It is rather simple to factory reset a Cisco 7960 IP phone, actually this method should work for most Cisco IP phones! Password not required!
- Power cycle the phone
- Hold down the # key when you reconnect the power
- Once the phone is restarted "Reset key sequence detected" will appear on screen
- Release the # key and enter in 1 2 3 4 5 6 7 8 9 * 0 #
- Choose 1 to save network config or 2 to delete network config
- Phone will revert to factory settings regardless if you choose to keep the network config or not.