan, and
(d) the treatment of leaves of absence pursuant to Section 2.7(c).
4.10 0ther Payments or Awards. Nothing contained in the Plan shall be
------------------------
deemed in any way to limit or restrict the Company or the Committee
from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in
effect.
4.11 Reorganization.
--------------
(a) In the event that the Company is merged or consolidated with
another corporation and, whether or not the Company shall be the
surviving corporation, there shall be any change in the shares of
Common Stock
<PAGE>
by reason of such merger or consolidation, or in the event that all or
substantially all of the assets of the Company are acquired by another
person, or in the event of a reorganization or liquidation of the
Company (each such event being hereinafter referred to as a
"Reorganization Event") or in the event that the Board shall propose
that the Company enter into a Reorganization Event, then the Committee
may in its discretion, by written notice to a grantee, provide that
his options and stock appreciation rights will be terminated unless
exercised within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice;
provided that if, and to the extent that, the Committee takes such
action with respect to the grantee's options and/or stock appreciation
rights not yet exercisable, the Committee shall also accelerate the
dates upon which such options and stock appreciation rights shall be
exercisable. The Committee also may in its discretion by written
notice to a grantee provide that all or some of the restrictions on
any of the grantee's awards may lapse in the event of a Reorganization
Event upon such terms and conditions as the Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions
referred to in Section 4.11(a) may be made conditional upon the
consummation of the applicable Reorganization Event.
4.12 Section Headings. The section headings contained herein are for
----------------
the purposes of convenience only and are not intended to define or
limit the contents of said sections.
4.13 Effective Date and Term of Plan.
-------------------------------
(a) The Plan shall be deemed adopted and become effective upon
the approval thereof by the Board or such other date as the Board
shall determine.
(b) The Plan shall terminate 10 years after the earlier of the
date on which it becomes effective or is approved by shareholders, and
no awards shall thereafter be made under the Plan. Notwithstanding the
foregoing, all awards made under the Plan prior to such termination
date shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan and
the applicable Plan agreement.
4.14 Governing Law. The Plan shall be governed by the laws of the
-------------
State of Michigan applicable to agreements made and to be performed
entirely within such state.
THIS 1995 OMNIBUS EQUITY PLAN is hereby executed on this 18th day of
May, 1995.
<PAGE>
NETWORK EXPRESS, INC.
By: ______________
BOARD OF DIRECTORS APPROVAL: 2/1/95
SHAREHOLDER APPROVAL: 5/18/95
CHR2215
<PAGE>
Exhibit 99.3
NETWORK EXPRESS, INC.
---------------------
STOCK OPTION AGREEMENT
UNDER THE 1991 STOCK OPTION PLAN
--------------------------------
THIS STOCK OPTION AGREEMENT made this by and between
-------------------
Network Express, Inc, a Michigan corporation ("the Company"), 4251 Plymouth
Road, Ann Arbor, Michigan 48105, and (the" Optionee").
--------------
Witnesseth:
WHEREAS, the Optionee is now employed as
-----------------------
of the Company, [or a subsidiary of the Company,] and the Company desires to
provide additional incentive to the Optionee, to encourage stock ownership by
the Optionee, and to encourage the Optionee to remain in the employ of the
Company, or any subsidiary, as an inducement thereto, the Company has determined
to grant the Optionee the following option:
NOW, THEREFORE, it is agreed between the parties as follows:
1. Grant of Option. Subject to the terms and conditions hereof, the
---------------
Company hereby grants to the Optionee the right and option to purchase from the
Company up to, but not exceeding in the aggregate, shares of the
------
Company's Common Stock, at a price of $ per share.
-----
2. Accrual of Right to Exercise Option. The Optionee may purchase from
-----------------------------------
the Company on or after twenty-five percent (25%) of the shares
------------
covered by this option, and on each succeeding this option may be
------
exercised as to an additional twenty-five percent (25%) of the shares covered by
this option, so that by this option shall be fully exercisable. To
------
the extent not exercised, installments shall accumulate and may exercised by the
Optionee, in whole or in part, in any subsequent period. This option may not be
exercised after
-----------
3. Termination of Employment. If, on or after the date that this option
-------------------------
shall first become exercisable, the Optionee's employment shall be terminated
for any reason other than death or disability (as defined in Section 22 (e) of
the Internal Revenue Code (the "Code"), the Optionee shall have the right,
within three months after the termination of employment, to exercise this option
to the extent that it shall have been exercisable and unexercised on the date of
such termination of services, subject to any other limitation on the exercise of
such option in effect on the date of such exercise.
