<PAGE>

                                                              EXHIBIT (d)(2)

                 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
                  COVERING SECURITIES THAT HAVE BEEN REGISTERED
                 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.*

                             Extreme Networks, Inc.
                         Amended 1996 Stock Option Plan

     This memorandum contains information regarding the Extreme Networks, Inc.
Amended 1996 Stock Option Plan (the "Plan), pursuant to which shares of Common
Stock of Extreme Networks, Inc. (the "Shares"), in any combination of authorized
but unissued Shares or reacquired Shares, may be offered to eligible persons
providing services for Extreme Networks, Inc. (the "Company"), or any parent or
subsidiary corporation of the Company or any subsidiary corporation of the
parent corporation of the Company (individually, a "Participating Company" and
collectively, the "Participating Company Group").

     Upon written or oral request, the Company will provide without charge, to
each person to whom a copy of this memorandum is delivered, a copy of the
Company's Registration Statement by which the securities described in this
memorandum are registered and copies of the documents that have been
incorporated by reference in the Company's Registration Statement (not including
exhibits to the documents that are incorporated by reference unless such
exhibits are specifically incorporated by reference into the documents that the
Registration Statement incorporates). Upon written or oral request, the Company
will also provide without charge, to each person to whom a copy of this
memorandum is delivered, an additional copy of this memorandum, a copy of the
Company's annual report to stockholders for its latest fiscal year, and a copy
of all reports, proxy statements and other communications distributed to its
stockholders for its latest fiscal year and a copy of all reports, proxy
statements and other communications distributed to its stockholders generally.
Such requests should be directed to the Chief Financial Officer, Extreme
Networks, Inc., 3585 Monroe Street, Santa Clara, California 95051, (408)
579-2800. Alternatively, on the Securities and Exchange Commission's web site at
http://www.sec.gov you will find the Registration Statement, reports, proxy
statements and other information regarding the Company that was filed
electronically.

     Except for the person set forth in the foregoing paragraph, no person has
been authorized to give any information or make any representations, other than
those contained in this prospectus, in connection with the Plan, and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company. This prospectus does not constitute an offering
in any state in which such offering may not lawfully be made.

--------------------------------------------------------------------------------

       * Q&As 4, 22, and 35 OF THIS DOCUMENT DO NOT CONSTITUTE A PART OF A
                                             ------
            PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

--------------------------------------------------------------------------------

                The date of this prospectus is October 22, 2001.
                ------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                    <C>
INTRODUCTION ........................................................   1

ELIGIBILITY & PARTICIPATION .........................................   3

OPTION GRANTS .......................................................   3

VESTING .............................................................   4

OPTION EXERCISE .....................................................   4

EMPLOYMENT STATUS ...................................................   6

TERMINATING SERVICE WITH THE COMPANY ................................   6

STOCKHOLDER RIGHTS ..................................................   7

TRANSFER OF CONTROL OF THE COMPANY ..................................   8

STOCK SALES .........................................................   9

TAX IMPLICATIONS OF INCENTIVE STOCK OPTIONS .........................   9

TAX IMPLICATIONS OF NONSTATUTORY STOCK OPTIONS ......................  11

FEDERAL SECURITIES LAWS AFFECTING PARTICIPANTS ......................  13

PLAN ADMINISTRATION .................................................  14

AMENDMENT OR TERMINATION OF THE PLAN ................................  15

OTHER INFORMATION ...................................................  15
</TABLE>

<PAGE>

                            Questions & Answers About

            The Extreme Networks, Inc. Amended 1996 Stock Option Plan

================================================================================

      The purpose of this prospectus is to provide you with a summary of the
terms of the Extreme Networks, Inc. Amended 1996 Stock Option Plan. Should any
inconsistency exist between the following description and the actual terms of
the Plan or your Stock Option Agreement, the terms of the Plan and your Stock
Option Agreement control.

================================================================================

Introduction

================================================================================

1.    What is the purpose of the Plan?

      The Company adopted the Plan to promote the interests of the Company by
      providing eligible persons with the opportunity to acquire a proprietary
      interest, or otherwise increase their proprietary interest in the Company,
      as an incentive for them to remain in service with the Company. Under the
      Plan, the Company may grant stock options to purchase the Company's Shares
      at a specified price to any such employees, consultants, and directors as
      may be selected by the Board of Directors of the Company (the "Board").

