<SUBMISSION>
<ACCESSION-NUMBER>0001095811-01-001441
<TYPE>S-8
<PUBLIC-DOCUMENT-COUNT>10
<FILING-DATE>20010216
<EFFECTIVENESS-DATE>20010216
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CISCO SYSTEMS INC
<CIK>0000858877
<ASSIGNED-SIC>3576
<IRS-NUMBER>770059951
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>0731
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-8
<ACT>33
<FILE-NUMBER>333-55742
<FILM-NUMBER>1548631
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>170 W TASMAN DR
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134-1706
<PHONE>4085264000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>225 WEST TASMAN DR
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134-1706
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>f69264ors-8.txt
<DESCRIPTION>FORM S-8
<TEXT>

<PAGE>   1

       As filed with the Securities and Exchange Commission on February 16, 2001

                                                   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)

          ACTIVE VOICE CORPORATION 1988 NON-QUALIFIED STOCK OPTION PLAN
                 ACTIVE VOICE CORPORATION 1993 STOCK OPTION PLAN
                 ACTIVE VOICE CORPORATION 1996 STOCK OPTION PLAN
                 ACTIVE VOICE CORPORATION 1998 STOCK OPTION PLAN
                 ACTIVE VOICE CORPORATION 2000 STOCK OPTION PLAN

                           (Full title of the Plan(s))


                                JOHN T. CHAMBERS
                 PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
                               CISCO SYSTEMS, INC.
                              300 EAST 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 Maximum       Proposed Maximum        Amount of
Title of Securities to be           Amount to be      Offering Price per     Aggregate Offering     Registration
Registered                         Registered(1)           Share(2)               Price(3)               Fee
<S>                              <C>                       <C>                 <C>                    <C>
Active Voice Corporation 1988
Non-Qualified Stock Option Plan
Common Stock, $0.001 par value      10,430 shares          $13.101             $   136,646.02         $   34.16

Active Voice Corporation 1993
Stock Option Plan
Common Stock, $0.001 par value     174,339 shares          $22.668             $ 3,951,880.03         $  987.97

Active Voice Corporation 1996
Stock Option Plan
Common Stock, $0.001 par value     297,048 shares          $20.516             $ 6,094,343.80         $1,523.59

Active Voice Corporation 1998
Stock Option Plan
Common Stock, $0.001 par value   1,208,519 shares          $24.304             $29,371,601.09         $7,342.90
</TABLE>
<PAGE>   2

<TABLE>
<CAPTION>
<S>                              <C>                       <C>                 <C>                    <C>
Active Voice Corporation 2000
Stock Option Plan
Common Stock, $0.001 par value     34,776 shares           $29.023             $ 1,009,316.78         $   252.33

                         Total: 1,725,112                          Aggregate Registration Fee         $10,140.95
================================================================================================================
</TABLE>

(1)  This Registration Statement shall also cover any additional shares of
     Common Stock which become issuable under the Active Voice Corporation 1988
     Non-qualified Stock Option Plan, 1993 Stock Option Plan, 1996 Stock Option
     Plan, 1998 Stock Option Plan, and 2000 Stock Option Plan, 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 outstanding shares of Registrant's 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 and rounded down to the nearest
     one tenth of one cent.

(3)  The actual aggregate offering price based on the actual weighted average
     exercise price per share.


                                       2
<PAGE>   3

                                     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 29, 2000 filed with the Commission on September 29,
               2000, pursuant to Section 13 of the Securities Exchange Act of
               1934, as amended (the " 1934 Act");

        (b)    The Registrant's Quarterly Report on Form 10-Q for the fiscal
               quarter ended October 28, 2000 filed with the Commission on
               December 12, 2000;

        (c)    The Registrant's Current Reports on Form 8-K filed with the
               Commission on December 15, 1999 (as amended on Form 8-K/A filed
               with the Commission on February 3, 2000 and August 4, 2000),
               August 15, 2000, September 7, 2000, September 15, 2000, September
               26, 2000, September 28, 2000, September 29, 2000, November 6,
               2000, November 7, 2000, November 13, 2000, November 15, 2000,
               November 15, 2000, December 19, 2000, December 21, 2000, December
               27, 2000, February 7, 2001, and February 8, 2001;

        (d)    The Registrant's Registration Statement No. 000-18225 on Form 8-A
               filed with the 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, and;

        (e)    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.



                                      II-1
<PAGE>   4

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 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.

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 Statement No. 000-18225
                    on Form 8-A, together with the amendments and exhibits
                    thereto, which are incorporated herein by reference pursuant
                    to Items 3(d) and 3(e).

        5           Opinion and consent of Brobeck, Phleger & Harrison LLP.

        23.1        Consent of PricewaterhouseCoopers L.L.P., 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        Active Voice Corporation 1988 Non-qualified Stock Option
                    Plan.

        99.2        Active Voice Corporation 1993 Stock Option Plan.

        99.3        Active Voice Corporation 1996 Stock Option Plan.

        99.4        Active Voice Corporation 1998 Stock Option Plan.

        99.5        Active Voice Corporation 2000 Stock Option Plan.

        99.6        Cisco Systems, Inc. form of Stock Option Assumption
                    Agreement - Full Acceleration.

        99.7        Cisco Systems, Inc. form of Stock Option Assumption
                    Agreement - Partial Acceleration.
</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 Active Voice
Corporation 1988 Non-qualified Stock Option Plan, 1993 Stock Option Plan, 1996
Stock Option Plan, 1998 Stock Option Plan, and 2000 Stock Option Plan.

               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>   5

               C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.


                                      II-3
<PAGE>   6

                                   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
15th day of February, 2001.

                              CISCO SYSTEMS, INC.



                              By: /s/ JOHN T. CHAMBERS
                                 -----------------------------------------------
                                 John T. Chambers
                                 President, Chief Executive Officer and Director


                                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 Officer        February 15, 2001
---------------------------------  and Director (Principal Executive
John T. Chambers                   Officer)


/s/ LARRY R. CARTER                Senior Vice President, Finance and        February 15, 2001
---------------------------------  Administration, Chief Financial
Larry R. Carter                    Officer, Secretary and Director
                                   (Principal Financial and Accounting
                                   Officer)


/s/ JOHN P. MORGRIDGE              Chairman of the Board and Director        February 15, 2001
---------------------------------
John P. Morgridge
</TABLE>



                                      II-4
<PAGE>   7

<TABLE>
<CAPTION>
           SIGNATURE                               TITLE                            DATE
           ---------                               -----                            ----
<S>                                <C>                                       <C>
/s/ DONALD T. VALENTINE            Vice Chairman of the Board and            February 15, 2001
---------------------------------  Director
Donald T. Valentine


/s/ JAMES F. GIBBONS               Director                                  February 15, 2001
---------------------------------
James F. Gibbons


/s/ STEVEN M. WEST                 Director                                  February 15, 2001
---------------------------------
Steven M. West


/s/ EDWARD R. KOZEL                Director                                  February 15, 2001
---------------------------------
Edward R. Kozel


/s/ CAROL A. BARTZ                 Director                                  February 15, 2001
---------------------------------
Carol A. Bartz


/s/ JAMES C. MORGAN                Director                                  February 15, 2001
---------------------------------
James C. Morgan


/s/ MARY CIRILLO                   Director                                  February 15, 2001
---------------------------------
Mary Cirillo


/s/ ARUN SARIN                     Director                                  February 15, 2001
---------------------------------
Arun Sarin


/s/ JERRY YANG                     Director                                  February 15, 2001
---------------------------------
Jerry Yang


/s/ CARLY FIORINA                  Director                                  February 15, 2001
---------------------------------
Carly Fiorina
</TABLE>


                                      II-5
<PAGE>   8


                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.


                                    EXHIBITS

                                       TO

                                    FORM S-8

                                      UNDER

                             SECURITIES ACT OF 1933


                               CISCO SYSTEMS, INC.







<PAGE>   9




                                        EXHIBIT INDEX


<TABLE>
<CAPTION>
 Exhibit Number     Exhibit
 --------------     -------
<S>                 <C>
        4           Instruments Defining the Rights of Stockholders. Reference
                    is made to Registrant's Registration Statement No. 000-18225
                    on Form 8-A, together with the amendments and exhibits
                    thereto, which are incorporated herein by reference pursuant
                    to Items 3(d) and 3(e).

        5           Opinion and consent of Brobeck, Phleger & Harrison LLP.

        23.1        Consent of PricewaterhouseCoopers L.L.P., 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        Active Voice Corporation 1988 Non-qualified Stock Option
                    Plan.

        99.2        Active Voice Corporation 1993 Stock Option Plan.

        99.3        Active Voice Corporation 1996 Stock Option Plan.

        99.4        Active Voice Corporation 1998 Stock Option Plan.

        99.5        Active Voice Corporation 2000 Stock Option Plan.

        99.6        Cisco Systems, Inc. form of Stock Option Assumption
                    Agreement - Full Acceleration.

        99.7        Cisco Systems, Inc. form of Stock Option Assumption
                    Agreement - Partial Acceleration.
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>2
<FILENAME>f69264orex5.txt
<DESCRIPTION>EXHIBIT 5
<TEXT>

<PAGE>   1

                                    EXHIBIT 5

             OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP


                               February 15, 2001


Cisco Systems, Inc.
170 West Tasman Drive
San Jose, California 95134-1706

               Re:    Cisco Systems, Inc. -- Registration Statement for
                      Offering of 1,725,112 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
1,725,112 shares of common stock (the "Shares") and related stock options under
the Active Voice Corporation 1988 Non-qualified Stock Option Plan, 1993 Stock
Option Plan, 1996 Stock Option Plan, 1998 Stock Option Plan, and 2000 Stock
Option Plan (together, 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 outstanding options 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



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<FILENAME>f69264orex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>   1



                                  EXHIBIT 23.1

         CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS



We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our reports dated August 8, 2000 relating to the
consolidated financial statements and financial statement schedule, which appear
in Cisco Systems, Inc.'s Annual Report on Form 10-K for the year ended July 29,
2000.

PricewaterhouseCoopers L.L.P.

San Jose, California
February 13, 2001





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>f69264orex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>

<PAGE>   1





                                  EXHIBIT 99.1

          ACTIVE VOICE CORPORATION 1988 NON-QUALIFIED STOCK OPTION PLAN



<PAGE>   2

                               ACTIVE VOICE, INC.

                       1988 Nonqualified Stock Option Plan

        SECTION 1. Purpose. The purpose of the Active Voice, Inc., 1988
Nonqualified Stock Option Plan (the "Plan") is to enable Active Voice, Inc. (the
"Company") to attract and retain the services of people with training,
experience and ability and to provide additional incentive to such persons by
granting them an opportunity to participate in the ownership of the Company.
These nonqualified options art not intended to qualify as incentive stock
options as defined un Section 422A of the Internal Revenue Code of 1986, as it
may be amended from time to time (the "Code"), or as qualified stock options
pursuant to Section 422 of the Code.

        SECTION 2. Stock Subject to Plan. The stock subject to this Plan shall
be the Company's common stock, par value $.0025 per share (the "Common Stock"),
presently authorized but unissued or now held or subsequently acquired by the
Company as treasury shares. Subject to adjustment as provided in Section 11,
aggregate amount of Common Stock reserved for issuance or delivery upon exercise
of all options granted under this Plan shall not exceed ___________ shares of
Common Stock, as constituted on date of adoption of this Plan by the board of
directors. If any option granted under this Plan shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares subject
thereto shall thereupon again be available for purposes of this Plan.

        SECTION 3. Administration. The Plan shall be administered by the board
of directors of the Company, in accordance with the following terms and
conditions:

            3.1 General Authority. Subject to the express provisions of the
Plan, the board of directors shall have the authority, in its discretion, to
determine all matters relating to options to be granted under the Plan,
including the selection of individuals to be granted options, the number of
shares to be subject to each option, the exercise price, the term, whether such
options shall be immediately exercisable or shall become exercisable in
increments over time, and all other terms and conditions thereof. Grants under
this Plan to persons eligible need not be identical in any respect, even when
made simultaneously. The board of directors may from time to time adopt rules
and regulations relating to the administration of the Plan. The interpretation
and construction by the board of directors of any terms or provisions of this
Plan or any Option issued hereunder, or of any rule or regulation promulgated in
connection herewith, shall be conclusive and binding on all interested parties.

            3.2 Directors. A member of the board of directors may be eligible to
participate in or receive or hold options under this plan; provided, however,
that no member of the board of directors shall vote with respect to the granting
of an option hereunder to himself or herself, as the case may be.

            3.3 Delegation to a Committee. Notwithstanding the foregoing, the
board of directors, if it so determines, may delegate to a committee of the
board of directors any or all authority for the administration of the Plan.


<PAGE>   3

        SECTION 4. Eligibility. Options may be granted only to persons who, at
the time the option is granted, are employees or directors of the Company or any
of its present or future subsidiaries corporations ("subsidiaries"). Any
employee or director may receive one or more grants of options as the board of
directors as shall from time to time determine. and such determinations may be
different as to different employees and may vary as to different grants.

        SECTION 5. Terms and Conditions of Options. Options granted under this
Plan shall be evidenced by written agreements which shall contain such terms,
conditions, limitations and restrictions as the board of directors shall deem
advisable and which are not inconsistent with this Plan. Notwithstanding the
foregoing, all such options shall include or incorporate by reference the
following terms and conditions:

            5.1 Number and Exercise Price of Shares. The maximum number of
shares that may be purchased pursuant to the exercise of each option and the
price per share at which such option is exercisable (the "exercise price") shall
be as established by the board of directors. The exercise price may be less than
the fair market value of the Common Stock at the time of the grant.

            5.2 Duration of Options. Subject to the restrictions contained in
Section 8, the term of each option shall be established by the board of
directors.

            5.3 Exercisability. Each option shall prescribe the installments, if
any, in which an option granted under the Plan shall become exercisable. Only
whole shares shall be issued pursuant to the exercise of any option.

        SECTION 6. Nontransferability of Options. Options granted under this
Plan and the rights and privileges conferred hereby may not be transferred.
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or the applicable laws of dissent and distribution
and shall not be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any
option under this Plan or any right or privilege conferred hereby, contrary to
the provisions hereof, or upon the sale or levy or any attachment or similar
process, such option thereupon shall terminate and become null and void. During
an optionee's lifetime, any options granted under this Plan are personal to him
or her and are exercisable solely by such optionee.

        SECTION 7. Exercise of Options. Options shall be exercised in accordance
with the following terms and conditions:

            7.1 Procedure. Options shall be exercised by delivery to the Company
of written notice of the number of shares with respect to which the option is
exercised.

            7.2 Payment. Payment of the option price shall be made in full
within 5 business days of the notice of exercise of the option and shall be in
cash or bank-certified or cashier's checks, or personal check is permitted by
the board of directors. If permitted by the board of directors, and to the
extent permitted by applicable laws and regulations (including. but not limited
to, federal tax and securities laws and regulations), an option may be exercised
by delivery of shares of stock of the Company held by the optionee having a fair
market value equal

                                       2
<PAGE>   4

to the exercise price, such fair market value to be determined in good faith by
the board of directors,

            7.3 Federal Withholding Tax Requirements. Upon exercise of an
option, the optionee shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements.

        SECTION 8. Termination of Employment. Disability and Death

            8.1 Termination of Option Upon Termination of Employment. Except as
otherwise determined by the board of directors, each option issued under or made
subject to this Plan shall expire, to the extent not previously exercised, upon
the voluntary or involuntary Termination. as hereinafter defined, of the
optionee's employment with the Company or with a parent or subsidiary
corporation of the Company, except that

        a) if the optionee is on military, sick leave or other bona fide leave
of absence (such as temporary employment by the federal government). his
employment relationship will be [THE REST OF THIS PARAGRAPH IS MISSING]


        SECTION 9. PAGE 4 OF THE DRAFT IS MISSING

            9.1 [PAGE 4 OF THE DRAFT IS MISSING].

            the time of grant, modify or eliminate the time periods specified in
Section 8.

            9.2 Termination of Options

            To the extent that the option of any deceased option or of any
optionee whose employment is terminated shall not have been exercised within the
limited periods prescribed in Section 8, all further rights to purchase shares
pursuant to such option shall cease and terminate at the expiration of such
period.

        SECTION 10. Grant of New Options. The board of directors shall be
authorized, in its absolute discretion, to permit option holders to surrender
outstanding options in exchange for the grant of new options or to require
option holders to surrender outstanding options as a condition precedent to the
grant of now options. The number of shares covered by the new options, the
exercise price, the term of the option and other terms and conditions of the new
option, shall be determined in accordance with the Plan and may be different
from the provisions of surrendered options.

        SECTION 11. Adjustments Upon Changes in Capitalization. In the event of
any change in the capitalization of the Company because of stock dividends,
split-ups, recapitalizations, reclassifications or the like, the number and kind
of shares of stock of the company to be subject to this Plan and to options then
outstanding or to be granted hereunder, the maximum number of shares may be
issued under options granted under or made subject to this Plan, and the option
price for shares subject to options hereunder shall be appropriately adjusted by
the Board of

                                       3
<PAGE>   5

Directors of the Company, and its determinations in this regard shall be final
and binding on all concerned.

        SECTION 12. Securities Regulations

            12.1 Compliance. Shares shall not be issued with respect to an
option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the rules and regulations promulgated thereunder. and
the requirements of any stock exchange upon which the shares may thou be listed,
and shall further be subject to the approval of counsel for the Company with
respect to such compliance. Inability of the Company to obtain from any
regulatory body having jurisdiction. the authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares
hereunder, shall relieve the Company of any liability in respect of the
nonissuance or sale of such shares as to which such requisite authority shall
not have been obtained.

            12.2 Representations by Optionee. As a condition to the exercise of
an option, the Company may require the optionee to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the option of counsel for the Company, such representation is required by
any relevant provision of the laws referred to in Section 12.1. At the option of
the Company, a stop transfer order against any shares of stock may be placed on
the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company)
stating that such transfer is not in violation of any applicable law or
regulation, may be stamped an the stock certificate in order to assure exemption
from registration. The board of directors may also require such other action or
agreement by the optionees as may from time to time be necessary to comply with
the federal and s-.ate securities laws. THIS PROVISION SHALL NOT OBLIGATE THE
COMPANY TO UNDERTAKE REGISTRATION OF OPTIONS OR STOCK HEREUNDER.

        SECTION 13. Employment Rights. Nothing in this Plan or any option or
right granted pursuant thereto shall confer upon any optionee any right to be
continued in the employment of the Company or any Subsidiary of the Company, or
to interfere in any way with the right of the Company, in its sole discretion,
to terminate such optionee's employment at any time.

        SECTION 14. Amendment and Termination.

            14.1 Shareholders. The Plan may be terminated, modified or amended
by the shareholders of the Company.

            14.2 Directors. The board of directors may also terminate the Plan,
or modify or amend the Plan in such respects as it shall deem advisable in order
to conform to any changes in law or regulation applicable thereto, or in other
respects which do not change: (i) the total number of shares as to which options
may be granted under the Plan, (ii) the employees eligible to receive grants of
options, (iii) a material modification in the eligibility requirements or (iv) a

                                       4
<PAGE>   6


material increase in the benefits afforded participants, which changes shall
require shareholder approval.

            14.3 Effect on Optionees. The termination, amendment or modification
of the Plan shall have no effect on options granted prior thereto.

            14.4 Merger or Consolidation. In the event of a merger or
consolidation of the Company with another corporation in which the Company is
not the surviving or continuing corporation, all of the outstanding options
hereunder shall terminate unless the board of directors of the Company arranges
to have the surviving or continuing corporation assume such options or issue
substitute options therefor; provided, however, that in the event of any such
merger or consolidation, each optionee hereunder shall have the right,
immediately prior thereto, to exercise his option(s) in whole or in part without
regard to any contrary waiting period, installment period or other limitation or
restriction in any option agreement or in the Plan.

        SECTION 15. Effective of the Plan. This Plan shall become effective on
the date of its adoption by the board of directors of the Company and options
may be granted immediately thereafter but no option may be exercised under the
Plan unless and until the Plan shall have been approved by the vote of t1%*
holders of a majority of the outstanding shares of Common Stock at a meeting of
shareholders after the date of adoption of the Plan by the board of directors.
If such approval is not obtained the Plan and any options granted thereunder
shall be null and void.


                                       5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>5
<FILENAME>f69264orex99-2.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>

<PAGE>   1

                                  EXHIBIT 99.2

                 ACTIVE VOICE CORPORATION 1993 STOCK OPTION PLAN



<PAGE>   2

                            ACTIVE VOICE CORPORATION

                             1993 STOCK OPTION PLAN

                                    ARTICLE I
                            PURPOSE AND EFFECTIVENESS

        1.1 PURPOSE. The purpose of the Stock Option Plan (the "Plan") is to
provide a method by which selected individuals rendering services to Active
Voice Corporation (the "Company"), whether as employees or consultants. may be
offered an opportunity to invest in capital stock of the Company, thereby
increasing their penalty interest in the growth and success of the Company. The
Plan is also intended to aid in attracting persons of exceptional ability to
become officers and employees of the Company.