<PAGE>
If on or after the date this option shall first become exercisable, the
Optionee shall die or become disabled (as defined in Section 22 (e) of the
Code), the Optionee or the legal representative of the estate of the Optionee
(on behalf of the person or persons to whom the option passed by will or the
laws of descent and distribution,) shall have the right at any time prior to the
first anniversary of the Optionee's termination of employment to exercise such
option, but only to the extent that such Optionee was entitled to exercise such
option at the date of death or termination of employment due to disability.
4. Exercise of Option. The Optionee, from time to time during the period
-------------------
when the option hereby granted may by its terms be exercised, may exercise the
option in whole or in part as at the time permitted, by delivery to the Company
of a written notice signed by the Optionee stating (i) the number of shares that
the Optionee has elected to purchase at that time from the Company, and (ii)
whether the Optionee will pay the exercise price for such shares (a) in cash,
(b) by delivering to the Company shares of Network Express Common Stock owned by
the Optionee such that the number of shares delivered times the market price of
such shares on the exercise date equals or exceeds the exercise price, (c)
through a cashless exercise procedure whereby the Optionee instructs his or her
Broker to deliver to the Company sufficient cash to pay the exercise price and
applicable income and employment witholding taxes, or (d) any combination
thereof. If the method of payment chosen is either cash or delivery of Common
Stock then the check or the Share Certificate should accompany the written
notice.
Anything to the contrary herein notwithstanding, the Company's obligation
to sell and deliver stock under this option is subject to such compliance with
federal and state laws, rules and regulations applying to the authorization,
issuance or sale of securities as the Company deems necessary or advisable.
The Company shall not be required to sell and deliver stock pursuant hereto
unless and until it receives satisfactory proof that the issuance or transfer of
such shares will not violate any of the provisions of the Securities Act of 1933
or the Securities Exchange Act of 1934 or the rules and regulations of the
Securities Exchange Commission promulgated thereunder or those of any stock
exchange or nationally recognized trading market on which the stock may be
listed or traded, or the provisions of any state law governing the sale of
securities, or that there has been compliance with the provisions of such acts,
rules, regulations and state laws. If the Optionee fails to accept delivery and
pay for all or any part of the number of shares specified by such notice upon
tender of delivery thereof the Optionee's right to exercise this option with
respect to such undelivered shares may be terminated by the Company.
5. Non-Assignability. The option hereby granted shall not be
-----------------
transferable by the Optionee other than by will or the laws of descent and
distribution, and the option may be exercised during the Optionee's lifetime
only by the Optionee or the trustee of such trust. Any transferee of the option
shall take the same subject to the terms and conditions of this Agreement. No
such transfer of the option shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of the
will and/or such other evidence as the Company may deem necessary to establish
the validity of the transfer and the acceptance by the transferee or transferees
of the terms and conditions of this Agreement.
2
<PAGE>
No assignment or transfer of this option, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law, or otherwise except by
the Optionee by will or the laws of descent and distribution, shall vest in the
purported assignee or transferee any interest or right herein whatsoever.
6. Withholding. The Optionee hereby agrees to reimburse the Company for
-----------
any income or employment tax withholding requirements and to provide the Company
with such information and date that the company deems necessary.
7. Company's Right to Repurchase Shares. The Optionee agrees that the
------------------------------------
shares purchased pursuant to the exercise of the option shall be subject to a
right of first refusal by the Company to repurchase the shares as provided in
the Plan.
8. Adjustments. In the event of any stock dividend, subdivision or
-----------
combination, reclassification, merger, consolidation, or similar transaction
affecting the shares covered by this option, the rights of the Optionee shall be
adjusted appropriately, as determined by the board of Directors in its sole
discretion.
9. Rights as Shareholder. The Optionee shall have no rights as a
---------------------
shareholder of the Company with respect to any of the shares covered by this
option until the issuance of a stock certificate or certificates upon the
exercise of the option in full or in part, and then only with respect to the
shares represented by such certificate or certificates.
10. Notices. Every notice relating to this Agreement shall be in writing
-------
and if given by registered or certified mail with return receipt requested. All
notices to the Company shall be delivered to the Secretary or addressed to
Secretary of the Company at its offices at the address set forth above. All
notices by the Company to the Optionee shall be delivered to the Optionee
personally or addressed to the Optionee at the Optionee's residence address as
set forth above. Either party by notice to the other may designate a different
address to which notices shall be addressed. Any notice given by the Company to
the Optionee at the Optionee's last designated address shall be effective to
bind any other person who shall acquire rights hereunder.
11. "Optionee" to Include Certain Transferees. Whenever the word
----------------------------------------
"Optionee" is used in any provision of this Agreement under circumstances where
the provision should logically apply to any person or person to whom the option,
in accordance with the provisions of Section 5 hereof, may be transferred, the
word "Optionee" shall be deemed to include such person or persons.