2.    What is a stock option?

      A stock option gives the option holder the right to purchase a specified
      number of Shares within a specified time period at a price determined at
      the time the option is granted. The exact number and the price of Shares
      you are entitled to purchase under the option granted to you is set forth
      in your Notice of Grant of Stock Options (the "Notice") and Stock Option
      Agreement (the "Option Agreement").

3.    Are there different kinds of stock options?

      Yes. The Plan authorizes both incentive stock options ("ISOs"), which must
      meet certain requirements under Section 422 of the Internal Revenue Code
      of 1986, as amended (the "Code"), and nonstatutory stock options ("NSOs"),
      which do not have to meet those requirements. Your Notice will indicate
      whether your option is intended to be an ISO or an NSO. Please be aware,
      however, that due to Internal Revenue Code limitations imposed on ISOs, an
      option initially intended to be an ISO may not in fact qualify, and may
      instead be an NSO in full or in part. In particular, if the aggregate
      exercise price of all your ISOs exceeds $100,000, the portion of such
      options which exceed such amount will be treated as NSO and not ISO. An
      NSO is a type of option that does not provide the special tax treatment
      accorded to ISOs. See Q&A 36 through 51 regarding the major federal income
      tax consequences of ISOs and NSOs.

<PAGE>

4.    What are the benefits of receiving a stock option?

      If the value of the Company increases, then the value of the Company's
      stock and the value of your option will increase proportionately. Since
      your option gives you the right to purchase Shares of the Company at a
      fixed price during the period specified in your Notice, you may ultimately
      profit from any increase in the value of the Shares. If you choose to
      exercise your option, then, as a stockholder, you will become a part owner
      of the Company and will have the right to receive any dividends paid on
      your stock and all communications sent to the Company's common
      stockholders, attend all stockholder meetings and vote upon all matters
      presented to the stockholders at such meetings. However, once you purchase
      Shares, you also bear the risk of price declines.

5.    What is the total number of Shares that may be issued under the Plan?

      A total of 34,028,618 Shares of the Company are reserved for issuance
      under the Plan. This number of Shares will be cumulatively increased (the
      "Annual Increase") on the December 1, 2000, and each December 1 thereafter
      until and including December 1, 2004, by a number of Shares equal to 4.9%
      of the number of Shares issued and outstanding on the immediately
      preceding November 30. The Shares may be authorized but unissued Shares or
      reacquired Shares.

6.    What happens if there is a change in the Company's capital structure?

      If there is a change in the Company's capital structure, the Company will
      make appropriate adjustments to the number and class of Shares subject to
      the Plan and your outstanding options, and to the purchase price under
      your outstanding options. These adjustments will prevent any dilution or
      enlargement of the rights and benefits of Plan participants that would
      otherwise occur as a result of a change in the Company's capital
      structure. However, in no event may the exercise price of any option be
      less than the par value, if any, of the Shares subject to the option.

      A "change in the Company's capital structure" includes: a stock dividend,
      stock split, reverse stock split, recapitalization, combination,
      reclassification, or similar change affecting the Company's Shares.

7.    Is the Plan subject to the provisions of the Employee Retirement Income
      Security Act of 1974?

      No. The Plan is not subject to the Employee Retirement Income Security Act
      of 1974.

                                        2

<PAGE>

================================================================================

ELIGIBILITY & PARTICIPATION

================================================================================

8.    Am I eligible to receive options under the Plan?

      You are eligible to receive options under the Plan if you are a current or
      prospective (pursuant to a written offer of employment) employee,
      consultant or director of the Participating Company Group. If you are not
      an employee on the effective date of the grant of your option, you may be
      granted only NSOs.

9.    Do I need to enroll in the Plan?

      No. You do not need to enroll in the Plan in order to receive stock
      options under the Plan. The decision to grant or not to grant options to
      any otherwise eligible person is solely within the discretion of the Board
      or a committee of the Board.

================================================================================

OPTION GRANTS

================================================================================

10.   What is the Date of Option Grant?

      The "Date of Option Grant" is the day that the Company grants you an
      option to purchase Shares unless the Board specifies a later effective
      date. Your Date of Option Grant is stated in your Notice.