        1.2 EFFECTIVE DATE. The Plan shall be effective as of September 1, 1993.

                                   ARTICLE II
                                   DEFINITIONS

        2.1 CERTAIN DEFINED TERMS. Capitalized terms not defined elsewhere in
the Plan shall have the following meanings (whether used in the singular or
plural):

            "Administrative Committee" is defined in Section 3.1.

            `Affiliate" of the Company means any corporation, partnership, or
other business association that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
Company.

            "Approved Transaction" means (a) any merger, consideration or
binding share exchange pursuant to which shares of Common Stock are changed or
converted into or exchanged for cash, securities or other property, other than
any such transaction in which the persons who hold Common Stock immediately
prior to the transaction have immediately following the transaction the same
proportionate ownership of the common stock of, and the same voting power with
respect to, the surviving corporation; (b) any merger, consolidation or binding
share exchange in which the persons who hold Common Stock immediately prior to
the transaction have immediately following the transaction less than a majority
of the combined voting power of the outstanding capital stock of the Company
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors; (c) any liquidation or
dissolution of the Company; and (d) any sale, lease, exchange or other transfer
not in the ordinary course of business (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company.

            "Board" means the Board of Directors of the Company.

            "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute or statutes thereto. Reference to any specific
section of the Code shall include any successor statute.


<PAGE>   3


            "Common Stock" means the Common Stock, no par value, of the Company.

            "Company" means Active Voice Corporation.

            "Control Purchase" means any transaction (or series of related
transactions),consummated without the approval of the Board, in which (a) any
person (including any "person" as defined in Sections 13(d)(3) and 14(d)(2) of
the Exchange Act), corporation or other entity (other than the Company or any
employee benefit plan sponsored by the Company) purchases any Common Stock (or
securities convertible into Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer; or (b) any person
(as so defined), corporation or other entity (other than the Company or any
employee benefit plan sponsored by the Company) becomes the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing forty percent (40%) or
more of the combined voting power of the then outstanding securities of the
Company ordinarily (and apart from rights accruing under specific circumstances)
having the right to vote in the election of directors (calculated as provided in
Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the
Company's securities).

            "Disability" means the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve (12) months.

            "Disinterested Person" is defined in Section 3.2(b).

            "Eligible Person" is defined in Section 5.1.

            "Equity Securities" has the meaning given that term in Rule 16a-l
promulgated under the Exchange Act, or any successor rule.

            "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any specific section of the Exchange Act shall include any successor section.

            "Fair Market Value" on any day means, in the event the Common Stock
is publicly traded, the last sales price (or, if no lost sides price is
reported, the average of the high bid and low asked prices) for a share of
Common Stock on that day (or, if that day is not a trading day, on the next
preceding trading day) as reported an NASDAQ or, if not reported on NASDAQ, as
quoted by the National Quotation Bureau Incorporated, or, if the Common Stock is
listed on an exchange, as reported by the principal exchange an which the Common
Stock is listed. If the Common Stock is not publicly traded, or if the Fair
Market Value of a share of Common Stock is not determinable by any of the
foregoing means, the Fair Market Value on any day shall be determined in good
faith by the Administrative Committee on the basis of such considerations as the
Administrative Committee deems appropriate,

            "Holder" means an Eligible Person who has received an Option under
this Plan.



                                       2
<PAGE>   4


            "Incentive Stock Option" means an Option that is intended to be an
incentive stock option within the meaning of Section 422 of the Code.

            "NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System,

            "Nonqualified Stock Option" means an Option that is designated a
nonqualified stock option.

            "Option" means an Incentive Stock Option or Nonqualified Stock
Option.

            "Option Agreement" means an agreement specified in Section 6.5.

            "Plan" is defined in Section 1.1.

            "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as
amended from time to time, or any successor rule thereto.

            "10% Shareholder" means a grantee of an Incentive Stock Option under
the Plan who, at the time the Option is granted, owns (or is considered as
owning within the meaning of Section 424 of the Code) stock possessing more than
10% of the total combined voting power of all classes of capital stock of the
Company.

                                   ARTICLE III
                                 ADMINISTRATION

        3.1 ADMINISTRATIVE COMMITTEE. The Plan shall be administered by the
Board unless the provisions of Section 3.2 below require that the Plan be
administered by a committee of the Board (the Board, or such committee, if it is
administering the Plan, will be referred to in the Plan as the "Administrative
Committee"). The Administrative Committee shall select one of its members as its
chairman and shall hold its meetings at such times and places as it shall deem
advisable. A majority of its members shall constitute a quorum and all
determinations shall be made by a majority of such quorum. Any determination
reduced to writing and signed by all of the members of the Administrative
Committee shall be fully as effective as if it had been made by a majority vote
at a meeting duly called and held.

        3.2 ALTERNATE ADMINISTRATIVE COMMITTEE. Notwithstanding the foregoing
provisions of this Article III, if the Company registers any class of any Equity
Security pursuant to Section 12 of the Exchange Act, the Plan shall, from the
effective date of such registration until six (6) months after the termination
of such registration, be administered as follows:

            (a) If at any time a member of the Board is not a Disinterested
Person, then the Board shall appoint a committee, consisting of two or more of
its members each of whom is a Disinterested Person, to administer this Plan in
accordance with such terms and conditions not inconsistent with this Plan as the
Board may prescribe. Once appointed, the committee shall continue to serve until
otherwise directed by the Board. From time to time the Board may increase the
size of the committee and appoint additional members, remove members (with or
without cause) and appoint new members in their place, fill vacancies however
caused, and/or


                                       3
<PAGE>   5

remove all members of the committee and thereafter directly administer this Plan
at any later time when all members of the Board are Disinterested Persons. At no
time shall a person who is not a Disinterested Person serve on the committee
appointed under this Section 3.2(a), nor shall such committee at any time have
fewer than two members.

            (b) The term "Disinterested Person" shall mean a member of the Board
who is not, during the period of one (1) year prior to service as a member of
the Administrative Committee, or during such service, granted or awarded Equity
Securities pursuant to the Plan or any other plan of the Company or any of its
Affiliates, other than grants or awards that would not prevent such member from
being a "disinterested person" with respect to the Plan for purposes of Rule
16b-3.

        3.3 POWERS; REGULATIONS. The Administrative Committee shall have full
power and authority, subject only to the express provisions of the Plan (a) to
designate the Eligible Persons to whom Options am to be granted under the Plan;
(b) to determine the number of shares, the exercise price and all other terms
and conditions (which need not be identical) of all Options so granted; (c) to
interpret the provisions of the Plan and the Option Agreements evidencing
Options so granted; (d) to correct any defect, supply any information and
reconcile any inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purpose of the Plan; (e) to supervise
the administration of the plan; and (f) to take such other actions in connection
with or in relation to the Plan as it deems necessary or advisable. The
Administrative Committee is authorized to establish, amend and rescind such
rules and regulations not inconsistent with the terms and conditions of the Plan
as it deems necessary or advisable for the proper administration of the Plan. In
making determinations hereunder, the Administrative Committee may give such
consideration to the recommendations of management of the Company as the
Administrative Committee deems desirable.

        3.4 LIMITS ON AUTHORITY. Exercise by the Administrative Committee of its
authority under the Plan shall be consistent (a) with the intent that all
Incentive Stock Options issued under the Plan be qualified under the terms of
Section 422 of the Code (including any amendments thereto and any similar
successor provision), and (b) if the Company registers any class of any Equity
Security pursuant to Section 12 of the Exchange Act, with the intent that the
Plan be administered in a manner that satisfies the conditions of Rule
l6b-3(c)(2)(i) under the Exchange Act (including any amendments thereto and any
similar successor provision) so that the grant of Options under this Plan, as
well as all other transactions with respect to the Plan, to Options granted
thereunder and to any Common Stock acquired upon exercise of Options, shall, to
the extent possible, be exempt from the operation of Section 16(b) of the
Exchange Act.

        3.5 EXERCISE OF AUTHORITY. Each action and determination made or taken
pursuant to the Plan by the Administrative Committee, including but not limited
to any interpretation or construction of the Plan and the Option Agreements,
shall be final and conclusive for all purposes and upon all persons. No member
of the Administrative Committee shall be liable for any action or determination
made or taken by the member or the Administrative Committee in good faith with
respect to the Plan.


                                       4
<PAGE>   6


                                   ARTICLE IV
                           SHARES SUBJECT TO THE PLAN

        4.1 NUMBER OF SHARES. Subject to the provisions of this Article IV, the
maximum number of shares of Common Stock with respect to which Options may be
granted during the term of the Plan shall be two hundred thousand (200,000).
Shares of Common Stock will be made available from the authorized but unissued
shares of the Company or from shares reacquired by the Company. If any Option
terminates for any reason without having been exercised in full, the shares of
Common Stock subject to the Option for which it has not been exercised shall
again be available for purposes of the Plan.

        4.2 ADJUSTMENTS. If the Company subdivides its outstanding shares of
Common Stock into a greater number of shares of Common Stock (by stock dividend,
stock split, reclassification or otherwise) or combines its outstanding shares
of Common Stock into a smaller number of shares of Common Stock (by reverse
stock split, reclassification or otherwise), or if the Administrative Committee
determines, in its sole discretion, that any stock dividend, extraordinary cash
dividend, reclassification, recapitalization, reorganization, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock, or other similar corporate event (including mergers or
consolidations other than those which constitute Approved Transactions) 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 this Plan,
then the Administrative Committee shall, in its sole discretion and in such
manner as the Administrative Committee may deem equitable and appropriate, make
Adjustments to (a) the number and kind of shares with respect to which Option
may thereafter be granted under this Plan; (b) the number and kind of shares
subject to outstanding Options, and (c) the exercise price under outstanding
Options; provided, however, that the number of shares subject to an Option shall
be always a whole number. The Administrative Committee may, if deemed
appropriate, provide for a cash payment to any Holder of an Option in connection
with any adjustment made pursuant to this Section 4.2.

                                    ARTICLE V
                                   ELIGIBILITY

        5.1 GENERAL. The persons who shall be eligible to participate in the
Plan and to receive Options under the Plan ("Eligible Persons") shall be
employees (including offices and, subject to Section 5.2, directors who are also
employees) of the Company or consultants rendering to persons who hold or have
held Options under this Plan or options or similar awards under any other plan
of the Company or any of its Affiliates.

        5.2 INELIGIBILITY. No member of the Administrative Committee, while
serving as such, shall be eligible to receive an Option.

                                   ARTICLE VI
                                  STOCK OPTIONS

        6.1 GRANT OF OPTIONS. Subject to the limitations of the Plan, the
Administrative Committee shall designate from time to time each Eligible Person
who is to be granted an


                                       5
<PAGE>   7


Option, the time when the Option shall be granted, the number of shares subject
to the Option, whether the Option is to be an Incentive Stock Option or a
Nonqualified Stock Option and, subject to Section 6.2, the purchase price of the
shares of Common Stock subject to the Option; provided, however, that Incentive
Stock Options may only be granted to Eligible Persons who are employees of the
Company or its Affiliates. Each Option granted under this Plan shall also be
subject to such other terms and conditions not inconsistent with this Plan as
the Administrative Committee, in its sole discretion, determines, subject to the
limitations of the Plan, the same Eligible Person may receive Incentive Stock
Options and Nonqualified Stock Options at the same time and pursuant to the same
Option Agreement, provided that Incentive Stock Options and Nonqualified Stock
Options are clearly designated as such.

        6.2 OPTION PRICE. The price at which shares may be purchased upon
exercise of an Option shall be fixed by the Administrative Committee and may be
more than, less than or equal to the Fair Market Value of the Common Stock as of
the date the Option is granted; provided, however, that the exercise price of an
Incentive Stock Option shall be (a) at least 110% of the Fair Market Value of
the Common Stock subject thereto as of the date of grant, if the Incentive Stock
Option is being granted to a 10% Shareholder, and (b) at least 100% of the Fair
Market Value of the Common Stock subject thereto as of the date of grant, if the
Incentive Stock Option is being granted to any other Eligible Person.

        6.3 LIMITATION ON GRANTS. The aggregate Fair Market Value of the Common
Stock with respect to which, during any calendar year, one or more Incentive
Stock Options under this Plan (and/or one or more options under any other plan
maintained by the Company or any of its Affiliates for the granting of options
intended to qualify under Section 422 of the Code) are exercisable for the first
time by a Holder shall not exceed $100,000 (said value to be determined as of
the respective dates on which such options are granted to the Holder). If an
Option that would otherwise qualify as an Incentive Stock Option becomes
exercisable for the first time in any calendar year for shares of Common Stock
that would cause such aggregate Fair Market Value to exceed $100,000, then the
portion of the Option in respect of such shares shall be deemed to be a
Nonqualified Stock Option.

        6.4 TERM OF OPTIONS. Subject to the provisions of the Plan with respect
to death, retirement and termination of employment, the term of each Option
shall be for such period as the Administrative Committee shall determine, but
not mom than (a) five (5) years from the date of grant in the case of Incentive
Stock Options held by 10% Shareholders, and (b) ten (10) years from the date of
grant in the case of all other Options.

        6.5 OPTION AGREEMENT. Each Option granted under the Plan shall be
evidenced by a written Option Agreement which shall designate the Option as an
Incentive Stock Option or a Nonqualified Stock Option and specify or incorporate
by reference to this Plan all Of the terms and conditions applicable to the
Option. Each grantee of an Option shall be notified promptly of such grant, an
Option Agreement shall be executed and delivered by the Company to the grantee
within sixty (60) days after the date the Administrative Committee approves such
grant, and, in the discretion of the Administrative Committee, such grant shall
terminate if the Option Agreement is not signed by the grantee (or his or her
attorney) and delivered to the Company within sixty (60) days after it is
delivered to the grantee. An Option Agreement nay be modified from time to time
pursuant to Section 7.6(b).


                                       6
<PAGE>   8

        6.6 EXERCISE OF OPTIONS. An Option granted under the Plan shall become
and remain exercisable during the term of the Option to the extent provided in
the Option Agreement evidencing the Option and this Plan and, unless the Option
Agreement otherwise provides, may be exercisable to the extent exercisable, in
whole or in part, at any time and from time to time during such term; provided,
however, that subsequent to the grant of an Option, the Administrative
Committee, at any time before complete termination of the Option, may accelerate
the time or times at which the Option may be exercised in whole or in part
(without reducing the term of the Option).

        6.7 MANNER OF EXERCISE.

            (a) Form of Payment. An Option shall be exercised by written notice
to the Company upon such terms and conditions as the Option Agreement may
provide and in accordance with such other procedures for the exercise of Options
as the Administrative Committee may establish from time to time. The method or
methods of payment of the purchase price for the shares to be purchased upon
exercise of an Option and of any amounts required by Section 7.9 shall be
determined by the Administrative Committee and may consist of (a) cash, (b)
check, (c) promissory note, (d) whole shares of Common Stock already owned by
the Holder, (e) the withholding of shares of Common Stock issuable upon exercise
of the Option, (f) the delivery, together with a properly executed exercise
notice, of irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds required to pay the purchase price,
(g) any combination of the foregoing methods of payment, or (h) such other
consideration and method of payment as may be permitted for the issuance of
shares under applicable securities and other laws. The permitted methods or
methods of payment of the amounts payable upon exercise of an Option, if other
than in cash, shall be set forth in the Option Agreement evidencing the Option
and may be subject to such conditions as the Administrative Committee deems
appropriate. Without limiting the generality of the foregoing, if a Holder is
permitted to elect to have shares of Common Stock issuable upon exercise of an
Option withheld to pay all or any part of the amounts payable in connection with
such exercise, then the Administrative Committee shall have the sole discretion
to approve or disapprove such election, which approval or disapproval shall be
given after the election is made, and the making of the election (including the
related exercise of the Option) shall (to the extent necessary) comply with the
requirements for exemptive relief under Rule 16b-3, including, to the extent
necessary and without limitation, paragraphs (e)(3) and (e)(4) thereof.

            (b) Value of Shares. Shares of Common Stock delivered in payment of
all or any part of the amounts payable in connection with the exercise of an
option, and shares of Common Stock withheld for such payment, shall be valued
for such purpose at their Fair Market Value as of the exercise date.

            (c) Issuance of Shares. The Company shall effect the issuance of the
shares of Common Stock purchased under the Option as soon as practicable after
the exercise thereof and payment in full of the purchase price therefor and of
any amounts required by Section 7.8, and within a reasonable time thereafter
such issuance shall be evidenced on the books of the Company.


                                       7
<PAGE>   9

            (d) Legend. The Holder consents to the placement of a legend on the
certificate for his or her shares, which legend shall be in form substantially
as follows:

            NOTICE: TRANSFER AND OTHER RESTRICTIONS

               THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
        APPLICABLE STATE SECURITIES ACT (COLLECTIVELY, THE "SECURITIES LAWS").
        THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
        OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS THE SHARES (I) ARE
        REGISTERED UNDER THE SECURITIES LAWS, OR (II) ARE EXEMPT FROM
        REGISTRATION UNDER THE SECURITIES LAWS AND THE CORPORATION IS PROVIDED
        AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
        REGISTRATION IS NOT REQUIRED.

               THE SHARES ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER, AND MAY
        BE SUBJECT TO REPURCHASE BY THE CORPORATION, PURSUANT TO THE PROVISIONS
        OF THE CORPORATION'S 1993 STOCK OPTION PLAN AND/OR AN OPTION AGREEMENT
        BETWEEN THE HOLDER AND THE CORPORATION. INFORMATION CONCERNING THESE
        RESTRICTIONS MAY BE OBTAINED FROM THE CORPORATION OR ITS LEGAL COUNSEL.

        6.8 NONTRANSFERABILITY. Options shall not be transferable other than by
will or the laws of descent and distribution, and Options my be exercised during
the lifetime of the Holder thereof only by the Holder (or his or her court
appointed legal representative).

                                   ARTICLE VII
                               GENERAL PROVISIONS

        7.1 ACCELERATION OF OPTIONS.

            (a) Death or Disability. If a Holder's employment shall terminate by
reason of death or Disability, each outstanding Option granted to the Holder
under the Plan shall immediately become exercisable in full in respect of the
aggregate number of shares covered thereby, notwithstanding any contrary vesting
schedule in the Option Agreement evidencing the Option (except to the extent the
Option Agreement expressly provides otherwise).

            (b) Approved Transactions; Control Purchase. In the event of any
Approved Transaction or Control Purchase, each outstanding Option under the Plan
shall immediately become exercisable in full in respect of the aggregate number
of shares covered thereby, notwithstanding any contrary vesting schedule in the
Option Agreement evidencing the Option (except to the extent the Option
Agreement expressly provides otherwise), effective upon the Control Purchase or
immediately prior to consummation of the Approved Transaction. In the case of an
Approved Transaction, the Company shall provide notice of the pendency of the
Approved Transaction, at least fifteen (15) days prior to the expected date of
consummation


                                       8
<PAGE>   10

thereof, to each Holder of an outstanding Option. Each Holder shall thereupon be
entitled to exercise the Option at any time prior to consummation of the
Approved Transaction. Any such exercise as to any portion of the Option that
will only become vested immediately prior to the consummation of the Approved
Transaction in accordance with the foregoing acceleration provision shall be
contingent on such consummation. Any such exercise as to any other portion of
the Option will not be contingent on such consummation unless so elected by the
Holder in a notice delivered to the company simultaneously with the exercise.
Upon consummation of the Approved Transaction, all Options shall expire to the
extent such exercise has not occurred. Notwithstanding the foregoing, except to
the extent one or more Option Agreements expressly provide otherwise, the
Administrative Committee may, in its discretion, determine that any or more of
the outstanding Options will, not vest or become exercisable on an accelerated
basis in connection with an Approved Transaction and/or will not terminate if
not exercised prior to consummation of the Approved Transaction, if the Board or
the surviving or acquiring corporation, as the can may be, shall have taken, or
made effective provision for the taking of, such action as in the opinion of the
Administrative Committee is equitable and appropriate in order to substitute new
Options for such Options, or to assume such Options (which assumption may be
effected by means of a payment to each Holder, in cancellation of the Option
held by him or her, of the difference between the then Fair Market Value of the
aggregate number of shares of Common Stock then subject to the Options and the
aggregate exercise price that would have to be paid to acquire such shares), and
in order to make such now or assumed Options as nearly as practicable equivalent
to the old Options (before giving to any acceleration of the vesting or
exercisability thereof), taking into account, to the extent applicable, the kind
and amount of securities, cash or other assets into or for which the Common
Stock may be changed, converted or exchanged in connection with the Approved
Transaction.