3
<PAGE>
12. Governing Law. This Agreement has been made in and shall be
-------------
constructed in accordance with the laws of the State of Michigan.
13. Provisions of the Plan Controlling. The provisions hereof are subject
----------------------------------
to the terms and provisions of the Plan, attached hereto as Exhibit A. In the
event of any conflict between the provisions of this option and the provisions
of the Plan control.
IN WITNESS WHEREOF, the parties hereto have executed Agreement as of the
day and year first above written.
NETWORK EXPRESS, INC
By:
-----------------------------
Richard P. Eidswick
President
-----------------------------
Optionee
Dated:
--------------------------
4
<PAGE>
Exhibit 99.4
NETWORK EXPRESS, INC.
---------------------
STOCK OPTION AGREEMENT
UNDER THE 1995 OMNIBUS EQUITY PLAN
----------------------------------
THIS STOCK OPTION AGREEMENT made this _____________, by and between
Network Express, Inc., a Michigan corporation ("the Company"), 4251 Plymouth
Road, Ann Arbor, Michigan 48105, and ______________ (the "Optionee").
Witnesseth:
WHEREAS, the Optionee is now employed as _____________________________ of
the Company, (or a subsidiary of the Company,) and the Company desires to
provide additional incentive to the Optionee, to encourage stock ownership by
the Optionee, and to encourage the Optionee to remain in the employ of the
Company, or any subsidiary, as an inducement thereto, the Company has determined
to grant the Optionee the following option:
NOW, THEREFORE, it is agreed between the parties as follows:
1. Grant of Option. Subject to the terms and conditions hereof, the
---------------
Company hereby grants to the Optionee the right and option to purchase from the
Company up to, but not exceeding in the aggregate, ______ shares of the
Company's Common Stock, at a price of $______ per share.
2. Accrual of Right to Exercise Option. The Optionee may purchase from
-----------------------------------
the Company on or after ____________ twenty-five percent (25%) of the shares
covered by this option, and on each succeeding ______, this option may be
exercised as to an additional twenty-five percent (25%) of the shares covered by
this option, so that ________________ this option shall be fully exercisable. To
the extent not exercised, installments shall accumulate and may be exercised by
the Optionee, in whole or in part, in any subsequent period. This option may not
be exercised after ____________.
3. Termination of Employment. If, on or after the date that this option
-------------------------
shall first become exercisable, the Optionee's employment shall be terminated
for any reason other than death or disability (as defined in Section 22(e) of
the Internal Revenue Code (the "Code"), the Optionee shall have the right,
within three months after the termination of employment, to exercise this option
to the extent that it shall have been exercisable and unexercised on the date of
such termination of services, subject to any other limitation on the exercise of
such option in effect on the date of such exercise.
If on or after the date this option shall first become exercisable, the
Optionee shall die or become disabled (as defined in Section 22(3) of the Code),
the Optionee or the legal representative of the estate of the Optionee (on
behalf of the person or persons to whom the option passed by will or the laws of
descent and distribution) shall have the right at any time
<PAGE>
prior to the first anniversary of the Optionee's termination of employment to
exercise such option at the date of death or termination of employment due to
disability.
4. Exercise of Option. The Optionee, from time to time during the period
------------------
when the option hereby granted may by its terms be exercised, may exercise the
option in whole or in part as at the time permitted, by delivery to the Company
of a written notice signed by the Optionee stating (i) the number of shares that
the Optionee has elected to purchase at that time from the Company; and (ii)
whether the Optionee will pay the exercise price for such shares (a) in cash,
(b) by delivering to the Company shares of Network Express Common Stock owned by
the Optionee such that the number of shares delivered times the market price of
such shares on the exercise date equals or exceeds the exercise price, (c)
through a cashless exercise procedure whereby the Optionee instructs his or her
Broker to deliver to the Company sufficient cash to pay the exercise price and
applicable income and employment withholding taxes, or (d) any combination
thereof. If the method of payment chosen is either cash or delivery of Common
Stock then the check or the Share Certificate should accompany the written
notice.
Anything to the contrary herein notwithstanding, the Company's obligation
to sell and deliver stock under this option is subject to such compliance with
federal and state laws, rules and regulations applying to the authorizations,
issuance or sale of securities as the Company deems necessary or advisable. The
Company shall not be required to sell and delivery stock pursuant hereto unless
and until it receives satisfactory proof that the issuance or transfer of such
shares will not violate any of the provisions of the Securities Act of 1933 or
the Securities Exchange Act of 1934 or the rules and regulation of the
Securities Exchange Commission promulgated thereunder or those of any stock
exchange or nationally recognized trading market on which the stock may be
listed or traded, or the provisions of any state law governing the sale of
securities, or that there have been compliance with the provisions of such acts,
rules, regulations and state laws. If the Optionee fails to accept delivery and
pay for all or any part of the shares the Optionee's right to exercise this
option with respect to such undelivered shares may be terminated by the Company.
