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