Exhibit 4.2
TELLIUM, INC.
SPECIAL 2001 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
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THIS AGREEMENT, is made as of the day of ______, 2001, by and between
Tellium, Inc., a Delaware corporation (the "Company"), and the individual named
on the Notice of Grant who is employed by, or providing services to, the Company
or one of its affiliates and who is a signatory hereto (the "Optionee").
WHEREAS, the Board of Directors and stockholders of the Company have
duly adopted and approved the Tellium, Inc. Special 2001 Stock Incentive Plan
(the "Plan") in order to provide additional incentive to certain of its
employees of the Company and its Subsidiaries; and
WHEREAS, the Committee appointed to administer the Plan has determined
that it would be to the advantage and best interest of the Company and its
stockholders to grant the Option provided for herein to the Optionee as an
inducement to enter into or remain in the service of the Company or its
Subsidiaries and as an incentive for increased efforts during such service, and
has advised the Company thereof and instructed the undersigned officers to issue
this Option;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. Grant of Option.
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1.1 In consideration of the Optionee's agreement to remain in
the employ of the Company or its Subsidiaries and for other good and valuable
consideration, on the date hereof, the Company irrevocably grants to the
Optionee the right and option (the "Option") to purchase all or any part of that
number of whole Shares as is set forth in the Notice of Grant attached hereto
upon the terms and conditions set forth in this Agreement and such Notice of
Grant. If designated in the Notice of Grant as an Incentive Stock Option, the
Option is intended to qualify as an "incentive stock option" within the meaning
of Section 422 of the Code and shall be so construed; provided, however, that
nothing in this Agreement shall be interpreted as a representation, guarantee or
undertaking on the part of the Company that the Option is or will be determined
to be an incentive stock option within the meaning of Section 422 of the Code.
1.2 In consideration of the granting of this Option by the
Company, the Optionee agrees to render faithful and efficient services to the
Company or a Subsidiary, with such duties and responsibilities as the Company
shall from time to time prescribe, for a period of at least one (1) year (or
such shorter period as may be fixed in the Notice of Grant) from the Date of
Grant set forth is the Notice of Grant.
1.3 This Agreement shall be construed in accordance and
consistent with, and subject to, the provisions of the Plan (the provisions of
which are incorporated herein by reference) and, except as otherwise expressly
set forth herein, the capitalized terms used in this Agreement shall have the
same definitions as set forth in the Plan. In the event any provision of this
Agreement shall conflict with any of the terms in the Plan as constituted on the
Date of Grant, the terms of the Plan as constituted on the Date of Grant shall
control.
2. Purchase Price.
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The price at which the Optionee shall be entitled to purchase
Shares upon the exercise of the Option shall be equal to the Option Price per
Share set forth in the Notice of Grant attached hereto.
3. Duration of Option.
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The Option shall be exercisable to the extent and in the
manner provided herein for a period of ten (10) years from the Date of Grant
(the "Exercise Term"); provided, however, that the Option may be earlier
terminated as provided in Section 6 hereof. Notwithstanding any provision of
this Option to the contrary, if designated in the Notice of Grant as an
Incentive Stock Option, in no event may this Option be exercised after ten (10)
years from the Date of Grant (five (5) years in the event this Option is granted
to a Ten-Percent Stockholder).
4. Exercisability of Option.
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4.1 Unless otherwise provided in this Agreement or the Plan,
the Option shall become vested and exercisable in accordance with the Vesting
Schedule set forth in the Notice of Grant. Each installment that becomes vested
and exercisable shall be cumulative and shall remain exercisable during the
remaining period of the Exercise Term, unless sooner exercised or terminated as
herein provided.
4.2 Anything contained in this Agreement to the contrary
notwithstanding, to the extent the Option is intended to qualify as an Incentive
Stock Option, as set forth in the Notice of Grant, the Option shall not be
exercisable as an Incentive Stock Option, and shall be treated as a Nonqualified
Stock Option, to the extent that the aggregate Fair Market Value (determined as
of the date of grant of each option) of Shares with respect to which Incentive
Stock Options granted under the Plan and "incentive stock options" (within the
meaning of Section 422 of the Code) granted under all other plans of the Company
or its Subsidiaries (in either case determined without regard to this Section
4.2) are exercisable by the Optionee for the first time during any calendar year
exceeds $100,000. In applying the limitation in the preceding sentence in the
case of multiple option grants, options which were intended to be Incentive
Stock Options shall be treated as Nonqualified Stock Options according to the
order in which
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they were granted such that the most recently granted options are first treated
as Nonqualified Stock Options.