11.   How many Shares does my option cover?

      The number of Shares covered by your option is determined by the Board at
      its discretion. If you are granted an option, the number of Shares subject
      to your option is stated in your Notice. However, no person is eligible to
      receive an option which is exercisable for more than that number of Shares
      equal to 5% of the outstanding Shares on the closing date of the Company's
      initial public offering of common stock.

12.   What is the Option Expiration Date?

      The "Option Expiration Date" is the last day on which you may exercise
      your option as specified in your Notice. Unless otherwise terminated, the
      Option Expiration Date for all options is the date ten (10) years after
      your Date of Option Grant. Notwithstanding the foregoing, if your option
      is an ISO and you are a 10% stockholder, the Option Expiration Date is the
      date five (5) years after your Date of Option Grant.

                                        3

<PAGE>

13.   Must I sign a Stock Option Agreement?

      Yes. No option is valid or a binding obligation of the Company unless
      evidenced by a fully executed Notice.

================================================================================

VESTING

================================================================================

14.   What are the vesting provisions of my option?

      Your Notice states the rate at which your option vests and becomes
      exercisable.

15.   Does my termination from service affect the vesting of my option?

      Yes. Upon your termination of service, your vesting will stop and the
      vested percentage of your option will depend on your length of service at
      the date of your termination.

=====================================================================

OPTION EXERCISE

=====================================================================

16.   What is my option exercise date or purchase date?

      The exercise date is the day that you exercise your option to purchase the
      Company's common stock.

17.   When may I exercise my option?

      You may exercise your option on or after the date stated in your Notice
      and prior to the Option Expiration Date. If you were granted an option as
      a prospective employee or prospective consultant, you may not in any event
      exercise your option prior to the date on which your service commences.

18.   How many Shares may I purchase?

      When you exercise your option, you may purchase up to the number of Vested
      Shares, as defined in your Option Agreement, less the number of Shares you
      previously acquired by exercising your option. See Q&A 12 & 14 for a
      discussion of the Option Expiration Date and vesting.

19.   How do I exercise my option?

      To exercise your option you must give written notice to the Company and
      pay the exercise price for the Shares you are purchasing. The notice must
      state your election to

                                        4

<PAGE>

      exercise the option, the number of whole Shares of the Company stock you
      are purchasing and any other information required by your Option
      Agreement. You must sign the written notice and deliver it in person, by
      certified or registered mail, return receipt requested, by confirmed
      facsimile transmission, or by such other means as the Company may permit,
      to the Chief Financial Officer of the Company or other authorized
      representative of the Participating Company Group. You must deliver the
      written notice and your exercise price payment prior to the termination of
      the option. You must also make appropriate arrangements with the Company
      for the satisfaction of all federal, state, local and foreign income and
      employment tax withholding requirements applicable to the option exercise.
      See Q&A 21 for authorized forms of payment and Q&A 48 for a discussion of
      withholding.

20.   What is the exercise price of my option?

      The exercise price of your option is stated in your Notice. This price was
      established when your option was granted. Under the terms of the Plan, if
      your option is an ISO, the price had to be set at no less than the fair
      market value of a Share on the Date of Option Grant, and if your option is
      an NSO, the price had to be set at no less than 85% of the fair market
      value of a Share on the Date of Option Grant. However, if you are a 10%
      stockholder and your option is an ISO, the price had to be set at no less
      than 110% of the fair market value of a Share on the Date of Option Grant.

      The "fair market value" for this purpose is generally the closing sale
      price of a share on the applicable date as quoted on the Nasdaq National
      Market.

21.   How do I pay for the stock when I exercise my option?

      Generally, you may pay the exercise price using any combination of the
      following methods, unless otherwise provided in your Option Agreement:

          1.  Cash or check.

          2.  By tender to the Company, or attestation to the ownership, of
              shares of the Company common stock you own which have a fair
              market value not less than the exercise price. This method of
              payment may not be used unless you either have owned the tendered
              shares for more than 6 months or did not acquire the shares
              directly or indirectly from the Company.

          3.  A "cashless exercise." A "cashless exercise" means the assignment
              to the Company of the proceeds of a sale or loan with respect to
              some or all of the Shares being acquired upon the exercise of the
              option. A form of cashless exercise is often referred to as
              "same-day sale."