        7.2 TERMINATION OF EMPLOYMENT. The provisions of this Section 7.2 shall
apply to any Holder who is granted one or more Options while an employee of the
Company or one of its Affiliates.

            (a) General. If the Holder's employment terminates prior to the
complete exercise of the Option, then, except to the extent one or more of the
Option Agreements expressly provide otherwise, all Options held by the Holder
shall immediately terminated; provided, however, that (i) if the Holder's
employment terminates by reason of death or Disability, the Option shall remain
exercisable for a period of six (6) months following such termination (but not
later than the scheduled expiration of the Option); and (ii) even if one or more
of the Option Agreements expressly provide that they shall be exercisable
(allowing the termination of the Holder's employment for reasons other than
death or Disability, any termination by the Company for cause will nevertheless
be treated in accordance with the provisions of Section 7.2(b) (except to the
extent that one or mom of the Option Agreements expressly provide otherwise).

            (b) Termination by Company for Cause. If a Holder's employment with
the Company shall be terminated by the Company for cause (for these purposes,
cause shall have the meaning ascribed thereto in any employment agreement to
which the Holder is a party or, in the absence thereof, shall include but not be
limited to, insubordination, dishonesty, incompetence, moral turpitude, other
misconduct of any kind and the refusal to perform the Holder's duties and
responsibilities for any reason other than illness or incapacity; provided,
however, that if such


                                       9
<PAGE>   11

termination occurs within twelve (12) months after an Approved Transaction or
Control Purchase, termination for cause shall mean only a felony conviction for
fraud, misappropriation or embezzlement), then all Options held by the Holder
shall immediately terminate.

            (c) Miscellaneous. In the case of an Option granted to a Holder who
is an employee, the Administrative Committee may determine whether any given
leave of absence constitutes a termination of employment; provided, however,
that for purposes of the Plan -

               (i) a leave of absence, duly authorized in writing by the Company
        for military service or sickness, or for any other purpose approved by
        the Company if the period of such leave does not exceed ninety (90)
        days, and

               (ii) a leave of absence in excess of ninety (90) days, duly
        authorized in writing by the Company, provided the employee's right to
        reemployment is guaranteed either by statute or by contract -

not be deemed a termination of employment. Any such Option granted under the
Plan shall not be affected by any change of employment so long as the Holder
continues to be an employee of the Company.

        7.3 RIOT OR COMPANY TO TERMINATE SERVICES. Nothing contained in the Plan
or in any Option, and no action of the Company or the Administrative Committee
with respect thereto, shall confer or be construed to confer on any Holder any
right to continue in the service of the Company or interfere in any way with the
right of the Company, subject to the provisions of any agreement between the
Holder and the Company, to terminate at any time, with or without cause, the
employment or consulting arrangement with the Holder.

        7.4 NONALIENATION OF BENEFITS. No right or benefit under the Plan shall
be subject to anticipation, alienation, sale, assignment, hypothecation, pledge,
exchange, transfer, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void. No right of benefit hereunder shall in any manner
be liable for or subject to the debts, contracts, liabilities or torts of the
person entitled to such right or benefit.

        7.5 RIGHT OF FIRST REFUSAL. An Option Agreement may contain such
provisions as the Administrative Committee shall determine to the effect that,
if a Holder elects to sell all or any sham of Common Stock that the Holder
acquires upon the exercise of an Option, then the Holder shall not sell the
shares unless the Holder shall have first offered in writing to sell the shares
to the Company at Fair Market Value on a date specified in the offer (which date
shall be at least three (3) business days and not more than ten (10) business
days following the date of the offer). In any such event, certificates
representing shares issued upon exercise of an Option shall bear a restrictive
legend to the effect that transferability of the shares is subject to the
restrictions contained in the Plan and the Option Agreement evidencing the
Option, and the Company may cause the transfer agent for the Common Stock to
place a stop transfer order with respect to the shares.


                                       10
<PAGE>   12

        7.6 TERMINATION AND AMENDMENT.

            (a) General. Unless the Plan shall theretofore have been terminated
as hereinafter provided, no Options may be granted under the Plan on or after
August 10, 2003. The Board or the Administrative Committee may at any time prior
to that date terminate the Plan, and may, from time to time, suspend or
discontinue the Plan or modify or amend the Plan in such respects as it shall
deem advisable; provided, however, that any such modification or amendment shall
comply with all applicable laws, applicable stock exchange listing requirements,
and applicable requirements for exemption (to the extent necessary) under Rule
16b-3. Notwithstanding the foregoing, without further shareholder approval no
modification or amendment to this Plan shall increase the number of shares of
Common Stock subject to the Plan (except as authorized by Article IV), change
the class of persons to receive Options under the Plan, or otherwise materially
increase the benefits accruing to participants, under the Plan.

            (b) Modification. No termination, modification or amendment of the
Plan may, without the consent of the Holder of any Option therefore granted,
adversely affect the rights of the Holder with respect to the Option. No
modification, extension, renewal or other change in any Option granted under the
Plan shall be made after the grant of the Option, unless the same is consistent
with the provisions of the Plan. With the consent of the Holder and subject to
the terms and conditions of the Plan (including Section 7.6(a)), the
Administrative Committee may amend outstanding Option Agreements with any Holder
and subject to the terms and conditions, without limitation, any amendment that
would (i) accelerate the time or times at which the Option may be exercised
and/or (ii) extend the scheduled expiration date of the Option. Without limiting
the generality of the foregoing, the Administrative Committee may, but solely
with the Holder's consent unless otherwise provided in the Option Agreement,
agree to cancel any Option under the Plan and issue a new Option in substitution
therefor, provided that the Option so substituted shall satisfy all of tic
requirements of the Plan as of the date such new Option is granted. Nothing
contained in the foregoing provisions of this Section 7.6(b) shall be construed
to prevent the Administrative Committee from providing in any Option Agreement
that the rights of the Holder with respect to the Option evidenced thereby shall
be subject to such rules and regulations as the Administrative Committee may,
subject to the express provisions of the Plan, adopt from time to time, or
impair the enforceability of any such provision.

        7.7 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to Options shall be subject to all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of any registration statement
required under the Securities Act of 1933, and the rules and regulations of any
securities exchange or association on which the Common Stock may be listed or
quoted. As long as the Common Stock is registered under the Exchange Act, the
Company shall use its reasonable efforts to comply with any legal requirements
(a) to maintain a registration statement in effect under the Securities Act of
1933 with respect to all shares of Common Stock that my be issued to Holder
under the Plan, and (b) to file in a timely mariner all reports required to be
filed by it under the Exchange Act.

        7.8 WITHHOLDING. The Company's obligation to deliver shares of Common
Stock upon exercise of an Option shall be subject to any applicable federal,
state and local tax withholding requirements. federal, state and local
withholding tax due at the time an Option is


                                       11
<PAGE>   13

exercised may, in the discretion of the Administrative Committee, be paid in
shares of Common Stock already owned by the Holder or through the withholding of
shares otherwise issuable to the Holder, upon such terms and conditions as the
Administrative Committee shall determine. If the Holder shall fail to pay, or
make arrangements satisfactory to the Administrative Committee for the payment
of, all such federal, state and local taxes, then the Company shall, to the
extent permitted by law, have the right to deduct from any payment of any
otherwise due to the Holder an amount equal to any federal, state or local taxes
of any kind required to be withheld by the Company with respect to the Option.

        7.9 SEPARABILITY. With respect to Incentive Stock Options, if this Plan
does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein with the
same force and effect as if such provision had been set out at length herein;
provided, further, that to the extent any Option that is intended to quality as
an Incentive Stock option cannot so qualify, the Option, to that extent, shall
be deemed to be a Nonqualified Stock Option for all purposes of the Plan.

        7.10 NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board nor the submission of the Plan to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of the
power to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.

        7.11 EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION. By
acceptance of an Option, unless otherwise provided in the Option Agreement
evidencing the Option, each Holder shall be deemed to have agreed that the
Option is special incentive compensation that will not be taken into account, in
any manner, as salary, compensation or bonus in determining the amount of any
payment under any pension, retirement or other employee benefit plan, program or
policy of the Company. in addition, each beneficiary of a deceased Holder shall
be deemed to have agreed that the Option will not affect the amount of any life
insurance coverage, if any, provided by the Company on the life of the Holder
that is payable to such beneficiary under any life insurance plan covering
employees of the Company.

        7.12 NO SHAREHOLDER RIGHTS. No Holder or other person shall have any
voting of other shareholder rights with respect to shares of Common Stock
subject to an Option until the Option has been duly exercised, full payment of
the option price has been made, and a certificate for the shares has been
issued. No adjustment shall be made for cash or other dividends or distributions
to shareholders for which the record date is prior to the date of such due
exercise and full payment.

        7.13 GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Washington.

        7.14 LEGENDS. In addition to any legend contemplated by Section 6.6(d)
or Section 7.5, each certificate evidencing Common Stock issued upon exercise of
an Option shall bear such other legends as the Administrative Committee deems
necessary or appropriate to reflect or refer to any terms, conditions or
restrictions applicable to such shares.


                                       12
<PAGE>   14


        7.15 COMPANY'S RIGHTS. The grant of Options pursuant to the Plan shall
not affect in any way the right or power of the Company to make
reclassifications, reorganizations or other changes of or to its capital or
business structure or to merge, consolidate, liquidate, sell or otherwise
dispose of all or any pan of its business or assets.


                                       13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>6
<FILENAME>f69264orex99-3.txt
<DESCRIPTION>EXHIBIT 99.3
<TEXT>

<PAGE>   1


                                                                    EXHIBIT 99.3

                 ACTIVE VOICE CORPORATION 1996 STOCK OPTION PLAN



<PAGE>   2


                            ACTIVE VOICE CORPORATION

                             1996 STOCK OPTION PLAN

                                    ARTICLE 1

                            PURPOSE AND EFFECTIVENESS

        1.1 PURPOSE. The purpose of the 1996 Stock Option Plan (the "Plan") is
to provide a method by which selected individuals performing services for Active
Voice Corporation, a Washington corporation (the "Company"), or any of its
Affiliates, may be offered an opportunity to invest in capital stock of the
Company, thereby increasing their personal interest in the growth and success of
the Company and its Affiliates.

        1.2 EFFECTIVE DATE; NOTIFICATION AND APPROVAL REQUIREMENTS. The Plan
shall be effective at the time specified in the resolutions of the Board
adopting the Plan (the "Effective Date"). Issuance of Incentive Stock Options
within twelve (12) months after the Effective Date shall be subject to the
approval of the Plan by the shareholders of the Company at a duly held meeting
of shareholders at which a majority of all outstanding voting stock of the
Company is represented in person or by proxy. The approval required shall be a
majority of the votes cast on the proposal to approve the Plan. Such approval
may also be provided pursuant to a written consent in lieu of such meeting. No
Incentive Stock Option shall be exercisable until this approval requirement has
been satisfied. If this requirement is not satisfied within twelve (12) months
after the Effective Date, then (a) no Incentive Stock Options may thereafter be
granted, and (b) each Incentive Stock Option granted prior thereto shall
automatically be deemed to be a Nonqualified Stock Option (except to the extent
its Option Agreement expressly provides otherwise).

                                    ARTICLE 2

                                   DEFINITIONS

        Capitalized terms in the Plan shall have the following meanings (whether
used in the singular or plural):

        "Affiliate" of the Company means any corporation, partnership or other
entity which, through one or more intermediaries, directly or indirectly
controls, is controlled by, or is under common control with the Company.

        "Approved Transaction" means any of the following transactions
consummated with the approval, recommendation or authorization of the Board:

               (a) any merger, consolidation, statutory or contractual share
        exchange, or other transaction to which the Company or any of its
        Affiliates or shareholders is a party if, immediately following the
        transaction, the persons who held Common Stock (or securities
        convertible into Common Stock) immediately prior to the transaction hold
        less than a majority of the combined Common Equity of the Company (or
        if, pursuant to the


<PAGE>   3


        transaction, shares of Common Stock are changed or converted into or
        exchanged for, in whole or part, securities of another corporation or
        entity, the combined Common Equity of that corporation or entity);

               (b) any liquidation or dissolution of the Company; and

               (c) any sale, lease, exchange or other transfer not in the
        ordinary course of business (in one transaction or a series of related
        transactions) of all, or substantially all, of the assets of the
        Company.

        "Board" means the Board of Directors of the Company.

        "Cause" means, in connection with the termination of the Service of a
Holder (a) repeated failures to carry out directions of the Board or the
Holder's supervisors with regard to material matters reasonably consistent with
the Holder's duties; (b) knowing violation of a state or federal law involving
the commission of a crime against the Company or any of its Affiliates or a
felony; (c) any misrepresentation, deception, fraud or dishonesty that is
materially injurious to the Company or any of its Affiliates; and (d) any act or
omission in willful disregard of the interests of the Company or any of its
Affiliates that substantially impairs the goodwill, business or reputation of
the Company or any of its Affiliates, including but not limited to any violation
of any proprietary rights or confidentiality agreement between the Company and
the Holder.

        "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute or statutes thereto. Reference to any specific
section of the Code shall include any successor section.

        "Committee" is defined in Section 3.1.

        "Common Equity" means the capital stock of a corporation (or
corresponding securities of a noncorporate entity) ordinarily, and apart from
rights accruing under special circumstances, having the right to vote in an
election for directors (or for members of the governing body of the noncorporate
entity).

        "Common Stock" means the Common Stock, no par value, of the Company.

        "Company" is defined in Section 1.1.

        "Continuing Option" is defined in Section 7.2(b)(v).

        "Control Purchase" means any transaction (or series of related
transactions), consummated without the approval, recommendation or authorization
of the Board, in which any person, corporation or other entity (including any
"person" as defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
purchases any Common Stock (or securities convertible into Common Stock),
pursuant to a tender offer or a request or invitation for tenders (as those
terms are defined in Section 14(d)(1) of the Exchange Act) or otherwise, and
thereafter is the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing at least twenty-five
percent (25%) of the combined Common Equity of the Company.


                                       2
<PAGE>   4


        "Disability" means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than twelve (12) months.

        "Effective Date" is defined in Section 1.2.

        "Eligible Person" is defined in Article 5.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any specific section of the Exchange Act shall include any successor section.

        "Executive Officer" means any employee of the Company who is an
"officer" within the meaning of Rule 16a-l(f) of the Exchange Act, as amended
from time to time, or any successor rule thereto.

        "Fair market Value" for the Common Stock (or any other security) on any
day means, if the Common Stock (or other security) is publicly traded, the last
sales price (or, if no last sales price is reported, the average of the high bid
and low asked prices) for a share of Common Stock (or unit of the other
security) on that day (or, if that day is not a trading day, on the next
preceding trading day), as reported by the principal exchange on which the
Common Stock (or other security) is listed, or, if the Common Stock (or other
security) is publicly traded but not listed on an exchange, as reported by The
Nasdaq Stock Market, or, if such prices or quotations are not reported by The
Nasdaq Stock Market, as reported by any other available source of prices or
quotations selected by the Committee. If the Common Stock (or other security) is
not publicly traded, or if the Fair Market Value is not determinable by any of
the foregoing means, the Fair Market Value on any day shall be determined in
good faith by the Committee on the basis of such considerations as the Committee
determines to be appropriate.

        "Good Reason" means, with respect to a Holder, the occurrence in
connection with an Approved Transaction, without the Holder's express written
consent, of one of the following events or conditions:

               (a) A material reduction in the level of the Holder's
        responsibilities in comparison to the level thereof at the time of the
        Approved Transaction;

               (b) The assignment to the Holder of a job title that is not of
        comparable prestige and status as the Holder's job title at the time of
        the Approved Transaction;

               (c) The assignment to the Holder of any duties inconsistent with
        the Holder's position at the time of the Approved Transaction, other
        than pursuant to the Holder's promotion;

               (d) A material reduction in the Holder's salary level;

               (e) A material reduction in the overall level of employee
        benefits or perquisites available to the Holder at the time of the
        Approved Transaction, or the


                                       3
<PAGE>   5


        Holder's right to participate therein, unless such reduction is
        nondiscriminatory as to the Holder;

               (f) Requiring the Holder to be based anywhere more than fifty
        (SO) miles from the business location to which the Holder normally
        reported for work at the time of the Approved Transaction, other than
        for required business travel not significantly greater than the Holder's
        business travel obligations at the time of the Approved Transaction; or

               (g) Any of the foregoing events and conditions occurring prior to
        the Approved Transaction which the Holder reasonably demonstrates was at
        the request of a third party or otherwise arose in connection with or in
        anticipation of the Approved Transaction.

        "Holder" means an Eligible Person who has received an option or, if
rights under the option continue following the death of the Eligible Person or
are transferred in a manner permitted by Section 6.8, the person who succeeds to
those rights by will or by the laws of descent and distribution or by such
transfer.

        "Incentive Stock Option" means an Option that is an incentive stock
option within the meaning of Section 422 of the Code.

        "Nonqualified Stock option" means an option that is not an Incentive
Stock Option.

        "Option" means an option with respect to shares of Common Stock awarded
pursuant to Article 6.

        "Option Agreement" is defined in Section 6.5.

        "Plan" is defined in Section 1.1.

        "Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor statute or statutes thereto. Reference to any specific
section of the Securities Act shall include any successor section.

        "Service" means the performance of services on a periodic basis for the
Company or any of its Affiliates in the capacity of an employee, a nonemployee
member of a board of directors or other governing body, or an independent
consultant or advisor.

        "Transaction Date" is defined in Section 7.2(b)(i).

        "10% Shareholder" means a person who owns (or is considered as owning
within the meaning of Section 424 of the Code) stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company.

                                    ARTICLE 3

                                 ADMINISTRATION


                                       4
<PAGE>   6

        3.1 COMMITTEE. The Plan shall be administered by the Board unless the
Board appoints a separate committee of the Board to administer the Plan pursuant
to Section 3.2 (the Board, or such committee, if it is administering the Plan,
will be referred to as the "Committee"). The Committee shall select one of its
members as its chairman and shall hold its meetings at such times and places as
it shall deem advisable. A majority of its members shall constitute a quorum and
all determinations shall be made by a majority of that quorum. Any determination
reduced to writing and signed by all of the members of the Committee shall be as
effective as if it had been made by a majority vote at a meeting duly called and
held.

        3.2 APPOINTMENT OF COMMITTEE. The Board may appoint a committee
consisting of two or more of its members to administer the Plan. Once appointed,
the committee shall continue to serve until otherwise directed by the Board.
From time to time the Board may increase the size of the committee and appoint
additional members, remove members (with or without cause) and appoint new
members in their place, fill vacancies however caused, and/or remove all members
of the committee and thereafter directly administer the Plan.

        3.3 POWERS; REGULATIONS. The Committee shall have full power and
authority, subject only to the provisions of the Plan (a) to administer or
supervise the administration of the Plan; (b) to interpret the provisions of the
Plan and the Option Agreements; (c) to correct any defect, supply any
information and reconcile any inconsistency in such manner and to such extent as
it determines to be necessary or advisable to carry out the purpose of the Plan;
and (d) to take such other actions in connection with the Plan as it determines
to be necessary or advisable. The Committee is authorized to adopt, amend and
rescind such rules, regulations and procedures not inconsistent with the
provisions of the Plan as it determines to be necessary or advisable for the
proper administration of the Plan, and each Option shall be subject to all such
rules, regulations and procedures (whether the option was granted before or
after promulgation thereof). Without limiting the authority of the Committee to
interpret the provisions of the Plan, the Committee shall have the right to
determine that a transaction (or series of related transactions) is not a
Control Purchase, even though literally included within the definition of that
term, if the Committee determines that the transaction (or series of related
transactions) does not have the effect of significantly changing or influencing
the control of the Company on a permanent basis.

        3.4 LIMITS ON AUTHORITY. Exercise by the Committee of its authority
shall be consistent with the intent that (a) all Incentive Stock options be
qualified under the terms of Section 422 of the Code, and (b) the Plan be
administered in a manner so that, to the extent possible, the grant of Options
and all other transactions with respect to the Plan, to Options and to any
Common Stock acquired upon exercise of Options, shall be exempt from the
operation of Section 16(b) of the Exchange Act.

        3.5 EXERCISE OF AUTHORITY. Each action and determination made or taken
by the Committee, including but not limited to any interpretation of the Plan
and the Option Agreements, shall be final, conclusive and binding for all
purposes and upon all persons. No member of the Committee shall be liable for
any action or determination made or taken by the member or the Committee in good
faith.



                                       5
<PAGE>   7

                                    ARTICLE 4

                           SHARES SUBJECT TO THE PLAN

        4.1 NUMBER OF SHARES. Subject to the provisions of this Article 4, the
maximum number of shares of Common Stock for which Options may be granted during
the term of the Plan shall be two hundred thirty thousand (230,000). Shares of
Common Stock will be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company. If an Option terminates
for any reason without having been exercised in full, the shares of Common Stock
for which the Option has not been exercised shall again be available for
purposes of the Plan.