5. Non-Assignability. The option hereby granted shall not be
-----------------
transferable by the Optionee other than by will or the laws of descent and
distribution, and the option may be exercised during the Optionee's lifetime
only the Optionee or the trustee of such trust. Any transferee of the option
shall take the same subject to the terms and conditions of this Agreement. No
such transfer to the option shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of the
will and/or such other evidence as the company may deem necessary to establish
the validity of the transfer and the acceptance by the transferee or transferees
of the terms and conditions of this Agreement.
No assignment or transfer of this option, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise,
except a transfer by the Optionee by will or by the laws of descent and
distribution, shall vest in the purported assignee or transferee any interest or
right herein whatsoever.
-2-
<PAGE>
6. Withholding. The Optionee hereby agrees to reimburse the Company for
-----------
any income or employment tax withholding requirements and to provide the Company
with such information and date that the Company deems necessary.
7. Company's Right to Repurchase Shares. The Optionee agrees that the
------------------------------------
shares purchased pursuant to the exercise of the option shall be subject to a
right of first refusal by the Company to repurchase the shares as provided in
the Plan.
8. Adjustments. In the event of any stock dividend, subdivision or
-----------
combination, reclassification, merger, consolidation, or similar transaction
affecting the shares covered by this option, the rights of the Optionee shall be
adjusted appropriately, as determined by the Board of Directors in its sole
discretion.
9. Rights as Shareholder. The Optionee shall have no rights as a
---------------------
shareholder of the Company with respect to any of the shares covered by this
option until the issuance of a stock certificate or certificates upon the
exercise of the option in full or in part, and then only with respect to the
shares represented by such certificate or certificates.
10. Notices. Every notice relating to this Agreement shall be in writing
-------
and if given by mail shall be given by registered or certified mail with return
receipt requested. All notices to the Company shall be delivered to the
Secretary or addressed to Secretary of the Company at its offices at the address
set forth above. All notices by the Company to the Optionee shall be delivered
to the Optionee personally or addressed to the Optionee at the Optionee's
residence address as set forth above. Either party by notice to the other may
designate a different address to which notices shall be addressed. Any notice
given by the Company to the Optionee at the Optionee's last designated address
shall be effective to bind any other person who shall acquire rights hereunder.
11. "Optionee" to include Certain Transferees. Whenever the word
-----------------------------------------
"Optionee" is used in any provision of this Agreement under circumstances where
the provision should logically apply to any other person or persons to whom the
option, in accordance with the provisions of Section 5 hereof, may be
transferred, the word "Optionee" shall be deemed to include such person or
persons.
12. Governing Law. This Agreement has been made in and shall be
-------------
constructed in accordance with the laws of the State of Michigan.
13. Provisions of the Plan Controlling. The provisions hereof are subject
----------------------------------
to the terms and provisions of the Plan, attached hereto as Exhibit A. In the
event on any conflict between the provisions of this option and the provisions
of the Plan, the provisions of the Plan control.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
NETWORK EXPRESS, INC.
By:______________________________
Richard P. Edswick
President
_________________________________
, Optionee
Dated:_________________________________
-4-
<PAGE>
Form of Stock Option Assumption Agreement used in connection
with the Amended and Restated Network Express, Inc. 1991 Stock Option Plan
1991 STOCK OPTION PLAN
CABLETRON SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of August, 1996
by Cabletron Systems, Inc., a Delaware corporation ("Cabletron").
WHEREAS, ______________________________ ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Network Express,
Inc., a Michigan corporation ("Network"), which were granted to Optionee under
the Amended and Restated Network Express, Inc. 1991 Stock Option Plan (the
"Plan") and are evidenced by a Stock Option Agreement (the "Option Agreement")
between Network and Optionee.
WHEREAS, Network has this day been acquired by Cabletron through merger of
a wholly-owned Cabletron subsidiary, Cabletron Systems of Michigan, Inc.
("Acquisition Corporation"), with and into Network (the "Merger") pursuant to
the Agreement and Plan of Merger dated as of May 21, 1996 by and among
Cabletron, Network and Acquisition Corporation (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cabletron to assume
all obligations of Network under all options outstanding under the Plan at the
consummation of the Merger and to issue to the holder of each outstanding option
a notice setting forth such holder's rights after consummation of the Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger is 0.1388 of a share of Cabletron common stock
("Cabletron Stock") for each outstanding share of Network common stock (the
"Exchange Rate").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Cabletron in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Network common stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Network Options")
<PAGE>
and the exercise price payable per share are set forth in Exhibit A hereto.