          4.  By a promissory note in a form approved by the Company.

      The Board may at any time or from time to time grant options which do not
      permit all of the foregoing forms of consideration to be used in payment
      of the exercise price or which otherwise restrict one or more forms of
      consideration.

                                        5

<PAGE>

22.   Will I receive stock certificates for the Shares that I purchase?

      Except in the case where you pay the exercise price by means of a cashless
      exercise, you will receive a certificate for the Shares you have purchased
      that will be registered in your name, or, if applicable, in the names of
      your heirs.

================================================================================

EMPLOYMENT STATUS

================================================================================

23.   If I receive an option under the Plan will it affect the terms of my
      employment?

      No. Unless you have a written employment contract with the Company
      providing otherwise, your employment is "at-will." This means that either
      you or your employer has the right to end your employment relationship at
      any time, for any reason, with or without cause. If you receive an option
      under the Plan, it will not affect your "at-will" relationship with the
      Company.

24.   What happens if I take a leave of absence?

      Generally, if you take an approved leave of absence, including military
      leave or sick leave, of 90 days or less, your service for Plan purposes
      will continue. However, if your leave of absence exceeds 90 days, your
      service will be deemed to terminate on the 91st day of such leave, unless
      your right to return to employment with the Company is guaranteed by law
      or by contract. Unless otherwise stated by the Company or required by law,
      your leave of absence will not be treated as service for purposes of
      vesting. See Q&A 14 for a discussion of vesting.

================================================================================

TERMINATING SERVICE WITH THE COMPANY

================================================================================

25.   What service counts for purposes of the Plan?

      "Service" for Plan purposes means your employment or service as an
      employee, a consultant, or a director of the Participating Company Group.
      Your service shall not be deemed to terminate merely because of a change
      in the capacity in which you render service to the Participating Company
      Group or a change in the Participating Company for which you render such
      service, provided that there is no interruption or termination of your
      service. Your service shall be deemed terminated either upon an actual
      termination of service or upon the corporation for which you perform
      service ceasing to be a Participating Company.

                                        6

<PAGE>

26.   What happens to my option if my service terminates?

      With certain exceptions described below, if your service terminates and
      your option was granted prior to April 17, 2001, you will generally have
      30 days from the date of your termination of service (but in no event
      later than the Option Expiration Date) to exercise the vested portion of
      your option. However, if your option is granted after April 17, 2001, you
      will generally have 90 days from the date of your termination of service
      (but in no event later than the Option Expiration Date) to exercise the
      vested portion of your option.

      If your service terminates due to your disability or death, you (or your
      estate) will generally have 12 months following termination (but in no
      event later than the Option Expiration Date) to exercise the vested
      portion of your option. However, the effect of your termination of service
      is specified in your Option Agreement and to the extent the provisions of
      the Option Agreement differ from the terms described above, the terms of
      your Option Agreement will control.

      If the exercise of your option within the applicable time periods set
      forth above is prevented by securities law, your option will remain
      exercisable until one month after the date you are notified by the Company
      that the Option is exercisable (but in no event later than the Option
      Expiration Date).

      If a sale within the applicable time periods set forth above of shares
      acquired by the exercise of your option will subject you to a suit under
      Section 16(b) of the Exchange Act, your exercise period may be extended
      until the earliest of (i) the 10th day following the date on which a sale
      of such shares would no longer be subject to suit, (ii) the 190th day
      after your termination of service, or (iii) the Option Expiration Date.

27.   What happens to my Shares if my service with the Company terminates?

      You are entitled to retain ownership of any Vested Shares you have
      purchased until such time as you decide to sell them. Generally, your
      option will terminate and you will forfeit any Shares that have not vested
      as of the date of your termination of service.

=====================================================================

STOCKHOLDER RIGHTS

=====================================================================

28.   Do I become a stockholder when I receive an option?

      No. You have no rights as a Company stockholder merely by virtue of being
      an option holder.

                                       7

<PAGE>

29.   When do I have rights as a stockholder?

      You have rights as a Company stockholder on the date you are issued the
      shares for which your option has been exercised, as evidenced by the
      appropriate entry on the books of the Company or of a duly authorized
      transfer agent of the Company.

30.   What information do I receive as an option holder?

      You will be given access to information concerning the Company equivalent
      to the information generally made available to the Company's common
      stockholders.

