EXHIBIT (d)(7)
TELLIUM, INC.
REPURCHASE AGREEMENT
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THIS AGREEMENT is made as of the 19th day of June, 2002, by and among
Tellium, Inc., a Delaware corporation (the "Company"), the employee of the
Company who is a signatory hereto (the "Employee") and each of the Employee
Affiliates (as defined below) named on the Repurchase Schedule attached hereto
as Annex A (the "Selling Affiliates").
WHEREAS, on various dates between April and August, 2000, the Employee
and certain executives, vice presidents and other employees of the Company
borrowed funds from the Company on a full-recourse basis to exercise stock
options with exercise prices of approximately $2.14 per share, under the terms
of individual purchase money promissory notes to the Company;
WHEREAS, in connection with the exercise of the Employee's stock
options, the Employee executed two Promissory Notes, each dated April 4, 2000,
as amended (the "Promissory Notes"), and received an aggregate of 6,600,000
shares of Common Stock of the Company (the "Restricted Stock"), subject to
vesting schedules and other restrictions contained in two restricted stock
agreements between the Company and the Employee, each dated as of April 4, 2000
(the "Restricted Stock Agreements");
WHEREAS, under the terms of two stock pledge agreements between the
Company and the Employee, each dated as of April 4, 2000 (the "Pledge
Agreements"), the Employee pledged all of the Restricted Stock to secure the
Promissory Notes;
WHEREAS, the Employee transferred shares of Restricted Stock to the
Employee Affiliates and other transferees under the terms of the Restricted
Stock Agreements and Pledge Agreements, and the Employee Affiliates and other
transferees signed joinder agreements to the Restricted Stock Agreements and the
Pledge Agreements, as applicable;
WHEREAS, the price of the Company's Common Stock has dropped
substantially below $2.14 per share, leaving insufficient collateral to repay
the Promissory Notes;
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WHEREAS, the Company recognizes that its current stock price primarily
reflects market and industry conditions and that the Promissory Notes are
diverting the Employee's attention from the Company's business;
WHEREAS, the Company intends to implement a positive incentive program
to retain, motivate and incentivize the performance of its management team; and
WHEREAS, in exchange for valuable consideration and other benefits to
the Company, including but not limited to the execution of a non-competition
agreement by the Employee, substantially in the form attached hereto as Annex B
(the "Non-Compete Agreement"), the Company desires to (1) repurchase vested and
unvested shares of Restricted Stock from the Employee and the Selling
Affiliates, (2) apply the proceeds from the repurchase of the Restricted Stock
toward repayment of the principal and interest due under the Promissory Notes,
and (3) amend each of the Promissory Notes, substantially in the form attached
hereto as Annex C.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
I. REPURCHASE OF THE RESTRICTED STOCK; AMENDMENT OF
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PROMISSORY NOTES; EXECUTION OF NON-COMPETE
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AGREEMENT; TERMINATION OF PLEDGE AGREEMENTS.
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1.1 The Employee and each of the Selling Affiliates hereby agree to
sell and the Company hereby agrees to purchase (the "Repurchase") (1) vested
shares of Restricted Stock at a price of $1.04 per share, which represents the
Fair Market Value of the Common Stock on June 19, 2002 and (2) unvested shares
of Restricted Stock at a per share price equal to the Per Share Price (as
defined in the applicable Restricted Stock Agreement) plus accrued interest (the
"Purchase Price"), in the amounts specified on the Repurchase Schedule attached
hereto Annex A. The Purchase Price shall be applied by crediting it against the
outstanding principal and interest due under the Promissory Notes.
1.2 The Company and the Employee hereby agree to amend each of the
Promissory Notes in the form attached hereto as Annex C (the "Amendments").
1.3 The Employee hereby agrees to enter into a Non-Compete Agreement
with the Company in the form attached hereto as Annex B.