Cabletron hereby assumes, as of the Effective Time, all the duties and
obligations of Network under each of the Network Options. In connection with
such assumption, the number of shares of Cabletron Stock purchasable under each
Network Option hereby assumed and the exercise price payable thereunder have
been adjusted to reflect the Exchange Rate at which shares of Network common
stock were converted into shares of Cabletron Stock in consummation of the
Merger. Accordingly, the number of shares of Cabletron Stock subject to each
Network Option hereby assumed, and the adjusted exercise price payable per share
of Cabletron Stock under the assumed Network Option, shall be as indicated for
that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed Network Option
is to assure that the spread between the aggregate fair market value of the
shares of Cabletron Stock purchasable under that option and the aggregate
exercise price as adjusted hereunder will, immediately after the consummation of
the Merger, equal the spread which existed, immediately prior to the Merger,
between the then aggregate fair market value of the Network common stock subject
to the Network Option and the aggregate exercise price in effect at such time
under the Option Agreement. Such adjustments are also designed to preserve, on
a per share basis immediately after the Merger, the same ratio of exercise price
per option share to fair market value per share which existed under the Network
Option immediately prior to the Merger.
3. The following provisions shall govern each Network Option hereby
assumed by Cabletron:
- Unless the context otherwise requires, all references to the "Company"
in each Option Agreement and in the Plan (as incorporated into such Option
Agreement) shall mean Cabletron, all references to "Common Stock" shall mean
shares of Cabletron Stock, and all references to the "Committee" shall mean the
Incentive Compensation Committee of the Board of Directors of Cabletron.
- The grant date and the expiration date of each assumed Network Option
and all other provisions which govern either the exercisability or the
termination of the assumed Network Option shall remain the same as set forth in
the Option Agreement applicable to that option and shall accordingly govern and
control Optionee's rights under this Agreement to purchase Cabletron Stock.
- Each assumed Network Option shall remain exercisable in accordance
with the same installment exercise schedule in effect under the applicable
Option Agreement immediately prior to the Effective Time, with the number of
shares of Cabletron Stock subject to each such installment adjusted to reflect
the Exchange Rate. Accordingly, no accelerated vesting of the Network Options
shall be deemed to occur by reason of the Merger, and the grant date for each
assumed Network Option shall accordingly remain the same as in effect under the
applicable Option Agreement immediately prior to the Merger.
-2-
<PAGE>
- For purposes of applying any and all provisions of the Option
Agreement relating to Optionee's status as an employee with the Company,
Optionee shall be deemed to continue in such employee status for so long as
Optionee renders services as an employee to Cabletron or any present or future
Cabletron subsidiary, including (without limitation) Network. Accordingly, the
provisions of the Option Agreement governing the termination of the assumed
Network Option upon the Optionee's cessation of employee status with Network
shall hereafter be applied on the basis of the Optionee's cessation of employee
status with Cabletron and its subsidiaries, and each assumed Network Option
shall accordingly terminate, within the designated time period in effect under
the Option Agreement for that option, following such cessation of employment
with Cabletron and its subsidiaries.
- The adjusted exercise price payable for the Cabletron Stock subject to
each assumed Network 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 Cabletron Stock delivered in
payment of such adjusted exercise price, the period for which such shares were
held as Network common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed Network Option, Optionee must
deliver to Cabletron a written notice of exercise in which the number of shares
of Cabletron Stock to be purchased thereunder must be indicated. The exercise
notice should be delivered to Cabletron at the following address:
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
Attention: Edward Cortes
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.
IN WITNESS WHEREOF, Cabletron Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of _________, 1996.
CABLETRON SYSTEMS, INC.
By:______________________________
-3-
<PAGE>
Form of Stock Option Assumption Agreement used in connection
with the Network Express, Inc. 1995 Omnibus Equity Plan
1995 OMNIBUS EQUITY PLAN
CABLETRON SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of August, 1996
by Cabletron Systems, Inc., a Delaware corporation ("Cabletron").
WHEREAS, ______________________________("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Network Express,
Inc., a Michigan corporation ("Network"), which were granted to Optionee under
the Network Express, Inc. 1995 Omnibus Equity Plan (the "Plan") and are
evidenced by a Plan agreement (the "Option Agreement") between Network and
Optionee.
