Exhibit 10.4
CIENA CORPORATION
Nonstatutory Stock Option Agreement
For Non-employee Directors
(Annual Option)
Shares:
Exercise Price:
Date of Grant:
     This Nonstatutory Stock Option Agreement For Non-Employee Directors (Annual
Option) (the “Option Agreement”) is made and entered into as of           ,
20     , by and between Ciena Corporation (the “Company”) and           (the
“Optionee”).
     The Company has granted to the Optionee an option to the number of shares
set of Stock set forth above, upon the terms and conditions set forth in this
Option Agreement (the “Option”).
A. Definitions.
     1. Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below.
          a. “Date of Grant” means          , 20     .
          b. “Number of Option Shares” means the number of shares of Stock set
forth above, as adjusted from time to time pursuant to Section H.
          c. “Exercise Price” means the price per share of Stock set forth
above, as adjusted from time to time pursuant to Section H.
          d. “Initial Exercise Date” means the Initial Vesting Date.
          e. “Initial Vesting Date” means the date occurring one year after the
Date of Grant.
          f. “Option Expiration Date” means the date ten years after the Date of
Grant.
          g. “Board” means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer the Plan, “Board”
shall also mean such Committee(s).
          h. “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

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          i. “Committee” means the Compensation Committee of the Board of
Directors or another committee of the Board duly appointed to administer the
Plan and having such powers as shall be specified by the Board. Unless the
powers of the Committee have been specifically limited, the Committee shall have
all the powers of the Board granted in the Plan, including, without limitation,
the power to amend or terminate the Plan at any time, subject to the terms of
the Plan and any applicable limitations imposed by law.
          j. “Company” means Ciena Corporation, a Delaware corporation, or any
successor corporation thereto.
          k. “Consultant” means any person, including an advisor, engaged by a
Participating Company to render services other than as an Employee or a
Director.
          l. “Director” means a member of the Board or of the board of directors
of any other Participating Company.
          m. “Disability” means the permanent and total disability of the
Optionee within the meaning of Section 22(e)(3) of the Code.
          n. “Employee” means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of a
Participating Company; provided, however, that neither service as a Director nor
payment of a director’s fee shall be sufficient to constitute employment for
purposes of the Plan.
          o. “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
          p. “Fair Market Value” “Fair Market means, as of any date, the value
of a share of the Stock determined as follows:

(i)   if the Stock is then quoted on the Nasdaq National Market, its closing
price on the Nasdaq National Market on the date of determination as reported in
The Wall Street Journal;   (ii)   if the Stock is publicly traded and is then
listed on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which the Stock
is listed or admitted to trading as reported in The Wall Street Journal;   (iii)
  if the Stock is publicly traded but is not quoted on the Nasdaq National
Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on the date of determination as
reported in The Wall Street Journal;   (iv)   if none of the foregoing is
applicable, by the Committee in good faith.

          q. “Parent Corporation” means any present or future “parent
corporation” of the Company, as defined in Section 424(e) of the Code.
          r. “Participating Company” means the company or any Parent Corporation
or Subsidiary Corporation.

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          s. “Participating Company Group” means, at any point in time, all
corporations collectively which are then Participating Companies.
          t. “Plan” means the Ciena Corporation 2000 Equity Incentive Plan.
          u. “Rule 16b-3” means Rule 16b-3 as promulgated under the Exchange
Act, as amended from time to time, or any successor rule or regulation.
          v. “Securities Act” means the Securities Act of 1933, as amended.
          w. “Service” means the Optionee’s service with the Participating
Company Group, whether in the capacity of an Employee, a Director or a
Consultant. The Optionee’s Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Optionee renders Service to the
Participating Company Group or a change in the Participating Company for which
the Optionee renders such Service, provided that there is no interruption or
termination of the Optionee’s Service. The Optionee’s Service shall be deemed to
have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a
Participating Company.
          x. “Stock” means the common stock, par value $0.01, of the Company, as
adjusted from time to time in accordance with Section H.
          y. “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
B. Tax Status of the Option. This Option is intended to be a nonstatutory stock
option and shall not be treated as an incentive stock option within the meaning
of Section 422(b) of the Code.
C. Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board, including any duly appointed
Committee of the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
D. Exercise of the Option.
     1. Right to Exercise. Except as otherwise provided herein, the Option shall
be exercisable on and after the Initial Exercise Date and prior to the
termination of the Option (as provided in Section A) in an amount not to exceed
the Number of Option Shares less the number of shares previously acquired upon
exercise of the Option. In no event shall the Option be exercisable for more
shares than the Number of Option Shares.
     2. Method of Exercise. Exercise of the Option shall be by written notice to
the Company which must state the election to exercise the Option, the number of
whole shares of Stock for which the Option is being exercised and such other
representations and agreements as to the Optionee’s investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other