31.   Can I assign or transfer my options?

      Generally no. During your lifetime, your options can only be exercised by
      you, your guardian or legal representative. You cannot transfer or assign
      any option, except by will or by the laws of descent and distribution.

================================================================================

TRANSFER OF CONTROL OF THE COMPANY

================================================================================

32.   What is a "transfer of control"?

      A "transfer of control" of the Company includes any of the following
      events in which the stockholders of the Company immediately before such
      event do not retain direct or indirect beneficial ownership of at least a
      majority of the beneficial interest in the voting stock of the Company or
      its successor:

          (1)  a direct or indirect sale or exchange by the stockholders of the
               Company of more than fifty percent (50%) of the voting stock of
               the Company;

          (2)  a merger or consolidation in which the Company is a party;

          (3)  the sale, exchange or transfer of all or substantially all of the
               assets of the Company; or

          (4)  liquidation or dissolution of the Company.

33.   What happens to my option if there is a transfer of control in the term of
      the Plan?

      If a transfer of control occurs, the surviving, continuing, successor, or
      purchasing corporation or parent corporation of any of these may either
      assume the Company's rights and obligations under outstanding options or
      substitute for outstanding options substantially equivalent options for
      the acquiring corporation's stock.

      However, if the acquiring corporation does not assume or substitute for
      the outstanding options, the Board may, in its sole discretion, provide in
      any Option Agreement that any

                                        8

<PAGE>

      unexercisable or unvested portions of the outstanding options will be
      immediately exercisable and vested in full as of the date 10 days prior to
      the date of the transfer of control. Any option or portion thereof which
      is neither assumed or substituted for by the acquiring corporation nor
      exercised as of the date of the change in control will terminate and cease
      to be outstanding effective as of the date of the change in control.

================================================================================

STOCK SALES

================================================================================

34.   When may I sell the Shares that I receive by exercising my option?

      Generally, you may sell the Shares that you receive at any time after the
      Shares have been issued in your name. Before you sell any of your Shares,
      you should discuss the tax implications of the sale with a tax advisor.
      See Q&A 36-51 below, Tax Implications of Incentive Stock Options and Tax
      Implications of Nonstatutory Stock Options. See also Q&A 52-54 below,
      Federal Securities Laws Affecting Participants.

35.   Do I pay brokerage commissions on the purchase of Shares under the Plan or
      when I subsequently sell such Shares?

      You will not pay any brokerage commissions when you exercise your option
      and purchase shares. However, you will be responsible for paying any
      brokerage commissions you incur on your subsequent sale of such shares.

================================================================================

TAX IMPLICATIONS OF INCENTIVE STOCK OPTIONS

================================================================================

      The tax consequences arising in connection with options are complex and
subject to change. The following summary is only a general guide to the current
U.S. federal income tax consequences of ISOs granted under the Plan and does not
describe all such possible tax consequences or consequences associated with
NSOs. In addition, your particular situation may be such that some variation of
the general rules is applicable. For example, the following summary does not
describe the tax consequences of certain transactions, such as if Shares are
used to exercise an option, if Shares acquired by exercise of an option are sold
to certain related parties, or if you acquire substantially identical Shares
within the 30-day period before or after your sale of Shares acquired upon
exercise of an option. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS PRIOR TO THE
EXERCISE OF ANY OPTION AND PRIOR TO THE DISPOSITION OF ANY SHARES ACQUIRED UNDER
THE PLAN.

                                        9

<PAGE>

36.   Is the grant to me of an ISO a taxable event?

      No. You do not recognize taxable income merely because you are granted an
      ISO under the Plan.

37.   Is my exercise of an ISO a taxable event?

      No. You do not recognize taxable income for regular tax purposes as a
                                                  -------
      result of your exercise of an ISO. However, when you exercise an ISO, the
      excess of the fair market value of the Shares on the date of the exercise
      over the exercise price of the ISO, often referred to as the "spread," is
      treated as income for purposes of computing your alternative minimum tax
                                                       -----------------------
      unless you dispose of the Shares in the same calendar year as your
      exercise.

          EXAMPLE: Adams has an ISO for 1,000 Shares of stock with an exercise
          price of $7 per share. If Adams exercises the option for all 1,000
          Shares on a day when they are fully vested and the fair market value
          of the stock is $10 per share, then the spread of $3 per share ($10 -
          $7), or $3,000, is an item of alternative minimum taxable income.