5. Manner of Exercise and Payment.
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5.1 Subject to the terms and conditions of this Agreement and
the Plan (including without limitation, any alternative method of exercise and
payment), the Option may be exercised by delivery to the Secretary of the
Company, at its principal executive office of a written notice signed by the
Optionee (or the person or persons then entitled to exercise the Option)
complying with the applicable rules established by the Committee. Such notice
shall state that the Optionee is electing to exercise the Option in whole or in
part and the number of whole Shares in respect of which the Option is being
exercised, provided, however, that any partial exercise of the Option shall be
for not less than five hundred (500) Shares (or the minimum installment, if a
smaller number of Shares). If requested by the Committee, the Optionee or such
other person or persons shall (i) deliver this Agreement to the Secretary of the
Company who shall endorse thereon a notation of such exercise and (ii) provide
satisfactory proof as to the right of such person or persons to exercise the
Option.
5.2 The notice of exercise described in Section 5.1 hereof
shall be accompanied by the full purchase price for the Shares in respect of
which the Option is being exercised, in cash, by check, or with the consent of
the Committee, (i) by Shares that have been held by the Optionee for at least
six (6) months prior to the exercise of the Option, duly endorsed for transfer
to the Company, that have a Fair Market Value on the day preceding the date of
exercise equal to the cash amount for which such Shares are substituted or (ii)
by Shares issuable to the Optionee upon exercise of the Option, with a Fair
Market Value on the date of delivery equal to the cash amount for which such
Shares are substituted, or (iii) by a combination of cash and the transfer of
Shares.
5.3 Upon receipt of notice of exercise and full payment for
the Shares in respect of which the Option is being exercised and all amounts
which under federal, state or local law the Company (or other employer
corporation) is required to withhold upon exercise of the Option in accordance
with Section 12 hereof, the Company shall, subject to Section 14 of the Plan,
take such action as may be necessary to effect the transfer to the Optionee of
the number of Shares as to which such exercise was effective.
5.4 The Optionee shall not be deemed to be the owner of any
Shares subject to the Option unless and until (i) the Option shall have been
exercised pursuant to the terms of this Agreement and the Optionee shall have
paid the full purchase price for the number of Shares in respect of which the
Option was exercised and all amounts which under federal, state or local law the
Company (or other employer corporation) is required to withhold upon exercise of
the Option, (ii) the Company shall have issued and delivered the Shares to the
Optionee, and (iii) the Optionee's name shall have been
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entered as a stockholder of record on the books of the Company, whereupon the
Optionee shall have full voting, dividend and other ownership rights with
respect to such Shares.
6. Termination of Employment. The following provisions apply to
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the Option upon a termination or change in the status of the employment of the
Optionee:
6.1 Disability or Retirement. If the Optionee suffers a
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Disability or retires on or after the Optionee's Normal Retirement Date, (i) the
Option or portion thereof which the Optionee was entitled to exercise on the
date of the Optionee's Termination of Employment shall continue to be
exercisable in whole or in part by the Optionee or his or her guardian or legal
representative at any time within one (1) year after the Disability Date or date
of Termination of Employment by reason of retirement, as the case may be, but in
no event after the expiration of the Exercise Term and (ii) unless otherwise
determined by the Committee, the unvested portion of the Option shall terminate
on the Disability Date or the date of such Termination of Employment by reason
of retirement. To the extent the Option is an Incentive Stock Option, it shall
only qualify as such for a period of three (3) months from the date of the
Optionee's Termination of Employment by reason of Disability or retirement and
it shall be a Nonqualified Stock Option thereafter.