        4.2 ADJUSTMENTS. If the Company subdivides its outstanding shares of
Common Stock into a greater number of shares (by stock dividend, stock split,
reclassification or otherwise) or combines its outstanding shares of Common
Stock into a smaller number of shares (by reverse stock split, reclassification
or otherwise), or if the Committee determines that any stock dividend,
extraordinary cash dividend, reclassification, recapitalization, reorganization,
split-up, spin-off, combination, exchange of shares, rights offering, or other
transaction or event that is not an Approved Transaction or Control Purchase
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 Committee shall, in such manner as it determines to be
equitable and appropriate, adjust any or all of (a) the number of shares of
Common Stock (or number and kind of other securities or property) for which, and
the time or times when, Outstanding Options may thereafter be exercised; (b) the
purchase price for the shares (or other securities or property) under
outstanding Options; and (c) the number of shares of Common Stock (or number and
kind of other securities or property) for which Options may thereafter be
granted. In connection with any adjustment made pursuant to this Section 4.2,
the Committee may, if deemed equitable and appropriate, provide for a cash
payment to be made to the Holder of an Option, in cancellation of the option, of
such amount as the Committee determines represents the value the Option would
then have if it were exercisable for all of the shares under the Option.

                                    ARTICLE 5

                                   ELIGIBILITY

        The persons eligible to participate in the Plan and to receive options
("Eligible Persons") shall be persons performing Service for the Company or any
of its Affiliates.

                                    ARTICLE 6

                                  STOCK OPTIONS

        6.1 GRANT OF OPTIONS. The Committee shall from time to time determine
(a) the Eligible Persons to whom Options are to be granted; (b) the number of
shares of Common Stock for which the options are exercisable and the purchase
price of such shares; (c) whether the Options are Incentive Stock Options or
Nonqualified Stock Option; and (d) all of the other terms


                                       6
<PAGE>   8

and conditions (which need not be identical) of the Options; PROVIDED, HOWEVER,
that all such determinations shall be subject to the express limitations of the
Plan.

        6.2 PURCHASE PRICE. The price at which shares of Common Stock may be
purchased upon exercise of an option may be more than, less than or equal to the
Fair Market Value of the shares on the date the Option is granted; PROVIDED,
HOWEVER, that the purchase price of each share of Common Stock under an
Incentive Stock Option shall be (a) at least 110% of the Fair Market Value of
such share on the date of grant of the Option, if it is granted to a 10%
Shareholder, and (b) at least 100% of the Fair Market Value of such share on the
date of grant of the option, if it is granted to any other Eligible Person.

        6.3 LIMITATIONS ON INCENTIVE STOCK OPTIONS.

            (a) GRANTS ONLY TO EMPLOYEES. Incentive Stock Options may only be
granted to Eligible Persons who are employees of the Company or an Affiliate
that constitutes a "parent corporation" or a "subsidiary corporation" within the
meaning of Section 424 of the Code.

            (b) LIMITATION ON SHARES. The aggregate Fair Market Value of the
shares of Common Stock for which, during any calendar year, one or more
Incentive Stock Options under the Plan (and/or one or more options under any
other plan maintained by the Company or any of its Affiliates for the granting
of options intended to qualify under Section 422 of the Code) become exercisable
for the first time by a Holder shall not exceed $100,000 (said value to be
determined as of the respective dates on which the options are granted to the
Holder). If (a) a Holder holds one or more Incentive Stock Options under the
Plan (and/or one or more options under any other plan maintained by the Company
or any of its Affiliates for the granting of options intended to qualify under
Section 422 of the Code), and (b) the aggregate Fair Market Value of the shares
of Common Stock for which, during any calendar year, such options become
exercisable for the first time exceeds $100,000 (said value to be determined as
provided above), then such option or options are intended to qualify under
Section 422 of the Code with respect to the maximum number of such shares as
can, in light of the foregoing limitation, be so qualified, with the shares so
qualified to be the shares under the option or options earliest granted to the
Holder. If an Option that would otherwise qualify as an Incentive Stock Option
becomes exercisable for the first time in any calendar year for shares of Common
Stock that would cause such aggregate Fair Market Value to exceed $100,000, then
the portion of the option in respect of such shares shall be deemed to be a
Nonqualified Stock option.

        6.4 TERM OF OPTIONS. Subject to the provisions of the Plan with respect
to termination of options upon or following death, Disability or other
termination of Service, the Committee shall determine the term of each Option,
which term shall not be more than (a) five (5) years from the date of grant in
the case of an Incentive Stock Option granted to a 1096 Shareholder, and (b) ten
(10) years from the date of grant in the case of any other Incentive Stock
Option.

        6.5 OPTION AGREEMENT. Each Option shall be evidenced by an agreement
(the "Option Agreement") containing the terms and conditions of the Option as
determined by the Committee. Each grantee of an Option shall be notified
reasonably promptly of the grant, an


                                       7
<PAGE>   9


Option Agreement shall be executed and delivered by the Company to the grantee
within sixty (60) days after the date the Committee approves the grant, and the
Committee may terminate the grant if the Option Agreement is not signed by the
grantee and delivered to the Company within sixty (60) days after it is
delivered to the grantee. An Option Agreement may contain (but shall not be
required to contain) such terms and conditions as the Committee determines to be
necessary or appropriate to ensure that the penalty provisions of Section 4999
of the Code will not apply to any stock received by the Holder from the Company.
An Option Agreement may be amended from time to time pursuant to Section 7.5(b).

        6.6 EXERCISE OF OPTIONS.

            (a) TIME EXERCISABLE. An Option shall become and remain exercisable
to the extent provided in its Option Agreement and in the Plan. If an Option is
scheduled to become exercisable on one or more dates specified in its Option
Agreement, and its Holder has a leave of absence without pay, such date or dates
shall be postponed for a period equal to the duration of the leave unless the
Committee determines otherwise.

            (b) MANNER OF EXERCISE. An Option shall be exercised by written
notice to the Company in compliance with the terms and conditions of its Option
Agreement and such procedures for exercise of Options as the Committee may adopt
from time to time. The method or methods of payment of the purchase price of the
shares to be purchased upon exercise of the Option and of any amounts required
by Section 7.7 shall be determined by the Committee and set forth in the Option
Agreement for the Option. Such method or methods may consist of (i) check for
United States funds, (ii) whole shares of Common Stock already owned by the
Holder, (iii) the delivery, together with a properly executed exercise notice,
of irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the purchase price, (iv) any
combination of the foregoing methods of payment, or (v) such other consideration
and method of payment as may be permitted for the issuance of shares under
applicable securities and other laws. The Committee may specify a minimum number
of shares of Common Stock for which an Option must be exercised, but such
minimum shall not prevent exercise of an option for the full number of shares
for which it is exercisable.

            (c) VALUE OF SHARES. Shares of Common Stock delivered in payment of
all or any part of the amounts payable upon exercise of an option, and shares of
Common Stock withheld for such payment, shall be valued at their Fair Market
Value on the exercise date of the option.

            (d) ISSUANCE OF SHARES. The Company shall issue the shares of Common
Stock purchased under an option as soon as practicable after the option has been
duly exercised; PROVIDED, HOWEVER, that no fractional shares shall be issuable
under the Plan, and any fractional shares that would otherwise be issuable shall
be disregarded. Following exercise of an Incentive Stock Option, the Committee
shall cause the information statement required by Section 6039 of the Code to be
furnished to the Holder within the time and in the manner prescribed by law.

        6.7 LEGENDS. Each certificate representing shares of Common Stock issued
upon exercise of an Option shall contain any legends that the Committee
determines to be necessary or


                                       8
<PAGE>   10

appropriate. The Company may cause the transfer agent for the Common Stock to
place a stop transfer order with respect to such shares.

        6.8 NONTRANSFERABILITY. Unless the Committee determines otherwise at the
time an option is granted (or at any later time when the Committee, by written
notice to the Holder, releases in whole or in part the restrictions under this
Section 6.8), an Option shall not be transferable other than by will or the laws
of descent and distribution and may be exercised during the lifetime of the
Holder thereof only by the Holder (or his or her court appointed legal
representative).

        6.9 AUTHORITY OF CHIEF EXECUTIVE OFFICER TO GRANT OPTIONS. The Chief
Executive Officer of the Company shall have the authority to determine from time
o time (a) the Eligible Persons to whom Options are to be granted; (b) the umber
of shares of Common Stock for which the Options are exercisable and the purchase
price of such shares; (c) whether the Options are Incentive Stock Options or
Nonqualified Stock Options; and (d) all of the other terms and conditions (which
need not be identical) of the Options; PROVIDED, HOWEVER, that i) the authority
delegated to the Chief Executive Officer under this Section 6.9 shall not exceed
that of the Committee under the foregoing provisions of this Article 6 and shall
be subject to any limitations, in addition to those specified in this Section
6.9, as may be specified by the Board from time to time; (ii) the Chief
Executive Officer may not grant any Option to any person who is an Executive
officer or a director of the Company at he time of the grant; (iii) the purchase
price of each share of Common Stock under an Option granted under this Section
6.9 shall not be less than the Fair Market Value of such share on the date of
grant of the option; and (iv) the Chief Executive Officer shall promptly provide
a report to the Committee of each person to whom an option has been granted
under this Section 6.9 and the material terms and conditions of the Option.

                                    ARTICLE 7

                               GENERAL PROVISIONS

        The provisions of this Article 7 shall apply to all options, except to
the extent that one or more Option Agreements expressly provide otherwise.

        7.1 TERMINATION OF SERVICE.

            (a) GENERAL. If a Holder's Service terminates without Cause prior to
the full exercise of an Option, then the option shall thereafter be exercisable,
to the extent the Holder was entitled to exercise the Option on the date of such
termination, for a period of thirty (30) days following such termination (but
not later than the end of the term of the Option); PROVIDED, HOWEVER, that, if
the Holder's Service terminates by reason of death or Disability, the Option
shall be exercisable for a period of one (1) year following such termination
(but not later than the end of the term of the Option). At the end of such
period, the Option shall terminate.

            (b) TERMINATION FOR CAUSE. If a Holder's Service is terminated for
Cause, then all options held by the Holder shall immediately terminate.
Following termination of


                                       9
<PAGE>   11

a Holder's Service, if the Holder engages in any act that would have constituted
Cause if the Holder had remained in the Service of the Company or any of its
Affiliates, then the Company shall be entitled to terminate any options held by
the Holder.

            (c) MISCELLANEOUS. The Committee may determine whether a leave of
absence of a Holder constitutes a termination of the Holder's Service; PROVIDED,
HOWEVER, that neither (i) a leave of absence, duly authorized in writing by the
Company or any of its Affiliates for military service or sickness, or for any
other purpose approved by the Company or any of its Affiliates, if the period of
the leave does not exceed ninety (90) days, nor (ii) a leave of absence in
excess of ninety (90) days, duly authorized in writing by the Company or any of
its Affiliates, provided the Holder's right to return to Service with the
Company or the Affiliate is guaranteed either by statute or by contract, shall
be deemed a termination of the Holder's Service. An Option shall not be affected
by any change in the Holder's Service so long as the Holder continues to be in
the Service of the Company or any of its Affiliates. If a Holder is in the
Service of an Affiliate of the Company that ceases to be an Affiliate, such
event shall, for purposes of any Option held by the Holder, be deemed to
constitute a termination of the Holder's Service for a reason other than death
or Disability.

        7.2 CERTAIN EVENTS.

            (a) CONTROL PURCHASE. Effective upon a Control Purchase, if the
Holder of an Option is in the Service of the Company or any of its Affiliates at
that time, the option shall become exercisable for all of the shares under the
Option.

            (b) APPROVED TRANSACTION. The following provisions shall apply if an
Approved Transaction occurs:

                (i) The Company shall provide each Holder with notice of the
pendency of the Approved Transaction at least fifteen (15) days prior to the
expected date of consummation thereof (the date on which the Approved
Transaction is consummated will be referred to as the "Transaction Date").

                (ii) Effective immediately prior to the Transaction Date, if the
Holder of an option is in the Service of the Company or any of its Affiliates on
the Transaction Date and has been in Service for at least one (1) year, the
Option shall become exercisable for the number of shares for which it would have
been exercisable if the Holder had remained in Service until --

                    (A) the first (1st) anniversary of the Transaction Date, if
        the Holder on the Transaction Date has been in Service for less than two
        (2) years; or

                    (B) the second (2nd) anniversary of the Transaction Date, if
        the Holder on the Transaction Date has been in Service for at least two
        (2) years but less than three (3) years;

and the Option shall become exercisable for all of the shares under the Option
if the Holder on the Transaction Date has been in Service for at least three (3)
years.


                                       10
<PAGE>   12


                (iii) Following notice of the Approved Transaction, any exercise
of an option may be contingent upon consummation of the Approved Transaction, if
so elected by the Holder in the notice of exercise, and shall be contingent upon
such consummation with respect to any portion of the option that will only
become exercisable immediately prior to the Transaction Date.

                (iv) Upon consummation of the Approved Transaction, all Options
shall terminate.

                (v) Section 7.2(b)(ii) through Section 7.2(b)(iv) shall not
apply to an option, if the committee determines that the Company or another
party to the Approved Transaction has made equitable and appropriate provision
for continuation of the Option, or for replacement of the Option with a new
award on terms which are, as nearly as practicable, the financial equivalent of
the Option, taking into account the consideration that holders of Common Stock
will receive in the Approved Transaction (any Option so continued or replaced
shall be referred to as a "Continuing Option"). An equitable and appropriate
replacement of an Option shall include, but not be limited to, the making of a
cash payment to the Holder, in cancellation of the Option, of such amount as the
Committee determines represents the value the option would then have if it were
exercisable for all of the shares under the option.

            (c) TERMINATION AFTER CERTAIN APPROVED TRANSACTIONS. If there are
one or more Continuing Options following an Approved Transaction and the Service
of the Holder of a Continuing option is terminated without Cause within a period
of eighteen (18) months following the Transaction Date, or if the Holder
voluntarily terminates his or her Service for Good Reason during such period,
then (i) all Continuing Options held by the Holder shall become exercisable for
all of the shares thereunder; (ii) all restrictions under the Plan or any option
Agreement with respect to Common Stock issued pursuant to exercise of any such
Continuing Option (other than restrictions on transfer under applicable
securities laws), including but not limited to contractual restrictions on
transfer, rights of repurchase or first refusal in favor of the Company and
restrictions on certificates for the Common Stock (other than restrictions on
certificates designed to promote compliance with applicable securities laws)
shall automatically terminate; and (iii) each such Continuing Option shall
remain exercisable until a period of eighteen (18) months has elapsed following
the Transaction Date or until the date on which the Continuing Option would have
terminated if the Service of the Holder had not terminated, whichever occurs
first.

        7.3 RIGHT TO TERMINATE SERVICE. Nothing contained in the Plan or in any
Option Agreement, and no action of the Company or the Committee with respect
thereto, shall confer on any Holder any right to continue in the Service of the
Company or any of its Affiliates or interfere in any way with the right of the
Company or any of its Affiliates, subject to the terms and conditions of any
agreement between the Holder and the Company or any of its Affiliates, to
terminate at any time, with or without Cause, the Service of the Holder.

        7.4 NONALIENATION OF BENEFITS. Except as permitted pursuant to Section
6.8, no right or benefit under the Plan or any Option shall be (a) subject to
anticipation, alienation, sale, assignment, hypothecation, pledge, exchange,
transfer, encumbrance or charge (and any attempt to anticipate, alienate, sell,
assign, hypothecate, pledge, exchange, transfer,


                                       11
<PAGE>   13

encumber or charge the same shall be void); or (b) liable for or subject to the
debts, contracts, liabilities or torts of the person entitled to the right or
benefit.

        7.5 TERMINATION AND AMENDMENT.

            (a) TERMINATION. The Plan shall terminate on the tenth (10th)
anniversary of the Effective Date; PROVIDED, HOWEVER, that the Board or the
Committee may terminate the Plan at any earlier time. No Options may be granted
following termination of the Plan, but the provisions of the Plan shall continue
in effect until all Options terminate or are exercised in full and all rights of
all persons with any interest in the Plan expire.

            (b) AMENDMENT OF PLAN. The Board or the Committee may from time to
time amend the Plan, whether before of after termination of the Plan, in such
respects as it shall deem advisable; PROVIDED, HOWEVER, that any such amendment
(i) shall comply with all applicable laws and stock exchange listing
requirements, and (ii) with respect to Incentive Stock options granted or to be
granted under the Plan, shall be subject to any approval by shareholders of the
Company required under the Code. No amendment of the Plan may adversely affect
the rights of the Holder of an Option in any material way unless the Holder
consents thereto.

            (c) AMENDMENT OF OPTIONS. The Committee may amend the Option
Agreement for an Option in such respects as it shall deem advisable, including
but not limited to any amendment that would accelerate the time or times at
which the option may be exercised or extend the scheduled termination date of
the Option; PROVIDED, HOWEVER, that (i) no amendment may adversely affect the
rights of the Holder of the Option in any material way unless the Holder
consents thereto, and (ii) the Option Agreement, as amended, shall satisfy all
of the requirements of the Plan at the time of the amendment. Nothing in this
Section 7.S shall prevent the Committee from adopting, amending or rescinding
rules, regulations and procedures pursuant to Section 3.3.

        7.6 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to options and the issuance of Common Stock upon the exercise thereof
shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required, including but not
limited to the effectiveness of any registration statement required under the
Securities Act, and the rules and regulations of any securities exchange or
over-the-counter market on which the Common Stock may be listed or quoted. The
Company shall have no obligation to register shares of Common Stock issuable
upon exercise of Options under the Securities Act or to register, qualify or
list such shares under the laws of any state or other jurisdiction or the rules
of any securities exchange or over-the-counter market.

        7.7 WITHHOLDING. By accepting an Option, the Holder shall be deemed to
have agreed to pay, or make arrangements satisfactory to the Committee for
payment to the Company of, all taxes required to be withheld by the Company in
connection with the exercise of the Option or any sale, transfer or other
disposition of any shares of Common Stock acquired upon exercise of the option.
If the Holder shall fail to pay, or make arrangements satisfactory to the
Committee for the payment of, all such taxes, then the Company or any of its
Affiliates shall, to


                                       12
<PAGE>   14

the extent not prohibited by law, have the right to deduct from any payment of
any kind otherwise due to the Holder an amount equal to any taxes of any kind
required to be withheld by the Company or any of its Affiliates with respect to
the Option.

        7.8 SEPARABILITY. With respect to Incentive Stock Options, if the Plan
does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein with the
same force and effect as if such provision had been set out in full herein;
PROVIDED, HOWEVER, that to the extent any option that is intended to qualify as
an Incentive Stock Option cannot so qualify, the Option, to that extent, shall
be deemed to be a Nonqualified Stock Option for all purposes of the Plan.

        7.9 PLAN NOT EXCLUSIVE. Neither the adoption of the Plan by the Board
nor any submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including but
not limited to the granting of stock options and the awarding of stock and cash
outside of the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

        7.10 EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION. By accepting
an Option, the Holder shall be deemed to have agreed that the Option is special
incentive compensation that will not be taken into account, in any manner, as
salary, compensation or bonus in determining the amount of any payment or other
benefit under any pension, retirement or other employee benefit plan, program or
policy of the Company or any of its Affiliates.

        7.11 NO SHAREHOLDER RIGHTS. No Holder or other person shall have any
voting or other shareholder rights with respect to shares of Common Stock under
an option until the Option has been duly exercised, full payment of the purchase
price has been made, all conditions under the Option and the Plan to issuance of
the shares have been satisfied, and a certificate for the shares has been
issued. No adjustment shall be made for cash or other dividends or distributions
to shareholders for which the record date is prior to the date of such issuance.

        7.12 GOVERNING LAW. The Plan and all options shall be governed by, and
interpreted in accordance with, the laws of the State of Washington.

        7.13 COMPANY'S RIGHTS. The grant of Options shall not affect in any way
the right or power of the Company to make reclassifications, reorganizations or
other changes of or to its capital or business structure or to merge,
consolidate, liquidate, sell or otherwise dispose of all or any part of its
business or assets.


                                       13
<PAGE>   15


                                 FIRST AMENDMENT
                                       TO
                            ACTIVE VOICE CORPORATION
                             1996 STOCK OPTION PLAN

        THIS FIRST AMENDMENT is adopted effective as of June 22, 1998 (the
"Amendment Date"), by ACTIVE VOICE CORPORATION, a Washington corporation (the
"Company").

                                    RECITALS

        A. The Company has adopted the Active Voice Corporation 1996 Stock
Option Plan (the "Plan").

        B. The Company desires to amend the Plan in certain respects.

        NOW, THEREFORE, the Plan is hereby amended as follows:

            1. The first sentence of Section 4.1 of the Plan is amended to read
as follows:


<PAGE>   16


                                 FIRST AMENDMENT
                                       TO
                            ACTIVE VOICE CORPORATION
                             1996 STOCK OPTION PLAN

        THIS FIRST AMENDMENT is adopted effective as of June 22,1998 (the
"Amendment Date"), by ACTIVE VOICE CORPORATION, a Washington corporation (the
Company").