      The Code requires taxpayers to compute the tax due under the alternative
      minimum tax and to pay that amount with their Form 1040 return if it is
      greater than the amount due under the regular method of determining income
      taxes. (If you are required to pay such additional taxes, you may be
      entitled to claim certain tax credits against your regular tax obligations
      in years following the year of exercise.) You may need to pay quarterly
      estimated tax or increase your income tax withholding from wages to avoid
      penalties for underpayment of estimated tax. If you are considering
      exercising ISOs, you should consult your personal tax advisor before
                                                                    ------
      exercising your options to determine the alternative minimum tax
      -----------------------
      consequences based on your particular situation.

38.   Is my subsequent sale of Shares acquired pursuant to an ISO under the Plan
      a taxable event?

      Yes. When you sell or otherwise dispose of your shares, your federal
      income tax consequences will depend on how long you have held the stock.
      If you do not dispose of the stock prior to the later of two years after
      the date of option grant and one year after the date on which you
      exercised the option (the "ISO Holding Period"), you will recognize a
      capital gain (or loss) equal to the amount by which the sale proceeds
      exceed (or are less than) your adjusted basis in the Shares. For regular
      tax purposes the adjusted basis is generally the exercise price. For
      alternative minimum tax purposes the adjusted basis is generally the
      exercise price plus any spread treated as an item of income for
      alternative minimum tax purposes. The capital gain will be long term
      capital gain.

      However, if you sell or otherwise dispose of your Shares prior to the end
      of the ISO Holding Period, then you will generally recognize ordinary
      income in the year of disposition equal to the lesser of: (1) the
      difference between the fair market value of the Shares on the date of
      option exercise and the exercise price you paid, or (2) the actual

                                       10

<PAGE>

     gain you realized on the disposition (sale proceeds minus the exercise
     price you paid) and any additional gain or loss will be long-term or
     short-term capital gain or loss depending upon the length of time you have
     held the Shares.

39.  What are long-term and short-term capital gains?

     A capital gain or loss will be long-term if you hold the Shares for more
     than 1 year after your purchase date and short-term if you hold the Shares
     for 1 year or less after your purchase date. Currently, long-term capital
     gains are subject to a maximum federal income tax rate of 20%.

40.  Will any amounts be withheld from my paycheck to cover my tax liability?

     No.

41.  Will I owe any other taxes?

     The above discussion is only a summary of certain aspects of the highly
     complex U.S. federal income tax rules applicable to ISOs and does not deal
     with other taxes which may affect you, such as state and local income
     taxes, federal and state estate, gift and inheritance taxes and taxes of
     countries other than the United States of America. You should obtain and
     rely on the advice of your own tax advisor with respect to such matters.

42.  Who can I talk to about my specific tax situation?

     Since the tax implications of stock options can be complex and can vary by
     individual, we suggest that you contact your tax advisor with questions
     specific to your situation.

43.  Does the Company receive a tax deduction?

     The Company is generally entitled to a tax deduction equal to the ordinary
     income that you recognize under the rules discussed above, except to the
     extent such deduction is limited by applicable provisions of the Internal
     Revenue Code or the regulations thereunder.

================================================================================

TAX IMPLICATIONS OF NONSTATUTORY STOCK OPTIONS

================================================================================

     The tax consequences arising in connection with options are complex and
subject to change. The following summary is only a general guide to the current
U.S. federal income tax consequences of NSOs granted under the Plan and does not
describe all such possible tax consequences or consequences associated with
ISOs. In addition, your particular situation may be such that some variation of
the general rules is applicable. For example, the following summary does not
describe the tax consequences of certain transactions, such as if Shares are

                                       11

<PAGE>

used to exercise an option, if Shares acquired by exercise of an option are sold
to certain related parties, or if you acquire substantially identical Shares
within the 30-day period before or after your sale of Shares acquired upon
exercise of an option. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS PRIOR TO THE
EXERCISE OF ANY OPTION AND PRIOR TO THE DISPOSITION OF ANY SHARES ACQUIRED UNDER
THE PLAN.

44.  Is the grant to me of an NSO a taxable event?

     No. You do not receive taxable income merely because you are granted an NSO
     under the Plan.