WHEREAS, Network has this day been acquired by Cabletron through merger of
a wholly-owned Cabletron subsidiary, Cabletron Systems of Michigan, Inc.
("Acquisition Corporation"), with and into Network (the "Merger") pursuant to
the Agreement and Plan of Merger dated as of May 21, 1996 by and among
Cabletron, Network and Acquisition Corporation (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cabletron to assume
all obligations of Network under all options outstanding under the Plan at the
consummation of the Merger and to issue to the holder of each outstanding option
a notice setting forth such holder's rights after consummation of the Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger is 0.1388 of a share of Cabletron common stock
("Cabletron Stock") for each outstanding share of Network common stock (the
"Exchange Rate").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Cabletron in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Network common stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Network Options")
<PAGE>
and the exercise price payable per share are set forth in Exhibit A hereto.
Cabletron hereby assumes, as of the Effective Time, all the duties and
obligations of Network under each of the Network Options. In connection with
such assumption, the number of shares of Cabletron Stock purchasable under each
Network Option hereby assumed and the exercise price payable thereunder have
been adjusted to reflect the Exchange Rate at which shares of Network common
stock were converted into shares of Cabletron Stock in consummation of the
Merger. Accordingly, the number of shares of Cabletron Stock subject to each
Network Option hereby assumed, and the adjusted exercise price payable per share
of Cabletron Stock under the assumed Network Option, shall be as indicated for
that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed Network Option
is to assure that the spread between the aggregate fair market value of the
shares of Cabletron Stock purchasable under that option and the aggregate
exercise price as adjusted hereunder will, immediately after the consummation of
the Merger, equal the spread which existed, immediately prior to the Merger,
between the then aggregate fair market value of the Network common stock subject
to the Network Option and the aggregate exercise price in effect at such time
under the Option Agreement. Such adjustments are also designed to preserve, on a
per share basis immediately after the Merger, the same ratio of exercise price
per option share to fair market value per share which existed under the Network
Option immediately prior to the Merger.
3. The following provisions shall govern each Network Option hereby
assumed by Cabletron:
- Unless the context otherwise requires, all references to the "Company"
in each Option Agreement and in the Plan (as incorporated into such Option
Agreement) shall mean Cabletron, all references to "Common Stock" shall mean
shares of Cabletron Stock, and all references to the "Committee" shall mean the
Incentive Compensation Committee of the Board of Directors of Cabletron.
- The grant date and the expiration date of each assumed Network Option
and all other provisions which govern either the exercisability or the
termination of the assumed Network Option shall remain the same as set forth in
the Option Agreement applicable to that option and shall accordingly govern and
control Optionee's rights under this Agreement to purchase Cabletron Stock.
- Each assumed Network Option shall remain exercisable in accordance
with the same installment exercise schedule in effect under the applicable
Option Agreement immediately prior to the Effective Time, with the number of
shares of Cabletron Stock subject to each such installment adjusted to reflect
the Exchange Rate. Accordingly, no accelerated vesting of the Network Options
shall be deemed to occur by reason of the Merger, and the grant date for each
assumed Network Option shall accordingly remain the same as in effect under the
applicable Option Agreement immediately prior to the Merger.
-2-
<PAGE>
- For purposes of applying any and all provisions of the Option
Agreement relating to Optionee's status as an employee with the Company,
Optionee shall be deemed to continue in such employee status for so long as
Optionee renders services as an employee to Cabletron or any present or future
Cabletron subsidiary, including (without limitation) Network. Accordingly, the
provisions of the Option Agreement governing the termination of the assumed
Network Option upon the Optionee's cessation of employee status with Network
shall hereafter be applied on the basis of the Optionee's cessation of employee
status with Cabletron and its subsidiaries, and each assumed Network Option
shall accordingly terminate, within the designated time period in effect under
the Option Agreement for that option, following such cessation of employment
with Cabletron and its subsidiaries.
- The adjusted exercise price payable for the Cabletron Stock subject to
each assumed Network 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 Cabletron Stock delivered in
payment of such adjusted exercise price, the period for which such shares were
held as Network common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed Network Option, Optionee must
deliver to Cabletron a written notice of exercise in which the number of shares
of Cabletron Stock to be purchased thereunder must be indicated. The exercise
notice should be delivered to Cabletron at the following address:
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
Attention: Edward Cortes
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.
IN WITNESS WHEREOF, Cabletron Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of _________, 1996.
CABLETRON SYSTEMS, INC.
By:______________________________
-3-
<PAGE>
Form of Stock Option Assumption Agreement used in connection
with the option granted to Kevin Kalkhoven
CABLETRON SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of August, 1996
by Cabletron Systems, Inc., a Delaware corporation (the "Cabletron").