                                    RECITALS

        A. The Company has adopted the Active Voice Corporation 1996 Stock
Option Plan (the "Plan").

        B. The Company desires to amend the Plan in certain respects.

        NOW, THEREFORE, the Plan is hereby amended as follows:

        1.     The first sentence of Section 4.1 of the Plan is amended to read
               as follows:

               Subject to the provisions of this Article 4, the maximum number
               of shares of Common Stock for which Options may be granted during
               the term of the Plan shall be four hundred thousand (400,000).

        2.     Section 4.1 of the Plan is amended by adding the following at the
               end thereof:

               The maximum number of shares of Common Stock with respect to
               which Options may be granted during any calendar year to any one
               person shall be one hundred fifty thousand (150,000).

        3.     Except as amended hereby, the Plan shall remain in full force and
               effect.

        IN WITNESS WHEREOF, this First Amendment has been executed as of the
Amendment Date.

                                               ACTIVE VOICE CORPORATION


                                               By  /s/ Robert L. Richmond
                                                   -----------------------------
                                                   Robert L. Richmond
                                                   Chairman of the Board and
                                                   Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>7
<FILENAME>f69264orex99-4.txt
<DESCRIPTION>EXHIBIT 99.4
<TEXT>

<PAGE>   1



                                  EXHIBIT 99.4

                  ACTIVE VOICE CORPORATION 1998 STOCK OPTION PLAN



<PAGE>   2
                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                           <C>
ARTICLE 1 PURPOSE AND EFFECTIVENESS..........................................................    1

        1.1    Purpose.......................................................................    1

        1.2    Effective Date................................................................    1

ARTICLE 2 DEFINITIONS........................................................................    1

ARTICLE 3 ADMINISTRATION.....................................................................    4

        3.1    Committee.....................................................................    4

        3.2    Appointment of Committee......................................................    5

        3.3    Powers; Regulations...........................................................    5

        3.4    Exercise of Authority.........................................................    5

ARTICLE 4 SHARES SUBJECT TO THE PLAN.........................................................    5

        4.1    Number of Shares..............................................................    5

        4.2    Adjustments...................................................................    6

ARTICLE 5 ELIGIBILITY........................................................................    6

ARTICLE 6 STOCK OPTIONS......................................................................    6

        6.1    Grant of Options..............................................................    6

        6.2    Purchase Price................................................................    6

        6.3    Term of Options...............................................................    7

        6.4    Option Agreement..............................................................    7

        6.5    Exercise of Options...........................................................    7

        6.6    Legends.......................................................................    8

        6.7    Nontransferability............................................................    8

        6.8    Authority of Executive Officers to Grant Options..............................    8
</TABLE>


                                       i


<PAGE>   3


<TABLE>
<S>                                                                                            <C>
ARTICLE 7 GENERAL PROVISIONS................................................................     8

        7.1    Termination of Service.......................................................     8

        7.2    Certain Events...............................................................     9

        7.3    Right to Terminate Service...................................................    10

        7.4    Nonalienation of Benefits....................................................    10

        7.5    Termination and Amendment....................................................    11

        7.6    Government and Other Regulations.............................................    11

        7.7    Withholding..................................................................    11

        7.8    Plan Not Exclusive...........................................................    12

        7.9    Exclusion from Pension and Profit-Sharing Computation........................    12

        7.10   No Shareholder Rights........................................................    12

        7.11   Governing Law................................................................    12

        7.12   Company's Rights.............................................................    12
</TABLE>



                                       ii

<PAGE>   4

                            ACTIVE VOICE CORPORATION

                             1998 STOCK OPTION PLAN



                                    ARTICLE 1

                            PURPOSE AND EFFECTIVENESS


        1.1 PURPOSE. The purpose of the 1998 Stock Option Plan (the "Plan") is
to provide a method by which selected individuals performing services for Active
Voice Corporation, a Washington corporation (the "Company"), or any of its
Affiliates, may be offered an opportunity to invest in capital stock of the
Company, thereby increasing their personal interest in the growth and success of
the Company and its Affiliates.

        1.2 EFFECTIVE DATE. The Plan shall be effective as of January 22, 1998.


                                    ARTICLE 2

                                   DEFINITIONS

        Capitalized terms in the Plan shall have the following meanings (whether
used in the singular or plural):

        "Affiliate" of the Company means any corporation, partnership or other
entity which, through one or more intermediaries, directly or indirectly
controls, is controlled by, or is under common control with the Company.

        "Applicable Percentage" means, at any time, the quotient (expressed as a
percentage) calculated by dividing (a) the sum of -

                (i) the aggregate number of shares of Common Stock issuable upon
        exercise of all Options that at that time are outstanding under this
        Plan, and

                (ii) the aggregate number of shares of Common Stock issuable
        upon exercise of all options or other rights that at that time are
        outstanding or available for grant under any other plan or arrangement
        of the Company or its Affiliates (other than a plan that meets the
        requirements of an employee stock purchase plan under Section 423(b) of
        the Code) providing for the issuance of options or other rights to
        acquire Common Stock to persons who are performing or have performed
        Service for the Company or any of its Affiliates -

by (b) the aggregate number of shares of Common Stock outstanding at that time.

        "Approved Transaction" means any of the following transactions
consummated with the approval, recommendation or authorization of the Board:



                                       1.
<PAGE>   5

                (a) any merger, consolidation, statutory or contractual share
        exchange, or other transaction to which the Company or any of its
        Affiliates or shareholders is a party if, immediately following the
        transaction, the persons who held Common Stock (or securities
        convertible into Common Stock) immediately prior to the transaction hold
        less than a majority of the combined Common Equity of the Company (or
        if, pursuant to the transaction, shares of Common Stock are changed or
        converted into or exchanged for, in whole or part, securities of another
        corporation or entity, the combined Common Equity of that corporation or
        entity);

                (b) any liquidation or dissolution of the Company; and

                (c) any sale, lease, exchange or other transfer not in the
        ordinary course of business (in one transaction or a series of related
        transactions) of all, or substantially all, of the assets of the
        Company.

        "Board" means the Board of Directors of the Company.

        "Cause" means, in connection with the termination of the Service of a
Holder (a) repeated failures to carry out directions of the Board or the
Holder's supervisors with regard to material matters reasonably consistent with
the Holder's duties; (b) knowing violation of a state or federal law involving
the commission of a crime against the Company or any of its Affiliates or a
felony; (c) any misrepresentation, deception, fraud or dishonesty that is
materially injurious to the Company or any of its Affiliates; and (d) any act or
omission in willful disregard of the interests of the Company or any of its
Affiliates that substantially impairs the goodwill, business or reputation of
the Company or any of its Affiliates, including but not limited to any violation
of any proprietary rights or confidentiality agreement between the Company and
the Holder.

        "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute or statutes thereto. Reference to any specific
section of the Code shall include any successor section.

        "Committee" is defined in Section 3.1.

        "Common Equity" means the capital stock of a corporation (or
corresponding securities of a noncorporate entity) ordinarily, and apart from
rights accruing under special circumstances, having the fight to vote in an
election for directors (or for members of the governing body of the noncorporate
entity).

        "Common Stock" means the Common Stock, no par value, of the Company.

        "Company" is defined in Section 1. 1.

        "Continuing Option" is defined in Section 7.2(b)(v).

        "Control Purchase" means any transaction (or series of related
transactions), consummated without the approval, recommendation or authorization
of the Board, in which any person, corporation or other entity (including any
"person" as defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
purchases any Common Stock (or securities convertible



                                       2.
<PAGE>   6


into Common Stock), pursuant to a tender offer or a request or invitation for
tenders (as those terms are defined in Section 14(d)(1) of the Exchange Act) or
otherwise, and thereafter is the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of securities of the Company representing at least
twenty-five percent (25 %) of the combined Common Equity of the Company.

        "Disability" means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than twelve (12) months.

        "Eligible Person" is defined in Article 5.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any specific section of the Exchange Act shall include any successor section.

        "Fair Market Value" for the Common Stock (or any other security) on any
day means, if the Common Stock (or other security) is publicly traded, the last
sales price (or, if no last sales price is reported, the average of the high bid
and low asked prices) for a share of Common Stock (or unit of the other
security) on that day (or, if that day is not a trading day, on the next
preceding trading day), as reported by the principal exchange on which the
Common Stock (or other security) is listed, or, if the Common Stock (or other
security) is publicly traded but not listed on an exchange, as reported by The
Nasdaq Stock Market, or, if such prices or quotations are not reported by The
Nasdaq Stock Market, as reported by any other available source of prices or
quotations selected by the Committee. If the Common Stock (or other security) is
not publicly traded, or if the Fair Market Value is not determinable by any of
the foregoing means, the Fair Market Value on any day shall be determined in
good faith by the Committee on the basis of such considerations as the Committee
determines to be appropriate.

        "Good Reason" means, with respect to a Holder, the occurrence in
connection with an Approved Transaction, without the Holder's express written
consent, of one of the following events or conditions:

                (a) A material reduction in the level of the Holder's
        responsibilities in comparison to the level thereof at the time of the
        Approved Transaction;

                (b) The assignment to the Holder of a job title that is not of
        comparable prestige and status as the Holder's job title at the time of
        the Approved Transaction;

                (c) The assignment to the Holder of any duties inconsistent with
        the Holder's position at the time of the Approved Transaction, other
        than pursuant to the Holder's promotion;

                (d) A material reduction in the Holder's salary level;

                (e) A material reduction in the overall level of employee
        benefits or perquisites available to the Holder at the time of the
        Approved Transaction, or the



                                       3.
<PAGE>   7


        Holder's right to participate therein, unless such reduction is
        nondiscriminatory as to the Holder;

                (f) Requiring the Holder to be based anywhere more than fifty
        (50) miles from the business location to which the Holder normally
        reported for work at the time of the Approved Transaction, other than
        for required business travel not significantly greater than the Holder's
        business travel obligations at the time of the Approved Transaction; or

                (g) Any of the foregoing events and conditions occurring prior
        to the Approved Transaction which the Holder reasonably demonstrates
        -was at the request of a third party or otherwise arose in connection
        with or in anticipation of the Approved Transaction.

        "Holder" means an Eligible Person who has received an Option or, if
rights under the Option continue following the death of the Eligible Person or
are transferred in a manner permitted by Section 6.7, the person who succeeds to
those rights by will or by the laws of descent and distribution or by such
transfer.

        "Option" means an option with respect to shares of Common Stock awarded
pursuant to Article 6.

        "Option Agreement" is defined in Section 6.4.

        "Plan" is defined in Section 1.1.

        "Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor statute or statutes thereto. Reference to any specific
section of the Securities Act shall include any successor section.

        "Service" means the performance of services on a periodic basis for the
Company or any of its Affiliates in the capacity of an employee, a nonemployee
member of a board of directors or other governing body, or an independent
consultant or advisor.

        "Transaction Date" is defined in Section 7.2(b)(i).

        "10% Shareholder" means a person who owns (or is considered as owning
within the meaning of Section 424 of the Code) stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company.


                                    ARTICLE 3

                                 ADMINISTRATION

        3.1 COMMITTEE. The Plan shall be administered by the Board unless the
Board appoints a separate committee of the Board to administer the Plan pursuant
to Section 3.2 (the Board, or such committee, if it is administering the Plan,
will be referred to as the "Committee"). The Committee shall select one of its
members as its chairman and shall hold its meetings at such times and places as
it shall deem advisable. A majority of its members shall constitute a



                                       4.
<PAGE>   8

quorum and all determinations shall be made by a majority of that quorum. Any
determination reduced to writing and signed by all of the members of the
Committee shall be as effective as if it had been made by a majority vote at a
meeting duly called and held.

        3.2 APPOINTMENT OF COMMITTEE. The Board may appoint a committee
consisting of two or more of its members to administer the Plan. Once appointed,
the committee shall continue to serve until otherwise directed by the Board.
From time to time the Board may increase the size of the committee and appoint
additional members, remove members (with or without cause) and appoint new
members in their place, fill vacancies however caused, and/or remove all members
of the committee and thereafter directly administer the Plan.

        3.3 POWERS; REGULATIONS. The Committee shall have full power and
authority, subject only to the provisions of the Plan (a) to administer or
supervise the administration of the Plan; (b) to interpret the provisions of the
Plan and the Option Agreements; (c) to correct any defect, supply any
information and reconcile any inconsistency in such manner and to such extent as
it determines to be necessary or advisable to carry out the purpose of the Plan;
and (d) to take such other actions in connection with the Plan as it determines
to be necessary or advisable. The Committee is authorized to adopt, amend and
rescind such rules, regulations and procedures not inconsistent with the
provisions of the Plan as it determines to be necessary or advisable for the
proper administration of the Plan, and each Option shall be subject to all such
rules, regulations and procedures (whether the Option was granted before or
after promulgation thereof). Without limiting the authority of the Committee to
interpret the provisions of the Plan, the Committee shall have the right to
determine that a transaction (or series of related transactions) is not a
Control Purchase, even though literally included within the definition of that
term, if the Committee determines that the transaction (or series of related
transactions) does not have the effect of significantly changing or influencing
the control of the Company on a permanent basis.

        3.4 EXERCISE OF AUTHORITY. Each action and determination made or taken
by the Committee, including but not limited to any interpretation of the Plan
and the Option Agreements, shall be final, conclusive and binding for all
purposes and upon all persons. No member of the Committee shall be liable for
any action or determination made or taken by the member or the Committee in good
faith.

                                   ARTICLE 4

                           SHARES SUBJECT TO THE PLAN

        4.1 NUMBER OF SHARES. Subject to the provisions of this Article 4, the
maximum number of shares of Common Stock for which Options may be granted during
the term of the Plan shall be six hundred thousand (600,000). Shares of Common
Stock will be made available from the authorized but unissued shares of the
Company or from shares reacquired by the Company. If an Option terminates for
any reason without having been exercised in full, the shares of Common Stock for
which the Option has not been exercised shall again be available for purposes of
the Plan.


                                       5.
<PAGE>   9

        4.2 ADJUSTMENTS. If the Company subdivides its outstanding shares of
Common Stock into a greater number of shares (by stock dividend, stock split,
reclassification or otherwise) or combines its outstanding shares of Common
Stock into a smaller number of shares (by reverse stock split, reclassification
or otherwise), or if the Committee determines that any stock dividend,
extraordinary cash dividend, reclassification, recapitalization, reorganization,
split-up, spin-off, combination, exchange of shares, rights offering, or other
transaction or event that is not an Approved Transaction or Control Purchase
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 Committee shall, in such manner as it determines to be
equitable and appropriate, adjust any or all of (a) the number of shares of
Common Stock (or number and kind of other securities or property) for which, and
the time or times when, outstanding Options may thereafter be exercised; (b) the
purchase price for the shares (or other securities or property) under
outstanding Options; and (c) the number of shares of Common Stock (or number and
kind of other securities or property) for which Options may thereafter be
granted. In connection with any adjustment made pursuant to this Section 4.2,
the Committee may, if deemed equitable and appropriate, provide for a cash
payment to be made to the Holder of an Option, in cancellation of the Option, of
such amount as the Committee determines represents the value the Option would
then have if it were exercisable for all of the shares under the Option.


                                    ARTICLE 5

                                   ELIGIBILITY

        The persons eligible to participate in the Plan and to receive Options
("Eligible Persons") shall be persons, other than officers and directors of the
Company, performing Service for the Company or any of its Affiliates.


                                    ARTICLE 6

                                  STOCK OPTIONS

        6.1 GRANT OF OPTIONS. The Committee shall from time to time determine
(a) the Eligible Persons to whom Options are to be granted; (b) the number of
shares of Common Stock for which the Options are exercisable and the purchase
price of such shares; and (c) all of the other terms and conditions (which need
not be identical) of the Options; provided, however, that (i) the Committee
shall not grant an Option if, following the grant of the Option, the Applicable
Percentage would exceed twenty-two percent (22%), and (ii) all determinations by
the Committee under this Section 6.1 shall be subject to the express limitations
of the Plan. The Company intends that none of the Options shall be an incentive
stock option within the meaning of Section 422 of the Code.

        6.2 PURCHASE PRICE. The price at which shares of Common Stock may be
purchased upon exercise of an Option may be more than, less than or equal to the
Fair Market Value of the shares on the date the Option is granted.



                                       6.
<PAGE>   10

        6.3 TERM OF OPTIONS. Subject to the provisions of the Plan with respect
to termination of Options upon or following death, Disability or other
termination of Service, the Committee shall determine the term of each Option.

        6.4 OPTION AGREEMENT. Each Option shall be evidenced by an agreement
(the "Option Agreement") containing the terms and conditions of the Option as
determined by the Committee. Each grantee of an Option shall be notified
reasonably promptly of the grant, an Option Agreement shall be executed and
delivered by the Company to the grantee within sixty (60) days after the date
the Committee approves the grant, and the Committee may terminate the grant if
the Option Agreement is not signed by the grantee and delivered to the Company
within sixty (60) days after it is delivered to the grantee. An Option Agreement
may contain (but shall not be required to contain) such terms and conditions as
the Committee determines to be necessary or appropriate to ensure that the
penalty provisions of Section 4999 of the Code will not apply to any stock
received by the Holder from the Company. An Option Agreement may be amended from
time to time pursuant to Section 7.5(c).

        6.5 EXERCISE OF OPTIONS.

               (a) TIME EXERCISABLE. An Option shall become and remain
exercisable to the extent provided in its Option Agreement and in the Plan. If
an Option is scheduled to become exercisable on one or more dates specified in
its Option Agreement, and its Holder has a leave of absence without pay, such
date or dates shall be postponed for a period equal to the duration of the leave
unless the Committee determines otherwise.

               (b) MANNER OF EXERCISE. An Option shall be exercised by written
notice to the Company in compliance with the terms and conditions of its Option
Agreement and such procedures for exercise of Options as the Committee may adopt
from time to time. The method or methods of payment of the purchase price of the
shares to be purchased upon exercise of the Option and of any amounts required
by Section 7.7 shall be determined by the Committee and set forth in the Option
Agreement for the Option. Such method or methods may consist of (i) check for
United States funds, (ii) whole shares of Common Stock already owned by the
Holder, (iii) the delivery, together with a properly executed exercise notice,
of irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the purchase price, (iv) any
combination of the foregoing methods of payment, or (v) such other consideration
and method of payment as may be permitted for the issuance of shares under
applicable securities and other laws. The Committee may specify a number of
shares of Common Stock for which an Option must be exercised, but such shall not
prevent exercise of an Option for the full number of shares for which it is
exercisable.

               (c) VALUE OF SHARES. Shares of Common Stock delivered in payment
of all or any part of the amounts payable upon exercise of an Option, and shares
of Common Stock withheld for such payment, shall be valued at their Fair Market
Value on the exercise date of the Option.

           (d) ISSUANCE OF SHARES. The Company shall issue the shares of Common
Stock purchased under an Option as soon as practicable after the Option has been
duly exercised;



                                       7.
<PAGE>   11

provided, however, that no fractional shares shall be issuable under the Plan,
and any fractional shares that would otherwise be issuable shall be disregarded.

        6.6 LEGENDS. Each certificate representing shares of Common Stock issued
upon exercise of an Option shall contain any legends that the Committee
determines to be necessary or appropriate. The Company may cause the transfer
agent for the Common Stock to place a stop transfer order with respect to such
shares.

        6.7 NONTRANSFERABILITY. Unless the Committee determines otherwise at the
time an Option is granted (or at any later time when the Committee, by written
notice to the Holder, releases in whole or in part the restrictions under this
Section 6.7), an Option shall not be transferable other than by will or the laws
of descent and distribution and may be exercised during the lifetime of the
Holder thereof only by the Holder (or his or her court appointed legal
representative).

        6.8 AUTHORITY OF EXECUTIVE OFFICERS TO GRANT OPTIONS. Either the Chief
Executive Officer of the Company, acting alone, or the Chief Operating Officer
and Chief Financial Officer of the Company, acting jointly, shall have the
authority to determine from time to time (a) the Eligible Persons to whom
Options are to be granted; (b) the number of shares of Common Stock for which
the Options are exercisable and the purchase price of such shares; and (c) all
of the other terms and conditions (which need not be identical) of the Options;
PROVIDED, however, that (i) the authority delegated to such officer or officers
under this Section 6.8 shall not exceed that of the Committee under the
foregoing provisions of this Article 6 and shall be subject to any limitations,
in addition to those specified in this Section 6.8, as may be specified by the
Board from time to time; (ii) the purchase price of each share of Common Stock
under an Option granted under this Section 6.8 shall not be less than the Fair
Market Value of such share on the date of grant of the Option; and (iii) such
officer or officers shall promptly provide a report to the Committee of each
person to whom an Option has been granted under this Section 6.8 and the
material terms and conditions of the Option.