45.  Is my exercise of an NSO a taxable event?

     Yes. You will recognize taxable income as a result of your exercise of an
     NSO. Generally, the amount of that income is determined on your exercise
     date. At that time, you will recognize ordinary income equal to the excess
     of the fair market value of the Shares on the exercise date over the
     purchase price you pay for the Shares. If you are an employee or former
     employee, that ordinary income is treated as wages subject to income and
     employment tax withholding.

46.  Is my subsequent sale of Shares acquired pursuant to an NSO under the Plan
     a taxable event?

     Yes. Your sale of any Shares that you acquire pursuant to an NSO under the
     Plan is a taxable event. At that time, you will recognize capital gain or
     loss equal to any additional gain or loss recognized in the disposition.
     That gain or loss is determined by the difference between the amount you
     realize on the sale of the Shares and the fair market value of those Shares
     on the option exercise date. The tax consequences of disposing of the
     Shares will vary depending on how long you have held the Shares.

47.  What are long-term and short-term capital gains?

     A capital gain or loss will be long-term if you hold the Shares for more
     than 1 year after your purchase date and short-term if you hold the Shares
     for 1 year or less after your purchase date. Currently, long-term capital
     gains are subject to a maximum federal income tax rate of 20%.

48.  Will any amounts be withheld from my paycheck to cover my tax liability?

     If you are an employee or former employee, when you purchase Shares by
     exercising your NSO, you must make adequate provision for any federal,
     state, local or foreign tax withholding obligations. Generally, you will be
     required to pay directly to the Company or your employer the full amount of
     your tax withholding obligation at the time you exercise your NSO. If you
     exercise your NSO in a cashless exercise (same-day sale), you will be
     required to assign to the Company a portion of your share sale proceeds
     sufficient to pay your withholding tax. The Company may, but is not
     required to, withhold from your compensation the amount necessary to meet
     its tax withholding obligations. If you request, the Company may, but is
     not obligated to, withhold from the vested Shares

                                       12

<PAGE>

     otherwise issuable to you on exercise of your option a number of whole
     Shares having a fair market value on the exercise date not in excess of the
     minimum amount of tax required to be withheld by law. The Company will not
     be liable to you for any adverse tax consequences you suffer in connection
     with this share withholding procedure. The Company has no obligation to
     deliver Shares of stock until you have satisfied the withholding
     obligation.

49.  Will I owe any other taxes?

     The above discussion is only a summary of certain aspects of the highly
     complex U.S. federal income tax rules applicable to NSOs and does not deal
     with other taxes which may affect you, such as state and local income
     taxes, federal and state estate, gift and inheritance taxes and taxes of
     countries other than the United States of America. You should obtain and
     rely on the advice of your own tax advisor with respect to such matters.

50.  Who can I talk to about my specific tax situation?

     Since the tax implications of stock options can be complex and can vary by
     individual, we suggest that you contact your tax advisor with questions
     specific to your situation.

51.  Does the Company receive a tax deduction?

     The Company is generally entitled to a tax deduction equal to the ordinary
     income that you recognize under the rules discussed above, except to the
     extent such deduction is limited by applicable provisions of the Code or
     the regulations thereunder.

================================================================================

FEDERAL SECURITIES LAWS AFFECTING PARTICIPANTS

================================================================================

52.  What is Section 16(b)?

     Section 16(b) of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act"), permits the recovery by the Company of any profit realized
     by an "Insider" from each purchase and subsequent sale, or sale and
     subsequent purchase, of Shares within any period of less than six months.
     An "Insider" for this purpose is any officer or director of the Company or
     person who is directly or indirectly the beneficial owner of more than 10%
     of any class of equity security of the Company that is registered under
     Section 12 of the Exchange Act. If you are an Insider, you should consult
     with the Company's general counsel or your own legal advisor prior to the
     disposition of any Shares in order to ascertain the precise application to
     your particular situation of your reporting obligations and liability under
     Section 16(b).

                                       13

<PAGE>

53.  What is Rule 10b-5?

     Rule 10b-5 under the Exchange Act prohibits you from engaging in fraudulent
     practices in connection with the purchase or sale of securities. This rule
     generally prohibits you from buying or selling the Company's securities
     using material information about the Company which has not yet been
     released to the public. Before buying or selling any Shares and, in
     particular, before selling Shares acquired under the Plan, you should
     consult with the Company's general counsel regarding the applicability of
     any the Company "trading window" policies prohibiting trading in the
     Company's stock during specified periods of the year when material inside
     information is likely to be held prior to its release to the public.