WHEREAS, the undersigned individual, Kevin Kalkhoven ("Optionee"), holds an
option to purchase shares of the common stock of Network Express, Inc., a
Michigan corporation ("Network"), which was granted to Optionee by a resolution
of the Board of Directors of Network on May 18, 1995.
WHEREAS, Network has this day been acquired by Cabletron through merger of
a wholly-owned Cabletron subsidiary, Cabletron Systems of Michigan, Inc.
("Acquisition Corporation"), with and into Network (the "Merger") pursuant to
the Agreement and Plan of Merger dated as of May 21, 1996 by and among
Cabletron, Network and Acquisition Corporation (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cabletron to assume
all obligations of Network under the option granted to Optionee at the
consummation of the Merger and to issue to Optionee a notice setting forth his
rights with respect to the option after consummation of the Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger is 0.1388 of a share of Cabletron common stock
("Cabletron Stock") for each outstanding share of Network common stock (the
"Exchange Rate").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding option which have become necessary by
reason of the assumption of that option by Cabletron in connection with the
Merger.
WHEREAS, Optionee and Network intended the option to be issued subject to
the terms and conditions of the Network Express, Inc. 1995 Omnibus Equity Plan
(the "Plan"), and Cabletron and Optionee now wish to memorialize that such
option is subject to the terms and conditions of the Plan.
NOW, THEREFORE, it is hereby agreed as follows:
1
<PAGE>
The number of shares of Network common stock subject to the stock option
held by Optionee immediately prior to the Effective Time (the "Network Option")
and the exercise price payable per share are set forth in Exhibit A hereto.
Cabletron hereby assumes, as of the effective time, all of the duties and
obligations of Network with regards to the Network Option held by Optionee. In
connection with such assumption, the number of shares of Cabletron Stock
purchasable under the Network Option hereby assumed and the exercise price
payable thereunder have been adjusted to reflect the Exchange Rate at which
shares of Network common stock were converted into shares of Cabletron Stock in
consummation of the Merger. Accordingly, the number of shares of Cabletron
Stock subject to the Network Option hereby assumed, and the adjusted exercise
price payable per share of Cabletron Stock under the assumed Network Option,
shall be as indicated for that option in attached Exhibit B.
The intent of the foregoing adjustments to the assumed Network Option is to
assure that the spread between the aggregate fair market value of the shares of
Cabletron Stock purchasable under that option and the aggregate exercise price
as adjusted hereunder will, immediately after the consummation of the Merger,
equal the spread which existed, immediately prior to the Merger, between the
then aggregate fair market value of the Network common stock subject to the
Network Option and the aggregate exercise price under the Network Option. Such
adjustments are also designed to preserve, on a per share basis immediately
after the Merger, the same ratio of exercise price per option share to fair
market value per share which existed under the Network Option immediately prior
to the Merger.
Accrual of Right to Exercise Option. The Optionee may purchase from
-----------------------------------
Cabletron on or after July 3, 1996 twenty-five percent (25%) of the shares
covered by the assumed Network Option, and on each succeeding July 3, the
assumed Network Option may be exercised as to an additional twenty-five percent
(25%) of the shares covered by the assumed Network Option, so that by July 3,
1999, the assumed Network Option shall be fully exercisable. To the extent not
exercised, installments shall accumulate and may be exercised by the Optionee,
in whole or in part, in any subsequent period. The assumed Network Option may
not be exercised after July 3, 2005.
Exercise of Option. The Optionee, from time to time during the period when
------------------
the assumed Network Option may by its terms be exercised, may exercise the
assumed Network Option in whole or in part as at the time permitted, by delivery
to Cabletron of: (a) a written notice signed by the Optionee stating the number
of shares that the Optionee has elected to purchase at that time from Cabletron
and whether the exercise is cash or cashless, and (b) if cash exercise, a
certified check, bank draft, or money order for an amount equal to the purchase
price of the shares then to be purchased. Such exercise notice should be
delivered to Cabletron at the following address:
2
<PAGE>
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
Attention: Edward Cortes
Within five days after receipt of the foregoing, Cabletron shall issue the
shares in the name of the Optionee and deliver the certificates therefor to the
Optionees.
Anything to the contrary herein notwithstanding, Cabletron's obligation to
sell and deliver stock under the assumed Network Option is subject to such
compliance with federal and state laws, rules and regulations applying to the
authorizations, issuance or sale of securities as Cabletron deems necessary or
advisable. Cabletron shall not be required to sell and deliver stock pursuant
hereto unless and until it receives satisfactory proof that the issuance or
transfer of such shares will not violate any of the provisions of the Securities
Act of 1933 or the Securities Exchange Act of 1934 or the rules and regulation
of the Securities Exchange Commission promulgated thereunder or those of any
stock exchange or nationally recognized trading market on which the stock may be
listed or traded, or the provisions of any state law governing the sale of
securities, or that there have been compliance with the provisions of such acts,
rules, regulations and state laws. If the Optionee fails to accept delivery and
pay for all or any part of the shares, the Optionee's right to exercise the
assumed Network Option with respect to such undelivered shares may be terminated
by Cabletron.
