1
EXHIBIT 99.7
EMPLOYEE OPTION AGREEMENT
OPTION AGREEMENT made this ___ day of ______, ________ between Summa
Four, Inc., a Delaware Corporation, hereinafter called the Corporation, and
_____________, an employee of the corporation or one or more of its
subsidiaries, hereinafter called the employee.
The Corporation desires, by affording the employee an opportunity to
purchase its Common Shares, of the par value of $.0l per share, hereinafter
called the Common Shares, as hereinafter provided, to carry out the purpose of
the Incentive Stock Option Plan of August 1, 1992, approved by its shareholders.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grantive Option: The Corporation hereby irrevocably grants
to the employee the right and Option, hereinafter called the Option, to purchase
all or any part of an aggregate of _________ Common Shares (such number being
subject to adjustment as provided in paragraph 8 hereof) on the terms and
conditions herein set forth.
2. Purchase Price: The Purchase Price of the Common Shares
covered by the Option shall be $__________ per share flat or exdividend.
3. Term of Option: The Term of the Option shall be for a
period of ten (10) years from the date hereof, subject to earlier termination as
provided in Paragraphs 5 and 6 hereof. The Option may be exercised in accordance
with the following schedule: ____% on or after _____________; an additional
_________% on or after ____________; an additional ______% on or after
_____________; an additional _____% on or after ___________; and an
2
additional _______% on or after ______________. The Purchase Price of the shares
as to which the Option shall be exercised shall be paid in full in cash at the
time of exercise. Except as provided in Paragraphs 5 and 7 hereof, the Option
may not be exercised at any time unless the employee shall have been in
continuous employ of the Corporation, or one or more of its subsidiaries, from
the date hereof to the date of the exercise of the Option. The Holder of the
Option shall not have any of the rights of a shareholder with respect to the
shares covered by the Option except to the extent that one or more certificates
for such shares shall be delivered to him upon the due exercise of the Option.
No incentive stock option shall be exercisable by a participant while there is
outstanding any incentive stock Option, within the meaning of Section 422A of
the Code, which was granted before the granting of such Option to such
participant to purchase shares in the Corporation or in a corporation which (at
the time of the granting of such Option) is a parent or subsidiary corporation
of the Corporation, or in a predecessor corporation of any such corporation. For
purposes of this section, any incentive stock Option shall be treated as
outstanding until such Option is exercised in full or expires by reason of lapse
of time.
4. Investment Letter: This Option may not be exercised unless
and until an Investment Letter substantially in the form of Exhibit 1, attached
hereto, is signed by the employee or successor to the employee under the Plan
and such letter has been complied with by the Corporation.
5. Non-transferability: The Option shall not be transferable
otherwise than by Will or the laws of descent and distribution, and the Option
may be exercised, during the lifetime of the employee, only by him. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to
2
3
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect.
6. Termination of Employment: In the event that the employment
of the employee shall be terminated (otherwise than by reason of death), any
Option or Options held by him, to the extent not theretofore exercised, shall
forthwith terminate. So long as the employee shall continue to be an employee of
the Corporation or one or more of its subsidiaries, the Option shall not be
affected by any change of duties or position. Nothing in this Option Agreement
shall confer upon the employee any right to continue in the employ of the
Corporation or of any of its subsidiaries or interfere in any way with the right
of the Corporation or any such subsidiary to terminate his employment.
7. Death of Employee: If the employee shall die while he shall
be employed by the Corporation or one or more of its subsidiaries, the Option
may be exercised (to the extent that the employee shall have been entitled to do
so at the time of his death) by a legatee or legatees of the employee under his
last Will, or by his personal representatives or distributees, any time within
three months after his death unless otherwise extended by the Board of
Directors.
8. Changes in Capital Structure: If all or any portion of the
Option shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization or liquidation occurring after the date hereof, as a
result of which shares of any class shall be issued in respect of outstanding
Common Shares or Common Shares shall be changed into the same class or classes,
the person
3
4
or persons so exercising the Option shall receive, for the aggregate price paid
upon such exercise, the aggregate number and class of shares which, if Common
Shares (as authorized at the date hereof) had been purchased at the date hereof
for the same aggregate price (on the basis of the price per share set forth in
Paragraph 2 hereof) and had not been disposed of, such person or persons would
be holding, at the time of such exercise, as a result of such purchase and all
such shared dividends, split-ups, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations or
liquidations; provided, however, that no fractional share shall be issued upon
any such exercise, and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued. No adjustment shall be made in
the minimum number of shares which may be purchased at any one time, as fixed by
Paragraph 3 hereof.
9. Method of Exercising Option: Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by written
notice to the Corporation at the office of the Corporation now located at 00
Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxxxxx and by compliance with the provisions
of Paragraph 4 of this Agreement. Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised, and shall be signed by the person or persons so exercising the
Option. Such notice shall either: (a) be accompanied by payment of the full
Purchase Price of such shares, in which event the Corporation shall deliver a
certificate or certificates representing such shares as soon as practicable
after the notice shall be received; or (b) fix a date (not less than five (5)
nor more than ten (10) business days from the date such notice shall be received
by the Corporation) for the payment of the full Purchase Price of such shares at
the corporation, against delivery of a certificate or certificates representing
such shares. Payment of such Purchase Price shall, in
4
5
either case, be made by check payable to the order of the Corporation. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option (or, if the Option shall be exercised by the employee and
if the employee shall so request in the notice exercising the Option, shall be
registered in the name of the employee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person or persons exercising the Option. In the event the Option
shall be exercised, pursuant to Paragraph 7 hereof, by any person or persons
other than the employee, such notice shall be accompanied by appropriate proof
of the right of such person or persons to exercise the Option. All shares that
shall be purchased upon the exercise of the Option as provided herein shall be
fully paid and nonassessable.
10. General: The Corporation shall at all times during the
Term of the Option reserve and keep available such number of Common Shares as
will be sufficient to satisfy the requirements of this Option Agreement, shall
pay all original issue and transfer taxes with respect to the issue and transfer
of shares pursuant hereto and all other fees and expenses necessarily incurred
by the Corporation in connection therewith, and will from time to time use its
best efforts to comply with all laws and regulations which in the opinion of
counsel for the Corporation, shall be applicable thereto.
11. Subsidiary: As used herein, the term "Subsidiary" shall
mean a present or future corporation which should be a "subsidiary corporation"
of the Corporation, as that term is defined in section 425 of the Internal
Revenue Code of 1986.
5
6
IN WITNESS WHEREOF, the Corporation has caused the Option Agreement to
be duly executed by its officers thereunto duly authorized and the employee has
hereunto set his hand and seal, all as of the day and year first above written.
Corporate Seal SUMMA FOUR, INC.
Attest By:_________________________________
__________________________________ ____________________________________
Secretary
6