1.4 Effective upon the earliest date allowed by Regulation U of the
rules and regulations of the Federal Reserve System and any other applicable
laws or regulations, each of the Pledge Agreements, and each joinder agreement
thereto (the "Restricted Pledge Agreements"), that govern the Restricted Stock
held by the Employee Affiliates
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and other Employee transferees that is not sold to and purchased by the Company
hereunder (the "Remaining Stock") is hereby terminated, void and of no further
force or effect; provided, however, that if, after the Repurchase Date, an
Employee Entity or an Employee Trust holds Remaining Stock that is more than 10%
of the Employee's original aggregate holdings of Restricted Stock, the
Restricted Pledge Agreements that govern such Restricted Stock continue to be
valid and effective as of the Repurchase Date.
II. CHANGE IN CONTROL BONUS.
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2.1 The Company agrees that upon a Change in Control, the Company will
pay the Employee in cash the sum of (i) the amount sufficient to fully pay off
the outstanding balance due under the Promissory Notes as amended by the
Amendments, including any accrued interest thereon (the "Bonus") and (ii) an
amount (the "Gross-Up") such that after payment by the Employee of all federal,
state and local income and excise taxes imposed on such Gross-Up, the Employee
retains an amount of the Gross-Up equal to the federal, state and local income
and excise taxes imposed upon the Bonus; provided, however, that the Employee
shall not be entitled to receive the Bonus and Gross-Up if, prior to a Change in
Control, the Employee voluntarily resigns other than for Good Reason or is
terminated for Cause.
III. GENERAL PROVISIONS.
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3.1 Definitions. Unless otherwise defined herein, the capitalized terms
used in this Agreement shall have the following meanings:
"Cause" shall mean (i) the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any of its subsidiaries, (ii)
willfully failing to perform reasonably assigned duties within thirty (30) days
after having received written notice from the Company to do so, (iii) dishonesty
or willful misconduct in the performance of duties, (iv) involvement in a
transaction in connection with the performance of duties to the Company or any
of its subsidiaries which transaction is adverse to the interests of the Company
or any of its subsidiaries and which is engaged in for personal profit or (v)
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) in connection with the performance of duties.
"Change in Control" shall have the meaning as set forth in the
Company's 2001 Stock Incentive Plan, as it may be amended from time to time.
"Common Stock" shall mean the Company's common stock, par value $.001
per share.
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"Employee Affiliate" shall mean the Employee's spouse, an Employee
Trust or an Employee Entity.
"Employee Entity" shall mean a partnership, limited liability company,
corporation or other entity all of the owners of which are the Employee and his
or her spouse, life partner, descendants, including adopted children, ancestors,
siblings and spouses and life partners of his or her descendants, ancestors and
siblings.
"Employee Trust" shall mean a trust or custodianship the beneficiaries
of which include only the Employee and his or her spouse, life partner,
descendants, including adopted children, ancestors, siblings and spouses and
life partners of his or her descendants, ancestors and siblings.
"Good Reason" shall mean (i) the occurrence of any of the events in
Sections 4(c)(ii)(A)-(D) of the Employment Agreement between the Employee and
the Company dated as of December 21, 1999 (the "Employment Agreement"), without
the Employee's written consent; (ii) a reduction in the Employee's annual base
salary, (iii) the Company's requiring the Employee, without his consent, to be
permanently relocated outside a 50 mile radius from Oceanport, New Jersey, (iv)
the failure by the Company to (A) continue in effect any material compensation
or material benefit plan or (B) provide the Employee with participation in
compensation and benefit plans at least equal (in terms of benefit levels and/or
reward opportunities) to those provided for under each employee benefit plan,
program and practice; provided, however, that if (1) the Employee's annual base
salary or (2) the Employee's participation in the benefits covered by clauses
(A) or (B) above shall be reduced or altered on the same basis and terms as
affects all other senior management of the Company, it shall not be "Good
Reason."
"Repurchase Date" shall mean the date of this Agreement.
"Repurchase Schedule" shall mean the Repurchase Schedule set forth on
Annex A.