                                   ARTICLE 7

                               GENERAL PROVISIONS

        The provisions of this Article 7 shall apply to all Options, except to
the extent that one or more Option Agreements expressly provide otherwise.

        7.1 TERMINATION OF SERVICE.

            (a) GENERAL. If a Holder's Service terminates without Cause prior to
the full exercise of an Option, then the Option shall thereafter be exercisable,
to the extent the Holder was entitled to exercise the Option on the date of such
termination, for a period of thirty (30) days following such termination (but
not later than the end of the term of the Option); provided, however, that, if
the Holder's Service terminates by reason of death or Disability, the Option
shall be exercisable for a period of one (1) year following such termination
(but not later than the end of the term of the Option). At the end of such
period, the Option shall terminate.

            (b) TERMINATION FOR CAUSE. If a Holder's Service is terminated for
Cause,



                                       8.
<PAGE>   12

then all Options held by the Holder shall immediately terminate. Following
termination of a Holder's Service, if the Holder engages in any act that would
have constituted Cause if the Holder had remained in the Service of the Company
or any of its Affiliates, then the Company shall be entitled to terminate any
Options held by the Holder.

            (c) MISCELLANEOUS. The Committee may determine whether a leave of
absence of a Holder constitutes a termination of the Holder's Service; PROVIDED,
HOWEVER, that neither (i) a leave of absence, duly authorized in writing by the
Company or any of its Affiliates for military service or sickness, or for any
other purpose approved by the Company or any of its Affiliates, if the period of
the leave does not exceed ninety (90) days, nor (ii) a leave of absence in
excess of ninety (90) days, duly authorized in writing by the Company or any of
its Affiliates, provided the Holder's right to return to Service with the
Company or the Affiliate is guaranteed either by statute or by contract, shall
be deemed a termination of the Holder's Service. An Option shall not be affected
by any change in the Holder's Service so long as the Holder continues to be in
the Service of the Company or any of its Affiliates. If a Holder is in the
Service of an Affiliate of the Company that ceases to be an Affiliate, such
event shall, for purposes of any Option held by the Holder, be deemed to
constitute a termination of the Holder's Service for a reason other than death
or Disability.

        7.2 CERTAIN EVENTS.

            (a) CONTROL PURCHASE. Effective upon a Control Purchase, if the
Holder of an Option is in the Service of the Company or any of its Affiliates at
that time, the Option shall become exercisable for all of the shares under the
Option.

            (b) APPROVED TRANSACTION. The following provisions shall apply if an
Approved Transaction occurs:

                  (i) The Company shall provide each Holder with notice of the
pendency of the Approved Transaction at least fifteen (15) days prior to the
expected date of consummation thereof (the date on which the Approved
Transaction is consummated will be referred to as the "Transaction Date").

                  (ii) Effective immediately prior to the Transaction Date, if
the Holder of an Option is in the Service of the Company or any of its
Affiliates on the Transaction Date, the Option shall become exercisable for the
number of shares for which it would have been exercisable if the Holder had
remained in Service until -

                        (A) the first (1st) anniversary of the Transaction Date,
                if the Holder on the Transaction Date has been in Service for
                less than two (2) years; or

                        (B) the second (2nd) anniversary of the Transaction
                Date, if the Holder on the Transaction Date has been in Service
                for at least two (2) years but less than three (3) years;

and the Option shall become exercisable for all of the shares under the Option
if the Holder on the Transaction Date has been in Service for at least three (3)
years.



                                       9.
<PAGE>   13

                  (iii) Following notice of the Approved Transaction, any
exercise of an Option may be contingent upon consummation of the Approved
Transaction, if so elected by the Holder in the notice of exercise, and shall be
contingent upon such consummation with respect to any portion of the Option that
will only become exercisable immediately prior to the Transaction Date.

                  (iv) Upon consummation of the Approved Transaction, all
Options shall terminate.

                  (v) Section 7.2(b)(ii) through Section 7.2(b)(iv) shall not
apply to an Option, if the Committee determines that the Company or another
party to the Approved Transaction has made equitable and appropriate provision
for continuation of the Option, or for replacement of the Option with a new
award on terms which are, as nearly as practicable, the financial equivalent of
the Option, taking into account the consideration that holders of Common Stock
will receive in the Approved Transaction (any Option so continued or replaced
shall be referred to as a "Continuing Option"). An equitable and appropriate
replacement of an Option shall include, but not be limited to, the making of a
cash payment to the Holder, in cancellation of the Option, of such amount as the
Committee determines represents the value the Option would then have if it were
exercisable for all of the shares under the Option.

           (c) TERMINATION AFTER CERTAIN APPROVED TRANSACTIONS. If there are one
or more Continuing Options following an Approved Transaction and the Service of
the Holder of a Continuing Option is terminated without Cause within a period of
eighteen (18) months following the Transaction Date, or if the Holder
voluntarily terminates his or her Service for Good Reason during such period,
then (i) all Continuing Options held by the Holder shall become exercisable for
all of the shares thereunder; (ii) all restrictions under the Plan or any Option
Agreement with respect to Common Stock issued pursuant to exercise of any such
Continuing Option (other than restrictions on transfer under applicable
securities laws), including but not limited to contractual restrictions on
transfer, rights of repurchase or first refusal in favor of the Company and
restrictions on certificates for the Common Stock (other than restrictions on
certificates designed to promote compliance with applicable securities laws)
shall automatically terminate; and (iii) each such Continuing Option shall
remain exercisable until a period of eighteen (18) months has elapsed following
the Transaction Date or until the date on which the Continuing Option would have
terminated if the Service of the Holder had not terminated, whichever occurs
first.

        7.3 RIGHT TO TERMINATE SERVICE. Nothing contained in the Plan or in any
Option Agreement, and no action of the Company or the Committee with respect
thereto, shall confer on any Holder any right to continue in the Service of the
Company or any of its Affiliates or interfere in any way with the right of the
Company or any of its Affiliates, subject to the terms and conditions of any
agreement between the Holder and the Company or any of its Affiliates, to
terminate at any time, with or without Cause, the Service of the Holder.

        7.4 NONALIENATION OF BENEFITS. Except as permitted pursuant to Section
60, no right or benefit under the Plan or any Option shall be (a) subject to
anticipation, alienation, sale, assignment, hypothecation, pledge, exchange,
transfer, encumbrance or charge (and any attempt to anticipate, alienate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge



                                      10.
<PAGE>   14

the same shall be void); or (b) liable for or subject to the debts, contracts,
liabilities or torts of the person entitled to the right or benefit.

        7.5 TERMINATION AND AMENDMENT.

            (a) TERMINATION. The Plan shall terminate on January 22, 2008;
PROVIDED, however, that the Board or the Committee may terminate the Plan at any
earlier time. No Options may be granted following termination of the Plan, but
the provisions of the Plan shall continue in effect until all Options terminate
or are exercised in full and all rights of all persons with any interest in the
Plan expire.

            (b) AMENDMENT OF PLAN. The Board or the Committee may from time to
time amend the Plan, whether before of after termination of the Plan, in such
respects as it shall deem advisable; provided, however, that any such amendment
shall comply with all applicable laws and stock exchange listing requirements.
No amendment of the Plan may adversely affect the rights of the Holder of an
Option in any material way unless the Holder consents thereto.

            (c) AMENDMENT OF OPTIONS. The Committee may amend the Option
Agreement for an Option in such respects as it shall deem advisable, including
but not limited to any amendment that would accelerate the time or times at
which the Option may be exercised or extend the scheduled termination date of
the Option; provided, however, that (i) no amendment may adversely affect the
rights of the Holder of the Option in any material way unless the Holder
consents thereto, and (ii) the Option Agreement, as amended, shall satisfy all
of the requirements of the Plan at the time of the amendment. Nothing in this
Section 7.5 shall prevent the Committee from adopting, amending or rescinding
rules, regulations and procedures pursuant to Section 3.3.

        7.6 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to Options and the issuance of Common Stock upon the exercise thereof
shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required, including but not
limited to the effectiveness of any registration statement required under the
Securities Act, and the rules and regulations of any securities exchange or
over-the-counter market on which the Common Stock may be listed or quoted. The
Company shall have no obligation to register shares of Common Stock issuable
upon exercise of Options under the Securities Act or to register, qualify or
list such shares under the laws of any state or other jurisdiction or the rules
of any securities exchange or over-the-counter market.

        7.7 WITHHOLDING. By accepting an Option, the Holder shall be deemed to
have agreed to pay, or make arrangements satisfactory to the Committee for
payment to the Company of, all taxes required to be withheld by the Company in
connection with the exercise of the Option or any sale, transfer or other
disposition of any shares of Common Stock acquired upon exercise of the Option.
If the Holder shall fail to pay, or make arrangements satisfactory to the
Committee for the payment of, all such taxes, then the Company or any of its
Affiliates shall, to the extent not prohibited by law, have the right to deduct
from any payment of any kind otherwise due to the Holder an amount equal to any
taxes of any kind required to be withheld by the Company or any of its
Affiliates with respect to the Option.



                                      11.
<PAGE>   15

        7.8 PLAN NOT EXCLUSIVE. Neither the adoption of the Plan by the Board
nor any submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including but
not limited to the granting of stock options and the awarding of stock and cash
outside of the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

        7.9 EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION. By accepting
an Option, the Holder shall be deemed to have agreed that the Option is special
incentive compensation that will not be taken into account, in any manner, as
salary, compensation or bonus in determining the amount of any payment or other
benefit under any pension, retirement or other employee benefit plan, program or
policy of the Company or any of its Affiliates.

        7.10 NO SHAREHOLDER RIGHTS. No Holder or other person shall have any
voting or other shareholder rights with respect to shares of Common Stock under
an Option until the Option has been duly exercised, full payment of the purchase
price has been made, all conditions under the Option and the Plan to issuance of
the shares have been satisfied, and a certificate for the shares has been
issued. No adjustment shall be made for cash or other dividends or distributions
to shareholders for which the record date is prior to the date of such issuance.

        7.11 GOVERNING LAW. The Plan and all Options shall be governed by, and
interpreted in accordance with, the laws of the State of Washington.

        7.12 COMPANY'S RIGHTS. The grant of Options shall not affect in any way
the right or power of the Company to make reclassifications, reorganizations or
other changes of or to its capital or business structure or to merge,
consolidate, liquidate, sell or otherwise dispose of all or any part of its
business or assets.



                                      12.
<PAGE>   16

                                 FIRST AMENDMENT
                                       TO
                            ACTIVE VOICE CORPORATION
                             1998 STOCK OPTION PLAN


        THIS FIRST AMENDMENT is adopted effective as of June 22, 1998 (the
"Amendment Date"), by ACTIVE VOICE CORPORATION, a Washington corporation (the
"Company").

                                    RECITALS

        A. The Company has adopted the Active Voice Corporation 1998 Stock
Option Plan (the "Plan").

        B. The Company desires to amend the Plan in certain respects.

        NOW, THEREFORE, the Plan is hereby amended as follows:

        1. The definition of "Applicable Percentage" in Article 2 of the Plan is
        hereby deleted in its entirety.

        2. Section 6.1 of the Plan is amended by deleting the following phrase
        therefrom:

        (i) the Committee shall not grant an Option if, following the grant of
        the Option, the Applicable Percentage would exceed twenty-two percent
        (22%), and (ii)

        3. Except as amended hereby, the Plan shall remain in full force and
        effect.

        IN WITNESS WHEREOF, this First Amendment has been executed as of the
Amendment Date.



                                      ACTIVE VOICE CORPORATION



                                      By
                                         ------------------------------------
                                         Robert L. Richmond
                                         President and Chief Executive Officer




<PAGE>   17

                                SECOND AMENDMENT
                                       TO
                            ACTIVE VOICE CORPORATION
                             1998 STOCK OPTION PLAN


        THIS SECOND AMENDMENT is adopted effective as of October 21, 1999 (the
"Amendment Date"), by ACTIVE VOICE CORPORATION, a Washington corporation (the
Company").

                                    RECITALS

        A. The Company has adopted the Active Voice Corporation 1998 Stock
Option Plan (the "Plan").

        B. The Plan has been amended by that First Amendment thereto, effective
as of June 22, 1999.

        C. The Company desires to further amend the Plan in certain respects.

        NOW, THEREFORE, the Plan is hereby amended as follows:

        1. Section 4.1 of the Plan is hereby amended by substituting "one
        million (1,000,000)" in place of " six hundred thousand (600,000)".

        2. Except as amended hereby, the Plan shall remain in full force and
        effect.

        IN WITNESS WHEREOF, this Second Amendment has been executed as of the
Amendment Date.



                                     ACTIVE VOICE CORPORATION



                                     By
                                        ---------------------------------------
                                        Frank J. Costa
                                        President and Chief Executive Officer




<PAGE>   18

                                 THIRD AMENDMENT
                                       TO
                            ACTIVE VOICE CORPORATION
                             1998 STOCK OPTION PLAN



        THIS THIRD AMENDMENT is adopted effective as of May 9, 2000 (the
"Amendment Date"), by ACTIVE VOICE CORPORATION, a Washington corporation (the
Company").


                                    RECITALS

        A. The Company has adopted the Active Voice Corporation 1998 Stock
Option Plan (the " Plan").

        B. The Plan has been amended by that First Amendment thereto, effective
as of June 22, 1999, and by that Second Amendment thereto, effective October 21,
1999.

        C. The Company desires to further amend the Plan in certain respects.

        NOW, THEREFORE, the Plan is hereby amended as follows:

        1. Section 4.1 of the Plan is hereby amended by substituting "two
        million three hundred thousand (2,300,000)" in place of "two million
        (2,000,000)".

        2. Except as amended hereby, the Plan shall remain in full force and
        effect.

        IN WITNESS WHEREOF, this Third Amendment has been executed as of the
Amendment Date.



                                     ACTIVE VOICE CORPORATION



                                     By /s/ Frank J. Costa
                                        ---------------------------------------
                                        Frank J. Costa
                                        President and Chief Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>8
<FILENAME>f69264orex99-5.txt
<DESCRIPTION>EXHIBIT 99.5
<TEXT>

<PAGE>   1

                                  EXHIBIT 99.5

                 ACTIVE VOICE CORPORATION 2000 STOCK OPTION PLAN



<PAGE>   2

                            ACTIVE VOICE CORPORATION

                             2000 STOCK OPTION PLAN


<PAGE>   3




                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                PAGE
                                                                                ----
<S>     <C>                                                                      <C>
ARTICLE 1 PURPOSE AND EFFECTIVENESS...........................................   1

        1.1    Purpose........................................................   1
        1.2    Effective Date; Shareholder Approval Requirements..............   1

ARTICLE 2 DEFINITIONS.........................................................   1


ARTICLE 3 ADMINISTRATION......................................................   5

        3.1    Committee......................................................   5
        3.2    Appointment of Committee.......................................   5
        3.3    Powers; Regulations............................................   5
        3.4    Limits on Authority............................................   6
        3.5    Exercise of Authority..........................................   6

ARTICLE 4 SHARES SUBJECT TO THE PLAN..........................................   6

        4.1    Number of Shares...............................................   6
        4.2    Adjustments....................................................   6

ARTICLE 5 ELIGIBILITY.........................................................   7


ARTICLE 6 STOCK OPTIONS.......................................................   7

        6.1    Grant of Options...............................................   7
        6.2    Purchase Price.................................................   7
        6.3    Limitations on Incentive Stock Options.........................   7
        6.4    Term of Options................................................   7
        6.5    Option Agreement...............................................   8
        6.6    Exercise of Options............................................   8
               (a)    Time Exercisable........................................   8
               (b)    Manner of Exercise......................................   8
               (c)    Value of Shares.........................................   8
               (d)    Issuance of Shares......................................   8
        6.7    Legends........................................................   9
        6.8    Transferability................................................   9
        6.9    Authority of Chief Executive Officer to Grant Options..........   9

ARTICLE 7 GENERAL PROVISIONS..................................................   9

        7.1    Termination of Service.........................................  10
               (a)    General.................................................  10
               (b)    Termination for Cause...................................  10
               (c)    Miscellaneous...........................................  10
        7.2    Certain Events.................................................  10
               (a)    Control Purchase........................................  10
               (b)    Approved Transaction....................................  10
               (c)    Termination After Certain Approved Transactions.........  11
        7.3    Right to Terminate Service.....................................  12
</TABLE>

                                      -i-

<PAGE>   4

<TABLE>
<S>     <C>                                                                      <C>
        7.4    Nonalienation of Benefits......................................  12
        7.5    Termination and Amendment......................................  12
               (a)    Termination.............................................  12
               (b)    Amendment of Plan.......................................  12
               (c)    Amendment of Options....................................  12
        7.6    Government and Other Regulations...............................  13
        7.7    Withholding....................................................  13
        7.8    Severability; Incentive Stock Option Provisions................  13
        7.9    Plan Not Exclusive.............................................  13
        7.10   Exclusion from Pension and Profit-Sharing Computation..........  13
        7.11   No Shareholder Rights..........................................  14
        7.12   Governing Law..................................................  14
        7.13   Company's Rights...............................................  14
</TABLE>

                                      -ii-

<PAGE>   5


                            ACTIVE VOICE CORPORATION

                             2000 STOCK OPTION PLAN


                                    ARTICLE 1
                            PURPOSE AND EFFECTIVENESS

        1.1 PURPOSE. The purpose of the 2000 Stock Option Plan (the "Plan") is
to provide a method by which selected individuals performing services for Active
Voice Corporation, a Washington corporation (the "Company"), or any of its
Affiliates, may be offered an opportunity to invest in capital stock of the
Company, thereby increasing their personal interest in the growth and success of
the Company and its Affiliates.

        1.2 EFFECTIVE DATE; SHAREHOLDER APPROVAL REQUIREMENTS. The Plan shall be
effective as of June 21, 2000 (the "Effective Date"). Issuance of Incentive
Stock Options within twelve (12) months after the Effective Date shall be
subject to the approval of the Plan by the shareholders of the Company at a duly
held meeting of shareholders at which a majority of all outstanding voting stock
of the Company is represented in person or by proxy. The approval required shall
be a majority of the votes cast on the proposal to approve the Plan. No
Incentive Stock Option shall be exercisable until this approval requirement has
been satisfied. If this requirement is not satisfied within twelve (12) months
after the Effective Date, then (a) no Incentive Stock Options may thereafter be
granted, and (b) each Incentive Stock Option granted prior thereto shall
automatically be deemed to be a Nonqualified Stock Option (except to the extent
its Option Agreement expressly provides otherwise).

                                    ARTICLE 2
                                   DEFINITIONS

        Capitalized terms in the Plan shall have the following meanings (whether
used in the singular or plural):

        "Affiliate" of the Company means any corporation, partnership or other
entity which, through one or more intermediaries, directly or indirectly
controls, is controlled by, or is under common control with the Company.

        "Approved Transaction" means any of the following transactions
consummated with the approval, recommendation or authorization of the Board:

               (a) any merger, consolidation, statutory or contractual share
        exchange, or other transaction to which the Company or any of its
        Affiliates or shareholders is a party if, immediately following the
        transaction, the persons who held Common Stock (or securities
        convertible into Common Stock) immediately before the transaction hold
        less than a majority of --

                   (i) the combined Common Equity of the Company;



                                      -1-
<PAGE>   6

                   (ii) or if, pursuant to the transaction, shares of Common
               Stock are changed or converted into or exchanged for, in whole or
               part, securities of another corporation or entity, the combined
               Common Equity of that corporation or entity;

        without taking into account any person's Common Equity of the Company or
        the other corporation or entity that is not directly attributable
        (through continued ownership, amendment, reclassification, conversion or
        exchange) to the person's holdings of Common Stock (or securities
        convertible into Common Stock) immediately before the transaction;

               (b) any liquidation or dissolution of the Company; and

               (c) any sale, lease, exchange or other transfer not in the
        ordinary course of business (in one transaction or a series of related
        transactions) of all, or substantially all, of the assets of the
        Company.

        "Board" means the Board of Directors of the Company.

        "Cause" means, in connection with the termination of the Service of a
Holder (a) repeated failures to carry out directions of the Board or the
Holder's supervisors with regard to material matters reasonably consistent with
the Holder's duties; (b) knowing violation of a state or federal law involving
the commission of a crime against the Company or any of its Affiliates or a
felony; (c) any misrepresentation, deception, fraud or dishonesty that is
materially injurious to the Company or any of its Affiliates; and (d) any act or
omission in willful disregard of the interests of the Company or any of its
Affiliates that substantially impairs the goodwill, business or reputation of
the Company or any of its Affiliates, including but not limited to any violation
of any proprietary rights or confidentiality agreement between the Company and
the Holder.

        "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute or statutes thereto. Reference to any specific
section of the Code shall include any successor section.

