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EXHIBIT 99.2
SUMMA FOUR, INC.
1995 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Summa Four, Inc., a Delaware corporation (the "Company"),
hereby grants to ___________ (the "Optionee"), an option, pursuant to the
Company's 1995 Stock Option Plan (the "Plan"), to purchase an aggregate of
_________shares of Common Stock ("Common Stock") of the Company at a price of
$_____per share, purchasable as set forth in and subject to the terms and
conditions of this option and the Plan. Except where the context otherwise
requires, the term "Company" shall include all present and future subsidiaries
of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended or replaced from time to time (the "Code").
2. INCENTIVE STOCK OPTION. This option is intended to qualify as an incentive
stock option ("Incentive Stock Option") within the meaning of Section 422 of the
Code.
3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION.
(a) Vesting Schedule. Except as otherwise provided in this Agreement, this
option may be exercised prior to the tenth anniversary of the date of grant
(hereinafter the "Expiration Date") in installments as to not more than the
number of shares set forth in the table below during the respective installment
periods set forth in the table below.
Number of Shares as to which Option
Exercise Period is Exercisable
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Prior to
On or after
On or after
On or after
On or after
On or after
The right of exercise shall be cumulative so that if the option is not exercised
to the maximum extent permissible during any exercise period, it shall be
exercisable, in whole or in part, with respect to all shares not so purchased at
any time prior to the Expiration Date or the earlier termination of this option.
This option may not be exercised at any time on or after the Expiration Date.
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(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.
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(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
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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.
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(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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(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: __________________________
___________________________________
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