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means as the company may permit, to the Chief Financial Officer of the company,
or other authorized representative of the Participating Company Group, prior to
the termination of the Option, accompanied by full payment of the aggregate
Exercise Price for the number of shares of Stock being purchased. The Option
shall be deemed to be exercised upon receipt by the Company of such written
notice and the aggregate Exercise Price.
     3. Payment of Exercise Price.
          a. Forms of Consideration Authorized. Except as otherwise provided
below, payment of the aggregate Exercise Price for the number of shares of Stock
for which the Option is being exercised shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of whole shares of Stock owned by
the Optionee having a Fair Market Value not less than the aggregate Exercise
Price, (iii) by means of a Cashless Exercise, as defined in Section D.3.c, or
(iv) by any combination of the foregoing.
          b. Tender of Stock. Notwithstanding the foregoing, the Option may not
be exercised by tender to the company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s stock. The
Option may not be exercised by tender to the Company of shares of Stock unless
such shares either have been owned by the Optionee for more than six months or
were not acquired, directly or indirectly, from the Company.
          c. Cashless Exercise. A “Cashless Exercise” means an exercise of the
Option through arrangement, satisfactory to the Company, with a broker by which
the broker sells a portion of the underlying shares to generate enough proceeds
to pay the exercise price and remits the exercise price to the Company. The
Company reserves, at any and all times, the right, in its sole discretion, to
decline to approve or terminate any such program or procedure.
     4. Tax Withholding. At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee agrees
to make adequate provision for any sums required to satisfy the federal, state,
local and foreign tax withholding obligations of the Participating Company
Group, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares acquired upon
exercise of the Option, or (iii) the lapsing of any restriction with respect to
any shares acquired upon exercise of the Option.
     5. Restrictions on Grant of the Option and Issuance of Shares. The grant of
the Option and the issuance of shares of Stock upon exercise of the Option shall
be subject to compliance with all applicable requirements of federal, state or
foreign law with respect to such securities. The Option may not be exercised if
the issuance of shares of Stock upon the exercise would constitute a violation
of any applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed. In addition, the Option may not be exercised
unless (i) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares issuable upon
exercise of

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the Option or (ii) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE
FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO
EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability
of the Company to obtain from any regulatory body having jurisdiction the
authority, if any, deemed by the Company’s legal counsel to be necessary to the
lawful issuance and sale of any shares subject to the Option shall relieve the
Company of any liability in respect of the failure to issue or sell such shares
as to which such requisite authority shall not have been obtained. As a
condition to the exercise of the Option, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.
     6. Fractional Shares. The Company shall not be required to issue fractional
shares upon the exercise of the Option.
E. Nontransferability of the Option. The Option may be exercised during the
lifetime of the Optionee only the by Optionee or the Optionee’s guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section D.2 may be exercised by
the Optionee’s legal representative or by any person empowered to do so under
the deceased Optionee’s will or under the then applicable laws of descent and
distribution.
F. Termination of the Option. The Option shall terminate and may no longer be
exercised on the first to occur of (a) the Option Expiration Date, or (b) the
last date for exercising the Option following termination of the Optionee’s
Service as described in Section G.
G. Effect of Termination of Service.
     1. Option Exercisablity.
          a. Disability. If the Optionee’s Service with the Participating
Company Group is terminated because of the Disability of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee’s Service terminated, may be exercised by the Optionee (or the
Optionee’s guardian or legal representative) at any time prior to the expiration
of twelve months after the date on which the Optionee’s Service terminated, but
in any event no later than the Option Expiration Date.
          b. Death. If the Optionee’s Service with the Participating Company
Group is terminated because of the death of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee’s legal representative or other
person who acquired the right to exercise the Option by reason of the Optionee’s
death at any time prior to the expiration of twelve months after the date one
which the Optionee’s Service terminated, but in any event no later than the
Option Expiration Date. The Optionee’s Service shall be deemed

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to have terminated on account of death if the Optionee dies within three months
after the Optionee’s termination of Service.
          c. Other Termination of Service. If the Optionee’s Service with the
Participating Company Group terminates for any reason, except Disability or
death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee’s Service terminated, may be exercised by the
Optionee within three months after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date.
     2. Extension if Exercise Prevented by Law. Notwithstanding the foregoing,
if the exercise of the Option within the applicable time periods set forth in
Section G.1 is prevented by the provisions of Section D.5, the Option shall
remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.
     3. Extension if Optionee Subject to Section 16(b). Notwithstanding the
foregoing, if a sale, within the applicable time periods set forth in
Section G.1, of shares acquired upon the exercise of the Option would subject
the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth day following
the date on which a sale of such shares by the Optionee would no longer be
subject to such suit, (ii) the one hundred and ninetieth day after the
Optionee’s termination of Service, or (iii) the Option Expiration Date.
H. Adjustments for Changes in Capital Structure. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership
Change Event) shares of another corporation (the “New Shares”), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise Price shall be adjusted in a fair and equitable manner, as determined
by the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section H shall
be rounded down to the nearest whole number, and in no event may the Exercise
Price be decreased to an amount less than the par value, if any, of the stock
subject to the Option.
I. Rights as a Stockholder. The Optionee shall have no rights as a stockholder
with respect to any shares covered by the Option until the date of the issuance
of a certificate for the shares for which the 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). No adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to
the date such certificate is issued, except as provided in Section H.
J. Legends. The Company may at any time place legends referencing any applicable
federal, state or foreign securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the

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request of the Company, promptly present to the Company any and all certificates
representing shares acquired pursuant to the Option in the possession of the
Optionee in order to carry out the provisions of this Section.
K. Binding Effect. Subject to the restrictions on transfer set forth herein,
this Option Agreement shall insure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
L. Termination or Amendment. The Board may terminate or amend the Plan or the
Option at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in writing.
M. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group with respect to such subject
matter other than those as set forth or provided for herein. To the extent
contemplated herein, the provisions of this Option Agreement shall survive any
exercise of the Option and shall remain in full force and effect.
N. Applicable Law. This Option Agreement shall be governed by the laws of the
State of Maryland as such laws are applied to agreements between Maryland
residents entered into and to be performed entirely within the State of
Maryland.

                  CIENA CORPORATION    
 
           
 
  By:        
 
           
 
  Title:        
 
           

     The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.

         
 
  OPTIONEE    
 
       
 
       
 
       
 
  Date:    

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