EXHIBIT (D)(3)
AVICI SYSTEMS INC.
Non-Qualified Stock Option Agreement
Under the 2000 Stock Option and Incentive Plan
Avici Systems Inc., a Delaware corporation (the "Company"), hereby grants as
of [ , 2002] ("Grant Date") to [name of optionee] (the "Optionee"), an
option to purchase a maximum of [number] shares (the "Option Shares") of its
Common Stock, $.0001 par value ("Common Stock"), at the price of $ per
share, on the following terms and conditions:
1. Grant Under 2000 Stock Option and Incentive Plan. This option is granted
pursuant to and is governed by the Company's 2000 Stock Option and Incentive
Plan, as amended from time to time (the "Plan") and, unless the context
otherwise requires, terms used herein shall have the same meaning as in the
Plan. Determinations made in connection with this option pursuant to the Plan
shall be governed by the Plan as it exists on this date. Any inconsistency
between this Agreement and the Plan shall be governed by the Plan.
2. Xxxxx as Non-Qualified Option; Other Options. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option). This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company, but a duplicate
original of this instrument shall not effect the grant of another option.
3. Vesting of Option if Business Relationship Continues. If the Optionee has
continued to serve the Company or any Related Corporation in the capacity of an
employee, officer, director or consultant (such service is described herein as
maintaining or being involved in a "Business Relationship" with the Company or
any Related Corporation) on the following dates, the Optionee may exercise this
option for the number of shares of Common Stock set opposite the applicable
date:
On Grant Date [If optionee has > 1 yr service
number equal to 25% of option shares]
[If optionee has < 1 yr service
number equal to 12.5% of option shares]
After the [Grant Date], this option shall be exercisable for an additional
shares on the last day of every one-month period (or with respect to the
final installment such number of shares as shall remain unexercisable) such
that it shall be fully exercisable, subject to the terms and conditions of this
Agreement, on the date which is [three years /or/ three and one half years]
from [Grant Date]. In the event that the Grant Date occurs on the 29th, 30th or
31st day of a month and if vesting occurs within a month where there are fewer
than those number of days, vesting shall occur on the last day of that month.
The foregoing rights are cumulative and, while the Optionee continues to
maintain a Business Relationship with the Company or any Related Corporation,
may be exercised before the date which is ten years from the date this option
is granted. All of the foregoing rights are subject to Sections 4 and 5, as
appropriate, if the Optionee ceases to maintain a Business Relationship with
the Company and all Related Corporations or dies, becomes disabled or undergoes
dissolution while involved in a Business Relationship with the Company or any
Related Corporation. For the purposes of this Agreement, "Related Corporation"
shall mean any present or future subsidiary corporations of Avici Systems Inc.,
as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), and any present or future parent corporation of Avici Systems
Inc., as defined in Section 424(e) of the Code.
4. Termination of Business Relationship.
(a) Termination Other than for Cause: If the Optionee's Business
Relationship with the Company and all Related Corporations is
terminated, other than by reason of death, disability or dissolution as
defined in Section 5 or termination for Cause as defined in Section
4(c), no further installments of this option shall become exercisable,
and this option shall terminate after the passage of thirty (30) days
from the date the Business Relationship ceases, but in no event later
than the scheduled expiration date. In such a case, the Optionee's only
rights hereunder shall be those which are properly exercised before the
termination of this option.
(b) Termination for Cause: If the Optionee's Business Relationship with the
Company and all Related Corporations is terminated for Cause (as
defined in Section 4(c)), this option shall terminate upon the
Optionee's receipt of written notice of such termination and shall
thereafter not be exercisable to any extent whatsoever.
(c) Definition of Cause: "Cause" shall mean conduct involving one or more
of the following: (i) the substantial and continuing failure of the
Optionee, after notice thereof, to render services to the Company or
any Related Corporation in accordance with the terms or requirements of
the Optionee's Business Relationship with the Company or any Related
Corporation; (ii) disloyalty, gross negligence, willful misconduct,
dishonesty or breach of fiduciary duty to the Company or any Related
Corporation; (iii) the commission of an act of embezzlement or fraud;
(iv) deliberate disregard of the rules or policies of the Company or
any Related Corporation which results in direct or indirect loss,
damage or injury to the Company or any Related Corporation; (v) the
unauthorized disclosure of any trade secret or confidential information
of the Company or any Related Corporation; or (vi) the commission of an
act which constitutes unfair competition with the Company or any
Related Corporation or which induces any customer or supplier to break
a contract with the Company or any Related Corporation.
5. Death; Disability; Dissolution.
(a) Death: If the Optionee is a natural person who dies while involved in a
Business Relationship with the Company or any Related Corporation, this
option may be exercised, to the extent otherwise exercisable on the
date of his or her death, by the Optionee's estate, personal
representative or beneficiary to whom this option has been transferred
pursuant to Section 9, at any time within one year after the date of
death, but not later than the scheduled expiration date.
(b) Disability: If the Optionee is a natural person whose Business
Relationship with the Company or any Related Corporation is terminated
by reason of his or her disability (as defined in the Plan), this
option may be exercised, to the extent otherwise exercisable on the
date the Business Relationship was terminated, at any time within one
year after such termination, but not later than the scheduled
expiration date.
(c) Effect of Termination: At the expiration of such one year period
provided in paragraph (a) or (b) of this Section 5 or the scheduled
expiration date, whichever is the earlier, this option shall terminate
and the only rights hereunder shall be those as to which the option was
properly exercised before such termination.