3.2 No Employment or Service Contract. Nothing in this Agreement shall
confer upon the Employee any right to continue in the service of the Company (or
any subsidiary of the Company employing or retaining Employee) for any period of
time or interfere with or restrict in any way the rights of the Company (or any
subsidiary of the Company employing or retaining Employee) or the Employee,
which rights are hereby expressly reserved by each, to terminate the Employee
status of Employee at any time for any reason whatsoever, with or without cause,
subject to the provisions of any employment agreement between the Company and
the Employee.
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3.3 Notices. Any notice required in connection with this Agreement
shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States mail, registered or certified, postage
prepaid and addressed to the party entitled to such notice at the address
indicated on the signature page of this Agreement or at such other address as
such party may designate by 10 days' advance written notice under this Section
3.3 to all other parties to this Agreement.
3.4 No Waiver. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
3.5 Employee Undertaking. Each of the Employee and the Selling
Affiliates hereby agrees to take whatever additional action and execute whatever
additional documents the Company may, in sole discretion, deem necessary or
advisable in order to carry out or effect one or more of the obligations on the
Employee or the Selling Affiliates pursuant to the express provisions of this
Agreement.
3.6 Independent Advice. Neither the Employee nor the Selling Affiliates
is relying upon the Company or its representatives for legal, financial or tax
advice in connection with his, her or its execution of this Agreement or in
relation to any election made by the Employee or the Selling Affiliates
hereunder. The Employee and the Selling Affiliates are aware, and the Company
has advised each of them, that they should seek independent financial, legal and
tax counsel and advice with respect to any decision made by them in connection
with this Agreement.
3.7 Agreement Is Entire Contract. This Agreement, the Promissory Notes
as amended by the Amendments, the Non-Compete Agreement and the Employment
Agreement constitute the entire agreement between the parties hereto with regard
to the subject matter hereof.
3.8 Governing Law. This Agreement shall be constructed and determined
in accordance with the laws of the State of Delaware without regard to conflict
of laws principles thereof.
3.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, when taken
together, shall constitute one and the same instrument.
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3.10 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Company and its successors and
assigns and the Employee and each Employee Affiliate and their legal
representatives, heirs, legatees, distributes, executors, administrators,
successors, assigns and transferees by operation of law. All obligations imposed
upon the Employee and each Employee Affiliate and all rights granted to the
Company under this Agreement shall be final, binding and conclusive upon the
Employee and each Employee Affiliate and their legal representatives, heirs,
legatees, distributees, executors, administrators, successors, assigns and
transferees.
3.11 Severability. 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.
3.12 Modification of Agreement. This Agreement may be modified,
amended, suspended or terminated, and any terms or conditions may be waived, but
only by a written instrument executed by the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
THE COMPANY:
TELLIUM, INC.
By:
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Name:
Title:
Address: ------------------------------
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THE EMPLOYEE:
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Name:
Address: -----------------------------------
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THE SELLING AFFILIATE:
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Name:
Address: -----------------------------------
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THE SELLING AFFILIATE:
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Name:
Address: -----------------------------------
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ANNEX A
REPURCHASE SCHEDULE
Aggregate number of shares of Restricted Stock repurchased from the Employee and
the Selling Affiliate(s):
o vested shares of Restricted Stock: ___
o unvested shares of Restricted Stock: ___
o Total Restricted Stock ___
Number of shares of Restricted Stock to be repurchased from the Employee: ___
Number of shares of Restricted Stock to be repurchased from the Selling Affiliate(s): ___
Aggregate Purchase Price for shares of Restricted Stock:
o vested shares of Restricted Stock (at Fair Market Value of $1.04 per share on ___
June 19, 2002)
o unvested shares of Restricted Stock (at the original exercise price plus interest ___
set forth in the applicable Restricted Stock Agreement(s))
Aggregate Amount of Promissory Notes outstanding (including principal and interest) before ___
repurchase:
Aggregate Amount of Promissory Notes outstanding (including principal and interest) after ___
repurchase:
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