6.2 Death. If the Optionee dies while still employed by the
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Company or any Subsidiary, the Option shall immediately become vested and
exercisable with respect to those Shares that otherwise would have vested during
the one-year period following the Optionee's death and shall be deemed to have
become vested and exercisable on the day preceding the date of the Optionee's
death. The portion of the Option which the Optionee was entitled to exercise on
the date of the Optionee's death (which shall include the portion of the Option
that becomes vested and exercisable pursuant to the preceding sentence) (i)
shall continue to be exercisable in whole or in part at any time by the
Optionee's Beneficiary within one (1) year after the Optionee's death but in no
event after the expiration of the Exercise Term and (ii) unless otherwise
determined by the Committee, the unvested portion of the Option shall terminate
on the date of such death. If the Optionee dies after his or her Termination of
Employment, then the Option or the portion thereof which the Optionee was
entitled to exercise on the date of the Optionee's death may be exercised by his
or her Beneficiary within the period specified in Sections 6.1 or 6.4, as the
case may be. In the event of the Optionee's death, the Option shall be
exercisable, to the extent provided in the Plan and this Agreement, by the
legatee or legatees under his will, or by his personal representatives or
distributees and such person or persons shall be substituted for the Optionee
each time the Optionee is referred to herein.
6.3 Termination for Cause. If the Optionee's Termination of
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Employment arises as a result of a termination for Cause, any unexercised
portion of the Option (whether or not vested and exercisable) shall terminate
and expire concurrently
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with the Optionee's Termination of Employment, and no rights hereunder may be
exercised by the Optionee.
6.4 Other Termination of Employment. Upon the Optionee's
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Termination of Employment under circumstances other than those described in
Sections 6.1 and 6.2 and for any reason other than a termination for Cause, (i)
the Option or portion thereof which the Optionee was entitled to exercise on the
date of the Optionee's Termination of Employment shall continue to be
exercisable in whole or in part at any time by the Optionee within three (3)
months after the Optionee's Termination of Employment but in no event after the
expiration of the Exercise Term and (ii) unless otherwise determined by the
Committee, the unvested portion of the Option shall terminate on the date of
such Termination of Employment.
7. Effect of Change in Control.
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Notwithstanding anything contained in this Agreement to the
contrary, in the event of a Change in Control, the Option shall continue;
provided, however, that the Committee, in its sole discretion and on such terms
and conditions as it deems appropriate, may provide for any or all of the
following alternatives (separately or in any combination):
(i) for the payment in cash upon the surrender to the
Company for cancellation of the Option or portion of the
Option to the extent vested and not yet exercised in an amount
equal to the excess, if any, of (1) (A) in the case of a
Nonqualified Stock Option, the greater of (i) the Fair Market
Value, on the date preceding the date of surrender, of the
Shares subject to the Option or portion thereof surrendered or
(ii) the Adjusted Fair Market Value of the Shares subject to
the Option or portion thereof surrendered or (B) in the case
of an Incentive Stock Option, the Fair Market Value, on the
date preceding the date of surrender, of the Shares subject to
the Option or portion thereof surrendered, over (2) the
aggregate purchase price for such Shares under the Option or
portion thereof surrendered.
(ii) for the replacement of the Option with other rights or
property selected by the Committee in its sole discretion;
(iii) for the accelerated vesting of all or a portion of the
Option;
(iv) for the assumption of the Option by the successor or
survivor corporation, or a parent or subsidiary thereof, or
the substitution by such corporation for the Option of a new
option covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares
and prices; or
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(v) for adjustments in the terms and conditions of the
Option and/or the number and type of Shares or other
securities or property subject to the Option.
In the case of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if any,
as are specifically recommended by an independent accounting firm retained by
the Company to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including, without limitation (i)
deferring the vesting, exercise or payment of the Option, (ii) providing that
the payment of the Option shall be made in the form of cash, Shares or
securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (iii) providing for the extension of the term of the Option to
the extent necessary to accommodate the foregoing, but in no event beyond the
Exercise Term.
8. Nontransferability.
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The Option granted hereunder shall not be transferable by the
Optionee other than by will or the laws of descent and distribution or, if the
Option is a designated as a Nonqualified Stock Option in the Notice of Grant, to
a spouse or former spouse pursuant to a domestic relations order (within the
meaning of Rule 16a-12 promulgated under the Exchange Act (a "Domestic Relations
Transfer"). The Option may be exercised during the lifetime of the Optionee only
by the Optionee or his or her guardian or legal representative; provided,
however, if the Option is designated as a Nonqualified Stock Option and
transferred to a spouse or a former spouse pursuant to a Domestic Relations
Transfer, the Option may be exercised by such spouse or former spouse and
provided, further, however, that, if the Option is designated as a Nonqualified
Stock Option, the Committee, in its sole discretion, may provide that this
Option may be otherwise transferable and exercisable by a transferee. Following
transfer, for purposes of this Agreement, a transferee of an Option shall be
deemed to be the Optionee; provided that the Option shall be exercisable by the
transferee only to the extent and for such periods that the Option would have
been exercisable if held by the Optionee. The terms of the Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