(d) Dissolution: If the Optionee is a corporation, partnership, trust or
other entity that is dissolved, is liquidated, becomes insolvent or
enters into a merger or acquisition with respect to which the Optionee
is not the surviving entity, at a time when the Optionee is involved in
a Business Relationship with the Company or any Related Corporation,
this option shall immediately terminate as of the date of such event,
and the only rights hereunder shall be those as to which this option
was properly exercised before such dissolution or other event.
2
6. Partial Exercise. This option may be exercised in part at any time and
from time to time within the above limits, except that this option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this option and cash in lieu of a
fractional share must be paid, to permit the Optionee to exercise completely
such final installment. Any fractional share with respect to which an
installment of this option cannot be exercised because of the limitation
contained in the preceding sentence shall remain subject to this option and
shall be available for later purchase by the Optionee in accordance with the
terms hereof.
7. Payment of Price. The option price shall be paid in the following manner:
(i) in cash or by check;
(ii) by delivery of an assignment satisfactory in form and substance to
the Company of a sufficient amount of the proceeds from the sale of
the Option Shares and an instruction to the broker or selling agent
to pay that amount to the Company; or
(iii) by any combination of the foregoing.
8. Method of Exercising Option. Subject to the terms and conditions of this
Agreement, this option may be exercised by written notice to the Company, at
the principal executive office of the Company, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of Option Shares for which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such
shares as soon as practicable after the notice shall be received. Such
certificate or certificates shall be registered in the name of the person or
persons so exercising this option (or, if this option shall be exercised by the
Optionee and if the Optionee shall so request in the notice exercising this
option, shall be registered in the name of the Optionee and another person
jointly, with right of survivorship). In the event this option shall be
exercised, pursuant to Section 5 hereof, by any person or persons other than
the Optionee, such notice shall be accompanied by appropriate proof of the
right of such person or persons to exercise this option.
9. Option Not Transferable. This option is not transferable or assignable
except by will or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee can exercise this option.
10. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
11. No Obligation to Continue Business Relationship. Neither the Plan, this
Agreement, nor the grant of this option imposes any obligation on the Company
or any Related Corporation to continue to maintain a Business Relationship with
the Optionee.
12. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to the Option Shares until such time as
the Optionee has exercised this option by delivering a notice of exercise and
has paid in full the purchase price for the number of shares for which this
option is to be so exercised in accordance with Section 8. Except as is
expressly provided in the Plan with respect to certain changes in the
capitalization of the Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to such date of exercise.
13. Capital Changes and Business Successions. The Plan contains provisions
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
14. Withholding Taxes. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this option, or in connection with the
3
transfer of, or the lapse of restrictions on, any Common Stock or other
property acquired pursuant to this option, the Optionee hereby agrees that the
Company or any Related Corporation may withhold from the Optionee's wages or
other remuneration the appropriate amount of tax. At the discretion of the
Company or Related Corporation, the amount required to be withheld may be
withheld in cash from such wages or other remuneration or in kind from the
Common Stock or other property otherwise deliverable to the Optionee on
exercise of this option. The Optionee further agrees that, if the Company or
any Related Corporation does not withhold an amount from the Optionee's wages
or other remuneration sufficient to satisfy the withholding obligation of the
Company or Related Corporation, the Optionee will make reimbursement on demand,
in cash, for the amount underwithheld.
15. Lock-up Agreement. The Employee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company
or the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of
without the prior written consent of the Company or such underwriter, as the
case may be, for at least 270 days after the effectiveness of the Registration
Statement filed in connection with such offering, or such longer period of time
as the Board of Directors may determine if all of the Company's directors and
officers agree to be similarly bound.
16. Arbitration. Any dispute, controversy, or claim arising out of, in
connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the Commonwealth of
Massachusetts, pursuant to the rules then obtaining of the American Arbitration
Association. Any award shall be final, binding and conclusive upon the parties
and a judgment rendered thereon may be entered in any court having jurisdiction
thereof.
17. Provision of Documentation to Employee. By signing this Agreement the
Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
18. Miscellaneous.
(a) Notices: All notices hereunder shall be in writing and shall be deemed
given when sent by certified or registered mail, postage prepaid,
return receipt requested, to the address set forth below. The addresses
for such notices may be changed from time to time by written notice
given in the manner provided for herein.
(b) Entire Agreement; Modification: This Agreement constitutes the entire
agreement between the parties relative to the subject matter hereof,
and supersedes all proposals, written or oral, and all other
communications between the parties relating to the subject matter of
this Agreement. This Agreement may be modified, amended or rescinded
only by a written agreement executed by both parties.
(c) Severability: The invalidity, illegality or unenforceability of any
provision of this Agreement shall in no way affect the validity,
legality or enforceability of any other provision.
(d) Successors and Assigns: This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and assigns, subject to the limitations set forth in Section 9 hereof.
(e) Governing Law: This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts, without
giving effect to the principles of the conflicts of laws thereof.
4
IN WITNESS WHEREOF, the Company and the Optionee have caused this instrument
to be executed as of the date first above written.
AVICI SYSTEMS INC.
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
By: _________________________________
------------------------------------- -------------------------------------
Optionee Signature Title
-------------------------------------
Print Name of Optionee
-------------------------------------
Title
-------------------------------------
Street Address
-------------------------------------
City State Zip Code
-------------------------------------
Telephone No. (with area code)
-------------------------------------
Tax ID/Social Security No.
5