54.  What is Rule 144?

     "Affiliates" of the Company are generally obligated to resell Shares in
     compliance with Rule 144 promulgated by the Securities and Exchange
     Commission under the Securities Act of 1933, as amended (the "Securities
     Act"). Participants in the Plan with the power to manage and direct the
     policies of the Company, relatives of such participants, and trusts,
     estates, corporations, or other organizations controlled by such
     participants may be deemed to be "Affiliates" of the Company.

     Rule 144 requires that sales by Affiliates be effected in "broker
     transactions" (as defined in Rule 144), and limits the number of Shares
     that may be sold in any 3-month period to no more than the greater of 1% of
     the outstanding Shares or the average weekly reported volume of trading in
     Shares during the 4 calendar weeks preceding the filing of the required
     notice of the proposed sale. Since the Shares have been registered under
     the Securities Act, Affiliates selling Shares in compliance with Rule 144
     are not subject to the holding period requirements of Rule 144.

================================================================================

PLAN ADMINISTRATION

================================================================================

55.  Who administers the Plan?

     The Plan is administered by the Board and/or by a duly appointed committee
     having such powers as specified by the Board. All questions of
     interpretation of the Plan or of any option are determined by the Board,
     whose decisions are final and binding upon all persons having an interest
     in the Plan.

     The Board may establish a committee of "outside directors" within the
     meaning of Section 162(m) of the Code to approve any option grant which
     might reasonably be anticipated to result in the payment of employee
     remuneration that would otherwise exceed the limit on employee remuneration
     deductible for income tax purposes pursuant to Section 162(m).

                                       14

<PAGE>

56.  Who is on the Board?

     The Board consists of five directors. The members of the Board hold office
     until the expiration of the term for which elected and until their
     successors are elected and qualified or until their earlier death,
     resignation or removal from office.

================================================================================

AMENDMENT OR TERMINATION OF THE PLAN

================================================================================

57.  Can the Plan be amended or terminated?

     Yes. The Board may terminate or amend the Plan at any time. However,
     without stockholder approval, the Board may not (1) increase the number of
     shares issuable under the Plan (except in the event of capital changes
     described above), (2) change the class of persons eligible to receive ISOs,
     or (3) adopt an amendment to the Plan which would require stockholder
     approval under any applicable law, regulation or rule.

     In addition, no termination or amendment of the Plan may adversely affect
     an option previously granted to you without your consent, unless such
     termination or amendment is required to enable an option designated as an
     ISO to qualify as an ISO or is necessary to comply with any applicable law,
     regulation or rule.

58.  How long can the Plan remain in effect?

     The Plan will remain in effect until either all Shares available for
     issuance under the Plan have been issued or the Board terminates the Plan,
     whichever is earlier; provided that all options must be granted before
     September 3, 2006.

================================================================================

OTHER INFORMATION

================================================================================

59.  Where can I get additional information?

     You can get additional information about the Plan from the Company at
     Extreme Networks, Inc., 3585 Monroe Street, Santa Clara, California 95051,
     (408) 579-1000.

60.  Can anyone at the Company provide me with tax advice?

     No. Since the tax implications of your stock options can be complex and can
     vary by individual, you should contact your individual tax advisor with
     questions specific to your situation.

                                       15

<PAGE>

61.  What documents are incorporated by reference in this prospectus?

     The following documents and information previously filed by the Company
     with the Securities and Exchange Commission are incorporated by reference
     in this prospectus:

     .    The Company's latest annual report on Form 10-K filed pursuant to
          Sections 13(a) or 15(d) of the Exchange Act, containing audited
          financial statements for the Company's latest fiscal year;

     .    All other reports filed pursuant to Section 13(a) or 15(d) of the
          Exchange Act since the end of the fiscal year covered by the
          registrant document referred to above;

     .    All documents filed by the Company pursuant to Sections 13(a), 13(c),
          14 and 15(d) of the Exchange Act after the date of this prospectus and
          prior to the filing of a post-effective amendment; and

     .    The description of the Company's common stock contained in its
          Registration Statement on Form 8-A filed under the Exchange Act,
          including any amendment or report filed for the purpose of updating
          such description.

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