9. No Right to Continued Employment.
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Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary, nor shall this Agreement or the Plan interfere with
or restrict in any way the rights of the Company or any Subsidiary, which are
hereby expressly reserved, to terminate the Optionee's employment at any time,
with or without Cause.
10. Adjustments.
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In the event of a Change in Capitalization, the Committee may
make appropriate adjustments to the number and class of Shares or other stock or
securities subject to the Option and the purchase price for such Shares or other
stock or securities. The Committee's adjustment shall be made in accordance with
the provisions of Section 14 of the Plan and shall be effective and final,
binding and conclusive for all purposes of the Plan and this Agreement.
11. Effect of a Merger Consolidation or Liquidation.
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Subject to Section 7 hereof, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a "Transaction"), the Option shall continue in effect in accordance
with its terms and the Option shall be treated as provided for in the agreement
entered into in connection with the Transaction or, if not so provided in such
agreement, the Optionee shall be entitled to receive in respect of all Shares
subject to the Option, upon exercise of the Option, the same number and kind of
stock, securities, cash, property or other consideration that each holder of
Shares was entitled to receive in the Transaction in respect of a Share;
provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions and restrictions
applicable to the Option prior to such Transaction.
12. Withholding of Taxes.
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At such times as the Optionee recognizes taxable income in
connection with the receipt of Shares or cash hereunder (a "Taxable Event"), the
Optionee shall pay to the Company in cash an amount equal to the federal, state
and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company shall have the right to deduct from any
payment of cash to the Optionee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In satisfaction of the
Withholding Taxes, the Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the sole discretion of the
Committee, (i) to have withheld a portion of the Shares issuable to him or her
upon exercise of the Option, having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the minimum Withholding Taxes
required to be withheld or (ii) to deliver Shares that have been held by the
Optionee for at least six (6) months, duly endorsed for transfer to the Company,
having an aggregate Fair Market Value on the day preceding the date of exercise
equal to the minimum Withholding Taxes required to be withheld.
13. Disqualifying Disposition.
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To the extent that this Option is designated as an Incentive
Stock Option in the Notice of Grant and the Optionee disposes of the Shares
acquired upon exercise of this Option within two (2) years following the Date of
Grant as specified in the Notice of
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Grant or within one (1) year following the issuance thereof to the Optionee (a
"Disqualifying Disposition"), the Optionee shall immediately prior to such
Disqualifying Disposition notify the Company in writing of the date and terms of
such Disqualifying Disposition and provide such other information regarding the
Disqualifying Disposition as the Company may reasonably require.
14. Optionee Bound by the Plan.
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The Optionee hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof.
15. Modification of Agreement.
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This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, by the Company provided,
however, that any such modification, amendment, suspension, termination or
waiver that adversely alters or impairs any rights or obligations under this
Option may be made only by a written instrument executed by the parties hereto.
16. Severability.
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Whenever possible, each provision in this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held by a court of competent
jurisdiction to be prohibited by or invalid or unenforceable under applicable
law, then (a) such provision shall be deemed amended to accomplish the
objectives of the provision as originally written to the fullest extent
permitted by law and (b) all other provisions of this Agreement shall remain in
full force and effect.
17. Governing Law.
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The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
18. Successors in Interest.
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This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
the Optionee's legal representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement shall be final,
binding and conclusive upon the Optionee's heirs, executors, administrators and
successors.
19. Resolution of Disputes.
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Any dispute or disagreement which may arise under, or as a
result of, or in any way relate to, the interpretation, construction or
application of this Agreement shall be determined by the Committee. Any
determination made hereunder shall be final, binding and conclusive on the
Optionee and Company for all purposes.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, or caused this Agreement to be duly executed and delivered in
their name and on their behalf, as of the day and year first above written.
TELLIUM, INC.
By:
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Name:
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Title:
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Name of Optionee: [INSERT NAME]
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