        "Committee" is defined in Section 3.1.

        "Common Equity" means the capital stock of a corporation (or
corresponding securities of a noncorporate entity) ordinarily, and apart from
rights accruing under special circumstances, having the right to vote in an
election for directors (or for members of the governing body of the noncorporate
entity).

        "Common Stock" means the Common Stock, no par value, of the Company.

        "Company" is defined in Section 1.1.

        "Continuing Option" is defined in Section 7.2(b)(v).

        "Control Purchase" means any transaction (or series of related
transactions), consummated without the approval, recommendation or authorization
of the Board, in which any person, corporation or other entity (including any
"person" as defined in Section 13(d)(3) or


                                      -2-
<PAGE>   7


Section 14(d)(2) of the Exchange Act) purchases any Common Stock (or securities
convertible into Common Stock), pursuant to a tender offer or a request or
invitation for tenders (as those terms are defined in Section 14(d)(1) of the
Exchange Act) or otherwise, and thereafter is the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) of securities of the Company representing
at least twenty-five percent (25%) of the combined Common Equity of the Company.

        "Disability" means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than twelve (12) months.

        "Effective Date" is defined in Section 1.2.

        "Eligible Person" is defined in Article 5.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any specific section of the Exchange Act shall include any successor section.

        "Executive Officer" means any employee of the Company who is an
"officer" within the meaning of Rule 16a-1(f) of the Exchange Act, as amended
from time to time, or any successor rule thereto.

        "Fair Market Value" for the Common Stock (or any other security) on any
day means, if the Common Stock (or other security) is publicly traded, the last
sales price (or, if no last sales price is reported, the average of the high bid
and low asked prices) for a share of Common Stock (or unit of the other
security) on that day (or, if that day is not a trading day, on the next
preceding trading day), as reported by the principal exchange on which the
Common Stock (or other security) is listed, or, if the Common Stock (or other
security) is publicly traded but not listed on an exchange, as reported by The
Nasdaq Stock Market, or, if such prices or quotations are not reported by The
Nasdaq Stock Market, as reported by any other available source of prices or
quotations selected by the Committee. If the Common Stock (or other security) is
not publicly traded, or if the Fair Market Value is not determinable by any of
the foregoing means, the Fair Market Value on any day shall be determined in
good faith by the Committee on the basis of such considerations as the Committee
determines to be appropriate.

        "Good Reason" means, with respect to a Holder, the occurrence in
connection with an Approved Transaction, without the Holder's express written
consent, of one of the following events or conditions:

               (a) A material reduction in the level of the Holder's
        responsibilities in comparison to the level thereof at the time of the
        Approved Transaction;

               (b) The assignment to the Holder of a job title that is not of
        comparable prestige and status as the Holder's job title at the time of
        the Approved Transaction;


                                      -3-
<PAGE>   8


               (c) The assignment to the Holder of any duties inconsistent with
        the Holder's position at the time of the Approved Transaction, other
        than pursuant to the Holder's promotion;

               (d) A material reduction in the Holder's salary level;

               (e) A material reduction in the overall level of employee
        benefits or perquisites available to the Holder at the time of the
        Approved Transaction, or the Holder's right to participate therein,
        unless such reduction is nondiscriminatory as to the Holder;

               (f) Requiring the Holder to be based anywhere more than fifty
        (50) miles from the business location to which the Holder normally
        reported for work at the time of the Approved Transaction, other than
        for required business travel not significantly greater than the Holder's
        business travel obligations at the time of the Approved Transaction; or

               (g) Any of the foregoing events and conditions occurring before
        the Approved Transaction which the Holder reasonably demonstrates was at
        the request of a third party or otherwise arose in connection with or in
        anticipation of the Approved Transaction.

        "Holder" means an Eligible Person who has received an Option or, when
the context so requires, if rights under the Option continue following the death
of the Eligible Person or are transferred in a manner permitted by Section 6.8,
the person who succeeds to those rights by will or by the laws of descent and
distribution or by such transfer.

        "Incentive Stock Option" means an Option that is an incentive stock
option within the meaning of Section 422 of the Code.

        "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option.

        "Option" means an option with respect to shares of Common Stock awarded
pursuant to Article 6.

        "Option Agreement" is defined in Section 6.5.

        "Permitted Transferee" of a Holder means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of the Holder (including any such relative by
adoption); any person sharing the Holder's household (other than a tenant or
employee); a trust in which these persons have more than fifty percent (50%) of
the beneficial interest; and any other non-charitable entity in which these
persons (or the Holder) own more than fifty percent (50%) of the voting
interests. "Plan" is defined in Section 1.1.

        "Replacement Securities" is defined in Section 7.2(b)(v)(B).


                                      -4-
<PAGE>   9

        "Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor statute or statutes thereto. Reference to any specific
section of the Securities Act shall include any successor section.

        "Service" means the performance of services on a periodic basis for the
Company or any of its Affiliates in the capacity of an employee, a nonemployee
member of a board of directors or other governing body, or an independent
consultant or advisor.

        "Transaction Date" is defined in Section 7.2(b)(i).

        "10% Shareholder" means a person who owns (or is considered as owning
within the meaning of Section 424 of the Code) stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company.


                                    ARTICLE 3
                                 ADMINISTRATION

        3.1 COMMITTEE. The Plan shall be administered by the Board unless the
Board appoints a separate committee of the Board to administer the Plan pursuant
to Section 3.2 (the Board, or such committee, if it is administering the Plan,
will be referred to as the "Committee"). The Committee shall select one of its
members as its chairman and shall hold its meetings at such times and places as
it shall deem advisable. A majority of its members shall constitute a quorum and
all determinations shall be made by a majority of that quorum. Any determination
reduced to writing and signed by all of the members of the Committee shall be as
effective as if it had been made by a majority vote at a meeting duly called and
held.

        3.2 APPOINTMENT OF COMMITTEE. The Board may appoint a committee
consisting of two or more of its members to administer the Plan. Once appointed,
the committee shall continue to serve until otherwise directed by the Board.
From time to time the Board may increase the size of the committee and appoint
additional members, remove members (with or without cause) and appoint new
members in their place, fill vacancies however caused, and/or remove all members
of the committee and thereafter directly administer the Plan.

        3.3 POWERS; REGULATIONS. The Committee shall have full power and
authority, subject only to the provisions of the Plan (a) to administer or
supervise the administration of the Plan; (b) to interpret the provisions of the
Plan and the Option Agreements; (c) to correct any defect, supply any
information and reconcile any inconsistency in such manner and to such extent as
it determines to be necessary or advisable to carry out the purpose of the Plan;
and (d) to take such other actions in connection with the Plan as it determines
to be necessary or advisable. The Committee is authorized to adopt, amend and
rescind such rules, regulations and procedures not inconsistent with the
provisions of the Plan as it determines to be necessary or advisable for the
proper administration of the Plan, and each Option shall be subject to all such
rules, regulations and procedures (whether the Option was granted before or
after promulgation thereof). Without limiting the authority of the Committee to
interpret the provisions of the Plan, the Committee shall have the right to
determine that a transaction (or series of related transactions) is not a
Control Purchase, even though literally included within the definition of


                                      -5-
<PAGE>   10

that term, if the Committee determines that the transaction (or series of
related transactions) does not have the effect of significantly changing or
influencing the control of the Company on a permanent basis.

        3.4 LIMITS ON AUTHORITY. Exercise by the Committee of its authority
shall be consistent with the intent that (a) all Incentive Stock Options be
qualified under the terms of Section 422 of the Code, and (b) the Plan be
administered in a manner so that, to the extent possible, the grant of Options
and all other transactions with respect to the Plan, to Options and to any
Common Stock acquired upon exercise of Options, shall be exempt from the
operation of Section 16(b) of the Exchange Act.

        3.5 EXERCISE OF AUTHORITY. Each action and determination made or taken
by the Committee, including but not limited to any interpretation of the Plan
and the Option Agreements, shall be final, conclusive and binding for all
purposes and upon all persons. No member of the Committee shall be liable for
any action or determination made or taken by the member or the Committee in good
faith.

                                    ARTICLE 4
                           SHARES SUBJECT TO THE PLAN

        4.1 NUMBER OF SHARES. Subject to the provisions of this Article 4, the
maximum number of shares of Common Stock for which Options may be granted during
the term of the Plan shall be nine hundred fifty thousand (950,000). Shares of
Common Stock will be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company. If an Option terminates
for any reason without having been exercised in full, the shares of Common Stock
for which the Option has not been exercised shall again be available for
purposes of the Plan.

        4.2 ADJUSTMENTS. If the Company subdivides its outstanding shares of
Common Stock into a greater number of shares (by stock dividend, stock split,
reclassification or otherwise) or combines its outstanding shares of Common
Stock into a smaller number of shares (by reverse stock split, reclassification
or otherwise), or if the Committee determines that any stock dividend,
extraordinary cash dividend, reclassification, recapitalization, reorganization,
split-up, spin-off, combination, exchange of shares, rights offering, or other
transaction or event that is not an Approved Transaction or Control Purchase
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 Committee shall, in such manner as it determines to be
equitable and appropriate, adjust any or all of (a) the number of shares of
Common Stock (or number and kind of other securities or property) for which, and
the time or times when, outstanding Options may thereafter be exercised; (b) the
purchase price for the shares (or other securities or property) under
outstanding Options; and (c) the number of shares of Common Stock (or number and
kind of other securities or property) for which Options may thereafter be
granted. In connection with any adjustment made pursuant to this Section 4.2,
the Committee may, if deemed equitable and appropriate, provide for a cash
payment to be made to the Holder of an Option, in cancellation of the Option, of
such amount as the Committee determines represents the value the Option would
then have if it were exercisable for all of the shares under the Option.


                                      -6-
<PAGE>   11

                                    ARTICLE 5
                                   ELIGIBILITY

        The persons eligible to participate in the Plan and to receive Options
("Eligible Persons") shall be persons who are performing or have been hired to
perform Service for the Company or any of its Affiliates.

                                    ARTICLE 6
                                  STOCK OPTIONS

        6.1 GRANT OF OPTIONS. The Committee shall from time to time determine
(a) the Eligible Persons to whom Options are to be granted; (b) the number of
shares of Common Stock for which the Options are exercisable and the purchase
price of such shares; (c) whether the Options are Incentive Stock Options or
Nonqualified Stock Options; and (d) all of the other terms and conditions (which
need not be identical) of the Options; PROVIDED, HOWEVER, that all such
determinations shall be subject to the express limitations of the Plan.

        6.2 PURCHASE PRICE. The price at which shares of Common Stock may be
purchased upon exercise of an Option may be more than, less than or equal to the
Fair Market Value of the shares on the date the Option is granted; PROVIDED,
HOWEVER, that the purchase price of each share of Common Stock under an
Incentive Stock Option shall be (a) at least 110% of the Fair Market Value of
such share on the date of grant of the Option, if it is granted to a 10%
Shareholder, and (b) at least 100% of the Fair Market Value of such share on the
date of grant of the Option, if it is granted to any other Eligible Person.

        6.3 LIMITATIONS ON INCENTIVE STOCK OPTIONS.

            (a) GRANTS ONLY TO EMPLOYEES. Incentive Stock Options may only be
granted to Eligible Persons who are employees of the Company or an Affiliate
that constitutes a "parent corporation" or a "subsidiary corporation" within the
meaning of Section 424 of the Code.

            (b) LIMITATION ON SHARES. The aggregate Fair Market Value of the
shares of Common Stock for which, during any calendar year, one or more
Incentive Stock Options under the Plan (and/or one or more options under any
other plan maintained by the Company or any of its Affiliates for the granting
of options intended to qualify under Section 422 of the Code) become exercisable
for the first time by a Holder shall not exceed $100,000 (said value to be
determined as of the respective dates on which the options are granted to the
Holder). If an Option that would otherwise qualify as an Incentive Stock Option
becomes exercisable for the first time in any calendar year for shares of Common
Stock that would cause such aggregate Fair Market Value to exceed $100,000, then
the portion of the Option in respect of such shares shall be deemed to be a
Nonqualified Stock Option.

        6.4 TERM OF OPTIONS. Subject to the provisions of the Plan with respect
to termination of Options upon or following death, Disability or other
termination of Service, the Committee shall determine the term of each Option,
which term shall not be more than (a) five (5) years from the date of grant in
the case of an Incentive Stock Option granted to a 10% Shareholder, and (b) ten
(10) years from the date of grant in the case of any other Incentive Stock
Option.


                                      -7-
<PAGE>   12

        6.5 OPTION AGREEMENT. Each Option shall be evidenced by an agreement
(the "Option Agreement") containing the terms and conditions of the Option as
determined by the Committee. Each grantee of an Option shall be notified
reasonably promptly of the grant, an Option Agreement shall be executed and
delivered by the Company to the grantee within sixty (60) days after the date
the Committee approves the grant, and the Committee may terminate the grant if
the Option Agreement is not signed by the grantee and delivered to the Company
within sixty (60) days after it is delivered to the grantee. An Option Agreement
may contain (but shall not be required to contain) such terms and conditions as
the Committee determines to be necessary or appropriate to ensure that the
penalty provisions of Section 4999 of the Code will not apply to any stock
received by the Holder from the Company. An Option Agreement may be amended from
time to time pursuant to Section 7.5(b).

        6.6 EXERCISE OF OPTIONS.

            (a) TIME EXERCISABLE. An Option shall become and remain exercisable
to the extent provided in its Option Agreement and in the Plan. However, if an
Option is granted prior to the date its Holder first performs Service for the
Company or any of its Affiliates, the Option shall not be exercisable prior to
the date the Holder first performs such Service. If an Option is scheduled to
become exercisable on one or more dates specified in its Option Agreement, and
its Holder has a leave of absence without pay, such date or dates shall be
postponed for a period equal to the duration of the leave unless the Committee
determines otherwise.

            (b) MANNER OF EXERCISE. An Option shall be exercised by written
notice to the Company in compliance with the terms and conditions of its Option
Agreement and such procedures for exercise of Options as the Committee may adopt
from time to time. The method or methods of payment of the purchase price of the
shares to be purchased upon exercise of the Option and of any amounts required
by Section 7.7 shall be determined by the Committee and set forth in the Option
Agreement for the Option. Such method or methods may consist of (i) check for
United States funds, (ii) whole shares of Common Stock already owned by the
Holder, (iii) the delivery, together with a properly executed exercise notice,
of irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the purchase price, (iv) any
combination of the foregoing methods of payment, or (v) such other consideration
and method of payment as may be permitted for the issuance of shares under
applicable securities and other laws. The Committee may specify a minimum number
of shares of Common Stock for which an Option must be exercised, but such
minimum shall not prevent exercise of an Option for the full number of shares
for which it is exercisable.

            (c) VALUE OF SHARES. Shares of Common Stock delivered in payment of
all or any part of the amounts payable upon exercise of an Option, and shares of
Common Stock withheld for such payment, shall be valued at their Fair Market
Value on the exercise date of the Option.

            (d) ISSUANCE OF SHARES. The Company shall issue the shares of Common
Stock purchased under an Option as soon as practicable after the Option has been
duly exercised; PROVIDED, HOWEVER, that no fractional shares shall be issuable
under the Plan, and any fractional shares that would otherwise be issuable shall
be disregarded. Following exercise of an Incentive


                                      -8-
<PAGE>   13

Stock Option, the Committee shall cause the information statement required by
Section 6039 of the Code to be furnished to the Holder within the time and in
the manner prescribed by law.

        6.7 LEGENDS. Each certificate representing shares of Common Stock issued
upon exercise of an Option shall contain any legends that the Committee
determines to be necessary or appropriate. The Company may cause the transfer
agent for the Common Stock to place a stop transfer order with respect to such
shares.

        6.8 TRANSFERABILITY. Except to the extent the Committee limits this
Section 6.8 at the time a Nonqualified Stock Option is granted, the original
Holder of the Option may transfer the Option to any Permitted Transferee, so
long as the transfer is without value, and the Permitted Transferee may transfer
the Option without value to any other Permitted Transferee of the original
Holder. Neither (a) a transfer under a domestic relations order in settlement of
marital property rights, nor (b) a transfer to an entity in which more than
fifty percent (50%) of the voting interests are owned by Permitted Transferees
(or the original Holder) in exchange for an interest in that entity, will
constitute a transfer for value. Except as expressly permitted by this Section
6.8, an Option (including any Incentive Stock Option) will not be transferable
by its Holder other than by will or by the laws of descent and distribution,
will not be involuntarily alienable by legal process or otherwise by operation
of law, and will be exercisable during the Holder's lifetime only by the Holder.
If the Holder of an Option dies prior to its full exercise, the Option may be
exercised, to the extent it does not thereby terminate, by the person or persons
to whom the rights of the holder under the Option pass by will or by applicable
laws of descent and distribution.

        6.9 AUTHORITY OF CHIEF EXECUTIVE OFFICER TO GRANT OPTIONS. The Chief
Executive Officer of the Company shall have the authority to determine from time
to time (a) the Eligible Persons to whom Options are to be granted; (b) the
number of shares of Common Stock for which the Options are exercisable and the
purchase price of such shares; (c) whether the Options are Incentive Stock
Options or Nonqualified Stock Options; and (d) all of the other terms and
conditions (which need not be identical) of the Options; PROVIDED, HOWEVER, that
(i) the authority delegated to the Chief Executive Officer under this Section
6.9 shall not exceed that of the Committee under the foregoing provisions of
this Article 6 and shall be subject to any limitations, in addition to those
specified in this Section 6.9, as may be specified by the Board from time to
time; (ii) the Chief Executive Officer may not grant any Option to any person
who is an Executive Officer or a director of the Company at the time of the
grant; (iii) the purchase price of each share of Common Stock under an Option
granted under this Section 6.9 shall not be less than the Fair Market Value of
such share on the date of grant of the Option; and (iv) the Chief Executive
Officer shall promptly provide a report to the Committee of each person to whom
an Option has been granted under this Section 6.9 and the material terms and
conditions of the Option.

                                    ARTICLE 7
                               GENERAL PROVISIONS

        The provisions of this Article 7 shall apply to all Options, except to
the extent that one or more Option Agreements expressly provide otherwise.


                                      -9-
<PAGE>   14


        7.1 TERMINATION OF SERVICE.

            (a) GENERAL. If a Holder's Service terminates without Cause before
the full exercise of an Option, then the Option shall thereafter be exercisable,
to the extent the Holder was entitled to exercise the Option on the date of such
termination, for a period of thirty (30) days following such termination (but
not later than the end of the term of the Option); PROVIDED, HOWEVER, that, if
the Holder's Service terminates by reason of death or Disability, the Option
shall be exercisable for a period of one (1) year following such termination
(but not later than the end of the term of the Option). At the end of such
period, the Option shall terminate.

            (b) TERMINATION FOR CAUSE. If a Holder's Service is terminated for
Cause, then all Options held by the Holder shall immediately terminate.
Following termination of a Holder's Service, if the Holder engages in any act
that would have constituted Cause if the Holder had remained in the Service of
the Company or any of its Affiliates, then the Company shall be entitled to
terminate any Options held by the Holder.

            (c) MISCELLANEOUS. The Committee may determine whether a leave of
absence of a Holder constitutes a termination of the Holder's Service; PROVIDED,
HOWEVER, that neither (i) a leave of absence, duly authorized in writing by the
Company or any of its Affiliates for military service or sickness, or for any
other purpose approved by the Company or any of its Affiliates, if the period of
the leave does not exceed ninety (90) days, nor (ii) a leave of absence in
excess of ninety (90) days, duly authorized in writing by the Company or any of
its Affiliates, provided the Holder's right to return to Service with the
Company or the Affiliate is guaranteed either by statute or by contract, shall
be deemed a termination of the Holder's Service. An Option shall not be affected
by any change in the Holder's Service so long as the Holder continues to be in
the Service of the Company or any of its Affiliates. If a Holder is in the
Service of an Affiliate of the Company that ceases to be an Affiliate, such
event shall, for purposes of any Option held by the Holder, be deemed to
constitute a termination of the Holder's Service for a reason other than death
or Disability.

        7.2 CERTAIN EVENTS.

            (a) CONTROL PURCHASE. Effective upon a Control Purchase, if the
Holder of an Option is in the Service of the Company or any of its Affiliates at
that time, the Option shall become exercisable for all of the shares under the
Option.

            (b) APPROVED TRANSACTION. The following provisions shall apply if an
Approved Transaction occurs:

                (i) The Company shall provide each Holder with notice of the
pendency of the Approved Transaction at least fifteen (15) days before the
expected date of consummation thereof (the date on which the Approved
Transaction is consummated will be referred to as the "Transaction Date").