Non-Assignability. The assumed Network Option shall not be
-----------------
transferable by the Optionee other than by will or the laws of descent and
distribution, and the assumed Network Option may be exercised during the
Optionee's lifetime only by the Optionee or the trustee of such trust. Any
transferee of the assumed Network Option shall take the same subject to the
terms and conditions of this Agreement. No such transfer of the assumed Network
Option shall be effective to bind Cabletron unless Cabletron shall have been
furnished with written notice thereof and a copy of the will and/or such other
evidence as Cabletron may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions of this Agreement.
No assignment or transfer of this assumed Network Option, or of the rights
represented thereby, whether voluntary or involuntary, by operation of law or
otherwise, except a transfer by the Optionee by will or by the laws of descent
and distribution, shall vest in the purported assignee or transferee any
interest or right herein whatsoever.
Withholding. The Optionee hereby agrees to reimburse Cabletron for
-----------
any income or employment tax withholding requirements and to provide Cabletron
with such information by the date that Cabletron deems necessary.
3
<PAGE>
Company's Right to Repurchase Shares. The Optionee agrees that the
------------------------------------
shares purchased pursuant to the exercise of the assumed Network Option shall be
subject to a right of first refusal by Cabletron to repurchase the shares, as
provided in the Plan.
Adjustments. In the event of any stock dividend, subdivision or
-----------
combination, reclassification, merger, consolidation, or similar transaction
affecting the shares covered by the assumed Network Option, the rights of the
Optionee shall be adjusted appropriately, as determined by the Incentive
Compensation Committee of the Board of Directors of Cabletron in its sole
discretion.
Rights as Shareholder. The Optionee shall have no rights as a
---------------------
shareholder of Cabletron with respect to any of the shares covered by the
assumed Network Option until the issuance of a stock certificate or certificates
upon the exercise of the assumed Network Option in full or in part, and then
only with respect to the shares represented by such certificate or certificates.
Notices. Every notice relating to this Agreement shall be in writing
-------
and if given by mail shall be given by registered or certified mail with return
receipt requested. All notices to Cabletron shall be delivered to or addressed
to Cabletron at the address set forth in Section 4. All notices by Cabletron to
the Optionee shall be delivered to the Optionee personally or addressed to the
Optionee at the Optionee's residence address as set forth below. Either party
by notice to the other may designate a different address to which notices shall
be addressed. Any notice given by Cabletron to the Optionee at the Optionee's
last designated address shall be effective to bind any other person who shall
acquire rights hereunder.
"Optionee" to include Certain Transferees. Whenever the word
-----------------------------------------
"Optionee" is used in any provision of this Agreement under circumstances where
the provision should logically apply to any other person or persons to whom the
assumed Network Option, in accordance with the provisions of Section 5 hereof,
may be transferred, the word "Optionee" shall be deemed to include such person
or persons.
Governing Law. This Agreement shall be constructed in accordance with
-------------
the laws of the State of Delaware.
Provisions of the Plan Controlling. The assumed Network Option and
----------------------------------
the provisions hereof are subject to and governed by the terms and provisions
of the Plan, attached hereto as Exhibit A, which terms and provisions are
incorporated herein by reference and made a part hereof. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Plan, the provisions of the Plan control. Notwithstanding this Section 13, both
parties agree that the assumed Network Option subject to this Agreement was not
granted under the Plan; rather, both parties hereto have chosen to have the
terms and conditions of the Plan govern this Agreement. Furthermore, unless the
context otherwise requires, all references to the "Company" in the Plan shall
4
<PAGE>
mean Cabletron, all references to "Common Stock" shall mean shares of Cabletron
Stock, and all references to the "Committee" shall mean the Incentive
Compensation Committee of the Board of Directors of Cabletron.
For purposes of determining the holding period of any shares of
Cabletron Stock delivered in payment of the adjusted exercise price under the
assumed Network Option, the period for which such shares were held as Network
common stock prior to the Merger shall be taken into account.
IN WITNESS WHEREOF, Cabletron Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of August, 1996.
CABLETRON SYSTEMS, INC.
By:______________________________
KEVIN KALKHOVEN
____________________________________
Address:_____________________________
____________________________________
5