                (ii) Effective immediately before the Transaction Date, if the
Holder of an Option is in the Service of the Company or any of its Affiliates on
the Transaction Date and has been in Service for at least one (1) year, the
Option shall become exercisable for the number of shares for which it would have
been exercisable if the Holder had remained in Service until --


                                      -10-
<PAGE>   15


                    (A) the first (1st) anniversary of the Transaction Date, if
        the Holder on the Transaction Date has been in Service for less than two
        (2) years; or

                    (B) the second (2nd) anniversary of the Transaction Date, if
        the Holder on the Transaction Date has been in Service for at least two
        (2) years but less than three (3) years;

and the Option shall become exercisable for all of the shares under the Option
if the Holder on the Transaction Date has been in Service for at least three (3)
years.

                (iii) Following notice of the Approved Transaction, any exercise
of an Option may be contingent upon consummation of the Approved Transaction, if
so elected by the Holder in the notice of exercise, and shall be contingent upon
such consummation with respect to any portion of the Option that will only
become exercisable immediately before the Transaction Date.

                (iv) Upon consummation of the Approved Transaction, all Options
shall terminate.

                (v) Section 7.2(b)(ii) through Section 7.2(b)(iv) shall not
apply to an Option, if the Committee determines that the Company or another
party to the Approved Transaction has either --

                    (A) made appropriate provision for continuation of the
        Option, or for replacement of the Option with a new award on terms that
        are, as nearly as practicable, the financial equivalent of the Option
        (the Option as so continued or replaced shall be referred to as a
        "Continuing Option"); or

                    (B) delivered to the Holder equity securities of the Company
        or another party to the Approved Transaction (the "Replacement
        Securities") having a value equal to the value of the Option on the
        Transaction Date.

At the time the Holder is given notice of the pendency of the Approved
Transaction under Section 7.2(b)(i) or in a separate notice given before the
Transaction Date, the Committee shall inform the Holder of the provision to be
made for a Continuing Option or for delivery of Replacement Securities.
Effective automatically upon consummation of the Approved Transaction and
without any action by the Holder, the Option shall represent the Continuing
Option (if provision is made for a Continuing Option) or terminate (if
Replacement Securities are to be delivered).

            (c) TERMINATION AFTER CERTAIN APPROVED TRANSACTIONS. If there are
one or more Continuing Options following an Approved Transaction and the Service
of the Holder of a Continuing Option is terminated without Cause within a period
of eighteen (18) months following the Transaction Date, or if the Holder
voluntarily terminates his or her Service for Good Reason during such period,
then (i) all Continuing Options held by the Holder shall become exercisable for
all of the shares thereunder; (ii) all restrictions under the Plan or any


                                      -11-
<PAGE>   16

Option Agreement with respect to Common Stock issued pursuant to exercise of any
such Continuing Option (other than restrictions on transfer under applicable
securities laws), including but not limited to contractual restrictions on
transfer, rights of repurchase or first refusal in favor of the Company and
restrictions on certificates for the Common Stock (other than restrictions on
certificates designed to promote compliance with applicable securities laws)
shall automatically terminate; and (iii) each such Continuing Option shall
remain exercisable until a period of eighteen (18) months has elapsed following
the Transaction Date or until the date on which the Continuing Option would have
terminated if the Service of the Holder had not terminated, whichever occurs
first.

        7.3 RIGHT TO TERMINATE SERVICE. Nothing contained in the Plan or in any
Option Agreement, and no action of the Company or the Committee with respect
thereto, shall confer on any Holder any right to continue in the Service of the
Company or any of its Affiliates or interfere in any way with the right of the
Company or any of its Affiliates, subject to the terms and conditions of any
agreement between the Holder and the Company or any of its Affiliates, to
terminate at any time, with or without Cause, the Service of the Holder.

        7.4 NONALIENATION OF BENEFITS. Except as permitted pursuant to Section
6.8, no right or benefit under the Plan or any Option shall be (a) subject to
anticipation, alienation, sale, assignment, hypothecation, pledge, exchange,
transfer, encumbrance or charge (and any attempt to anticipate, alienate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge the same
shall be void); or (b) liable for or subject to the debts, contracts,
liabilities or torts of the person entitled to the right or benefit.

        7.5 TERMINATION AND AMENDMENT.

            (a) TERMINATION. The Plan shall terminate on the tenth (10th)
anniversary of the Effective Date; PROVIDED, HOWEVER, that the Board or the
Committee may terminate the Plan at any earlier time. No Options may be granted
following termination of the Plan, but the provisions of the Plan shall continue
in effect until all Options terminate or are exercised in full and all rights of
all persons with any interest in the Plan expire.

            (b) AMENDMENT OF PLAN. The Board or the Committee may from time to
time amend the Plan, whether before of after termination of the Plan, in such
respects as it shall deem advisable; PROVIDED, HOWEVER, that any such amendment
(i) shall comply with all applicable laws and stock exchange listing
requirements, and (ii) with respect to Incentive Stock Options granted or to be
granted under the Plan, shall be subject to any approval by shareholders of the
Company required under the Code. No amendment of the Plan may adversely affect
the rights of the Holder of an Option in any material way unless the Holder
consents thereto.

            (c) AMENDMENT OF OPTIONS. The Committee may amend the Option
Agreement for an Option in such respects as it shall deem advisable, including
but not limited to any amendment that would accelerate the time or times at
which the Option may be exercised or extend the scheduled termination date of
the Option; PROVIDED, HOWEVER, that (i) no amendment may adversely affect the
rights of the Holder of the Option in any material way unless the Holder
consents thereto, and (ii) the Option Agreement, as amended, shall satisfy all
of the requirements of the Plan at the time of the amendment. Nothing in this
Section 7.5 shall prevent the


                                      -12-
<PAGE>   17


Committee from adopting, amending or rescinding rules, regulations and
procedures pursuant to Section 3.3.

        7.6 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to Options and the issuance of Common Stock upon the exercise thereof
shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required, including but not
limited to the effectiveness of any registration statement required under the
Securities Act, and the rules and regulations of any securities exchange or
over-the-counter market on which the Common Stock may be listed or quoted. The
Company shall have no obligation to register shares of Common Stock issuable
upon exercise of Options under the Securities Act or to register, qualify or
list such shares under the laws of any state or other jurisdiction or the rules
of any securities exchange or over-the-counter market.

        7.7 WITHHOLDING. By accepting an Option, the Holder shall be deemed to
have agreed to pay, or make arrangements satisfactory to the Committee for
payment to the Company of, all taxes required to be withheld by the Company in
connection with the exercise of the Option or any sale, transfer or other
disposition of any shares of Common Stock acquired upon exercise of the Option.
If the Holder shall fail to pay, or make arrangements satisfactory to the
Committee for the payment of, all such taxes, then the Company or any of its
Affiliates shall, to the extent not prohibited by law, have the right to deduct
from any payment of any kind otherwise due to the Holder an amount equal to any
taxes of any kind required to be withheld by the Company or any of its
Affiliates with respect to the Option.

        7.8 SEVERABILITY; INCENTIVE STOCK OPTION PROVISIONS

            (a) If any provision of this Plan or any Option Agreement, on its
face or as applied to any person or circumstance, is or becomes unenforceable to
any extent, the remainder of this Plan or the Option Agreement, as the case may
be, and the application of the provision to any other person, circumstance or
extent, shall not be affected, and this Plan and the Option Agreement shall
continue in force.

            (b) With respect to Incentive Stock Options, if the Plan does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out in full herein; PROVIDED,
HOWEVER, that to the extent any Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, the Option, to that extent, shall be
deemed to be a Nonqualified Stock Option for all purposes of the Plan.

        7.9 PLAN NOT EXCLUSIVE. Neither the adoption of the Plan by the Board
nor any submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including but
not limited to the granting of stock options and the awarding of stock and cash
outside of the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

        7.10 EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION. By accepting
an Option, the Holder shall be deemed to have agreed that the Option is special
incentive


                                      -13-
<PAGE>   18


compensation that will not be taken into account, in any manner, as salary,
compensation or bonus in determining the amount of any payment or other benefit
under any pension, retirement or other employee benefit plan, program or policy
of the Company or any of its Affiliates.

        7.11 NO SHAREHOLDER RIGHTS. No Holder or other person shall have any
voting or other shareholder rights with respect to shares of Common Stock under
an Option until the Option has been duly exercised, full payment of the purchase
price has been made, all conditions under the Option and the Plan to issuance of
the shares have been satisfied, and a certificate for the shares has been
issued. No adjustment shall be made for cash or other dividends or distributions
to shareholders for which the record date is before the date of such issuance.

        7.12 GOVERNING LAW. The Plan and all Options shall be governed by, and
interpreted in accordance with, the laws of the State of Washington.

        7.13 COMPANY'S RIGHTS. The grant of Options shall not affect in any way
the right or power of the Company to make reclassifications, reorganizations or
other changes of or to its capital or business structure or to merge,
consolidate, liquidate, sell or otherwise dispose of all or any part of its
business or assets.


                                      -14-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.6
<SEQUENCE>9
<FILENAME>f69264orex99-6.txt
<DESCRIPTION>EXHIBIT 99.6
<TEXT>

<PAGE>   1









                                  EXHIBIT 99.6

        CISCO SYSTEMS, INC. FORM OF STOCK OPTION ASSUMPTION AGREEMENT -
                               FULL ACCELERATION
<PAGE>   2

                                               EFFECTIVE DATE: FEBRUARY 14, 2001


                               CISCO SYSTEMS, INC.
                       STOCK OPTION ASSUMPTION AGREEMENT

Dear [Target Optionee]:

As you know, on February 14, 2001 (the "Closing Date") Cisco Systems, Inc.
("Cisco") acquired Active Voice Corporation ("Active Voice") (the
"Acquisition"). In the Acquisition, each share of Active Voice common stock was
exchanged for 0.57960 of a share of Cisco common stock (the "Exchange Ratio").
On the Closing Date you held one or more outstanding options to purchase shares
of Active Voice common stock granted to you under the Active Voice Corporation
1988 Non-qualified Stock Option Plan, 1993 Stock Option Plan, 1996 Stock Option
Plan, 1998 Stock Option Plan, and/or 2000 Stock Option Plan and/or Director
Stock Option Plan, and any amendments thereto (the "Plans") and documented with
a Stock Option Agreement(s) (the "Option Agreement") issued to you under the
Plans (the "Active Voice Options"). In accordance with the Acquisition, on the
Closing Date Cisco assumed all obligations of Active Voice under the Active
Voice Options. This Agreement evidences the assumption of the Active Voice
Options required by the Acquisition.

Your Active Voice Options immediately before and after the Acquisition is as
follows:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                ACTIVE VOICE STOCK OPTION                                    CISCO ASSUMED OPTION
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
   # Shares of Active Voice     Active Voice Exercise Price     # of Shares of Cisco       Cisco Exercise Price Per
         Common Stock                    Per Share                  Common Stock                     Share
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                             <C>                        <C>

----------------------------------------------------------------------------------------------------------------------
</TABLE>

The post-Acquisition adjustments are based on the Exchange Ratio and are
intended to: (i) assure that the total spread of each assumed Active Voice
Option (i.e., the difference between the aggregate fair market value and the
aggregate exercise price) does not exceed the total spread that existed
immediately prior to the Acquisition; (ii) to preserve, on a per share basis,
the ratio of exercise price to fair market value that existed immediately prior
to the Acquisition; and (iii) to the extent applicable and allowable by law, to
retain incentive stock option ("ISO") status under the Federal tax laws.

Unless the context otherwise requires, any references in the Plans and the
Option Agreement (i) to the "Company" or the "Corporation" means Cisco, (ii) to
"Stock," "Common Stock" or "Shares" means shares of Cisco stock, (iii) to the
"Board of Directors" or the "Board" means the Board of Directors of Cisco and
(iv) to the "Committee" means the Compensation Committee of the Cisco Board of
Directors. All references in the Option Agreement and the Plans relating to your
status as an employee of Active Voice will now refer to your status as an
employee of Cisco or any present or future Cisco subsidiary. To the extent the
Option Agreement allowed you to deliver shares of Active Voice common stock as
payment for the exercise price, shares of Cisco common stock may be delivered in
payment of the adjusted exercise price, and the period for
<PAGE>   3

                                               EFFECTIVE DATE: FEBRUARY 14, 2001

which such shares were held as Active Voice Stock prior to the Acquisition will
be taken into account.

In accordance with the terms of the Plans, your assumed Active Voice Option
became fully vested and exercisable upon the close of the Acquisition. The grant
date and the expiration date of your assumed Active Voice Option remains the
same as set forth in your Option Agreement. All other provisions which govern
either the exercise or the termination of the assumed Active Voice Option remain
the same as set forth in your Option Agreement, and the provisions of the Option
Agreement (except as expressly modified by this Agreement and the Acquisition)
will govern and control your rights under this Agreement to purchase shares of
Cisco Stock. Upon your termination of employment with Cisco you will have the
limited time period specified in your Option Agreement to exercise your assumed
Active Voice Option to the extent vested and outstanding at the time, generally
a 30 day period, after which time your Active Voice Option will expire and NOT
be exercisable for Cisco Stock.

To exercise your assumed Active Voice Option, you must deliver to Cisco (i) a
written notice of exercise for the number of shares of Cisco Stock you want to
purchase, (ii) the adjusted exercise price, and (iii) all applicable taxes. The
exercise notice and payment should be delivered to Cisco at the following
address:

                           Cisco Systems, Inc.
                           170 West Tasman Drive
                           SJ-11-3
                           San Jose, CA 95134
                           Attention: Stock Administration

Nothing in this Agreement or your Option Agreement interferes in any way with
your rights and Cisco's rights, which rights are expressly reserved, to
terminate your employment at any time for any reason. Any future options, if
any, you may receive from Cisco will be governed by the terms of the Cisco stock
option plan, and such terms may be different from the terms of your assumed
Active Voice Option, including, but not limited to, the time period in which you
have to exercise vested option shares after your termination of employment.

Please sign and date this Agreement and return it promptly to the address listed
above. Until your fully executed Agreement is received by Cisco's Stock
Administration Department your Cisco account will not be activated. If you have
any questions regarding this Agreement or your assumed Active Voice Option,
please contact Kathy Zwern at 408-526-8045.

                                       2
<PAGE>   4
                                               EFFECTIVE DATE: FEBRUARY 14, 2001


                                    CISCO SYSTEMS, INC.


                                    By:
                                       Larry R. Carter
                                       Corporate Secretary

                                 ACKNOWLEDGMENT

                  The undersigned acknowledges receipt of the foregoing Stock
Option Assumption Agreement and understands that all rights and liabilities with
respect to his or her Active Voice Option hereby assumed by Cisco are as set
forth in the Option Agreement, the Plan, and such Stock Option Assumption
Agreement.

DATED:                     , 2001
       --------------------             ----------------------------
                                         <<EMPLOYEE>>, OPTIONEE


                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.7
<SEQUENCE>10
<FILENAME>f69264orex99-7.txt
<DESCRIPTION>EXHIBIT 99.7
<TEXT>

<PAGE>   1
                                              EFFECTIVE DATE:  FEBRUARY 14, 2001

                                  EXHIBIT 99.7


         Cisco Systems, Inc. form of Stock Option Assumption Agreement-
                              Partial Acceleration




<PAGE>   2

                               CISCO SYSTEMS, INC.
                        STOCK OPTION ASSUMPTION AGREEMENT

Dear [Target Optionee]:

As you know, on February 14, 2001 (the "Closing Date") Cisco Systems, Inc.
("Cisco") acquired Active Voice Corporation ("Active Voice") (the
"Acquisition"). In the Acquisition, each share of Active Voice common stock was
exchanged for 0.57960 of a share of Cisco common stock (the "Exchange Ratio").
On the Closing Date you held one or more outstanding options to purchase shares
of Active Voice common stock granted to you under the Active Voice Corporation
1988 Non-qualified Stock Option Plan, 1993 Stock Option Plan, 1996 Stock Option
Plan, 1998 Stock Option Plan, or 2000 Stock Option Plan, and any amendments
thereto (the "Plans") and documented with a Stock Option Agreement(s) and any
amendments or waivers thereto (the "Option Agreement") issued to you under the
Plans (the "Active Voice Options"). In accordance with the Acquisition, on the
Closing Date Cisco assumed all obligations of Active Voice under the Active
Voice Options. This Agreement evidences the assumption of the Active Voice
Options required by the Acquisition.

Your Active Voice Option immediately before and after the Acquisition is as
follows:

<TABLE>
<CAPTION>
------------------------------------------------------------ ---------------------------------------------------------
                 ACTIVE VOICE STOCK OPTION                                     CISCO ASSUMED OPTION
------------------------------------------------------------ ---------------------------------------------------------
   <S>                             <C>                          <C>                        <C>
   # Shares of Active Voice        Active Voice Exercise        # of Shares of Cisco       Cisco Exercise Price Per
         Common Stock                 Price Per Share               Common Stock                     Share
------------------------------- ---------------------------- ---------------------------- ----------------------------

------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

The post-Acquisition adjustments are based on the Exchange Ratio and are
intended to: (i) assure that the total spread of each assumed Active Voice
Option (i.e., the difference between the aggregate fair market value and the
aggregate exercise price) does not exceed the total spread that existed
immediately prior to the Acquisition; (ii) to preserve, on a per share basis,
the ratio of exercise price to fair market value that existed immediately prior
to the Acquisition; and (iii) to the extent applicable and allowable by law, to
retain incentive stock option ("ISO") status under the Federal tax laws.

Unless the context otherwise requires, any references in the Plans and the
Option Agreement (i) to the "Company" or the "Corporation" means Cisco, (ii) to
"Stock," "Common Stock" or "Shares" means shares of Cisco stock, (iii) to the
"Board of Directors" or the "Board" means the Board of Directors of Cisco and
(iv) to the "Committee" means the Compensation Committee of the Cisco Board of
Directors. All references in the Option Agreement and the Plans relating to your
status as an employee of Active Voice will now refer to your status as an
employee of Cisco or any present or future Cisco subsidiary. To the extent the
Option Agreement allowed you to deliver shares of Active Voice common stock as
payment for the exercise price, shares of Cisco common stock may be delivered in
payment of the adjusted exercise price, and the period for which such shares
were held as Active Voice Stock prior to the Acquisition will be taken into
account.

                                       2

<PAGE>   3

                                               EFFECTIVE DATE: FEBRUARY 14, 2001

In accordance with the terms of the Option Agreement, 50% of the unvested shares
subject to your Active Voice Option at the time of the Acquisition became fully
vested and exercisable upon the close of the Acquisition. The grant date,
vesting commencement date, vesting schedule for the remaining unvested shares,
and the expiration date of your assumed Active Voice Option remains the same as
set forth in your Option Agreement, but the number of shares subject to each
vesting installment has been adjusted to reflect the Exchange Ratio. All other
provisions which govern either the exercise or the termination of the assumed
Active Voice Option remain the same as set forth in your Option Agreement, and
the provisions of the Option Agreement (except as expressly modified by this
Agreement and the Acquisition) will govern and control your rights under this
Agreement to purchase shares of Cisco Stock. Upon your termination of employment
with Cisco you will have the limited time period specified in your Option
Agreement to exercise your assumed Active Voice Option to the extent vested and
outstanding at the time, generally a 30 day period, after which time your Active
Voice Option will expire and NOT be exercisable for Cisco Stock.

To exercise your assumed Active Voice Option, you must deliver to Cisco (i) a
written notice of exercise for the number of shares of Cisco Stock you want to
purchase, (ii) the adjusted exercise price, and (iii) all applicable taxes. The
exercise notice and payment should be delivered to Cisco at the following
address:

                           Cisco Systems, Inc.
                           170 West Tasman Drive
                           SJ-11-3
                           San Jose, CA 95134
                           Attention: Stock Administration

Nothing in this Agreement or your Option Agreement interferes in any way with
your rights and Cisco's rights, which rights are expressly reserved, to
terminate your employment at any time for any reason. Any future options, if
any, you may receive from Cisco will be governed by the terms of the Cisco stock
option plan, and such terms may be different from the terms of your assumed
Active Voice Option, including, but not limited to, the time period in which you
have to exercise vested option shares after your termination of employment.

Please sign and date this Agreement and return it promptly to the address listed
above. Until your fully executed Agreement is received by Cisco's Stock
Administration Department your Cisco account will not be activated. If you have
any questions regarding this Agreement or your assumed Active Voice Option,
please contact Kathy Zwern at 408-526-8045.

                                       CISCO SYSTEMS, INC.


                                       By
                                          --------------------------------------
                                          Larry R. Carter
                                          Corporate Secretary


                                       3
<PAGE>   4

                                               EFFECTIVE DATE: FEBRUARY 14, 2001


                                ACKNOWLEDGMENT

     The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to his or her Active Voice Option hereby assumed by Cisco are as set
forth in the Option Agreement, the Plan, and such Stock Option Assumption
Agreement.

DATED:                     , 2001
       --------------------             ----------------------------------------
                                        (EMPLOYEE), OPTIONEE




                                       4
</TEXT>
</DOCUMENT>
</SUBMISSION>
