EXHIBIT 10.31

 

TELLIUM, INC.

 

FORM OF

 

OPTION AWARD AGREEMENT

 

THIS OPTION AWARD AGREEMENT (the “Agreement”) is made as of March     , 2003, by
and between Tellium, Inc., a Delaware corporation (the “Company”), and
             (the “Employee”).

 

WHEREAS, the Company believes it to be in the best interests of the Company and
its shareholders to take action to promote work-force stability, to reward
performance and otherwise align employee interests with those of the Company;
and

 

WHEREAS, accordingly the Company has determined to (1) cancel all stock options
heretofore granted to the Employee by the Company and (2) issue Stock Options to
the Employee pursuant to the Plan, each of (1) – (2) in accordance with and in
amounts specified on the Option Award Schedule attached hereto as Annex A.

 

NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged the parties hereto, intending to be legally bound, agree as
follows:

 

1.    CANCELLATION AND ISSUANCE OF STOCK OPTIONS.

 

(a) Cancellation of Stock Options. Effective upon the execution of this
Agreement, the Company hereby cancels the stock options presently held by the
Employee in the amounts set forth on the Option Award Schedule. The Employee
hereby agrees that the stock options are cancelled and are null and void.

 

(b) Stock Option Grant. Concurrently with the execution of this Agreement, the
Company will grant the Employee options to purchase the number of shares of the
Company’s Common Stock set forth on the Option Award Schedule, at an exercise
price of $0.63 per share (the average of the daily closing prices of the
Company’s Common Stock during December, 2002) (the “Employee Stock Option
Grant”) pursuant to the Plan, as the same may be amended from time to time but
subject to the terms hereof. The Employee Stock Option Grant shall vest in whole
or in part (but not for a fraction of a share) upon the following schedule: (i)
50% of the options to purchase shares of Common Stock shall vest immediately
upon issuance; and (ii) the balance shall vest in four equal quarterly
installments on March 31, June 30, September 30 and December 31, 2003; provided,
however, that such unvested options shall not vest if the Employee voluntarily
resigns for other than Good Reason or is terminated for Cause (as determined by
the Compensation Committee in its sole discretion). The other terms of the
Employee Stock Option Grant are more particularly set forth in the Employee’s
Stock Option Agreement attached as Annex B and the Plan.

 

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2.    EXECUTION OF NON-COMPETITION AGREEMENT.

 

(a) Non-Competition Agreement. Concurrently with the execution of this
Agreement, the Employee shall execute a non-competition agreement (the
“Non-Compete Agreement”) substantially in the form attached hereto as Annex C.

 

3.    DEFINITIONS. Unless otherwise defined in this Agreement, the capitalized
terms used in this Agreement shall have the following meanings:

 

(a) “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, or (vi) the
commission of a felony.

 

(b) “Common Stock” shall mean the Company’s common stock, par value $0.001 per
share.

 

(c) “Compensation Committee” shall mean the Compensation Committee of the Board
of Directors of the Company.

 

(d) “Good Reason” shall mean (i) the nature of the Employee’s title, position,
duties, powers and authority, reporting relationship or the scope of his
responsibilities, are adversely modified, without the Employee’s 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.”

 

(e) “Option Award Schedule” shall mean the Option Award Schedule set forth on
Annex A.

 

(f) “Plan” shall mean the 2001 Stock Incentive Plan of Tellium, Inc., as in
effect from time to time.

 

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(g) “Stock Options” shall mean the stock options to purchase Common Stock
granted to the Employee in the amounts specified on the Option Award Schedule.

 

4.    CONDITIONS TO COMPANY’S OBLIGATIONS. The obligations of the Company
pursuant to Section 1 of this Agreement is subject to the satisfaction or
waiver, on or before the date hereof, of each of the following conditions:

 

(a) Employee shall have executed and delivered the Non-Compete Agreement
substantially in the form attached hereto as Annex C.

 

5.    GENERAL PROVISIONS.

 

(a) 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 written employment agreement, if any, between
the Company and the Employee.

 

(b) Independent Advice. The Employee is not relying upon the Company or its
representatives for legal, financial or tax advice in connection with his
execution of this Agreement or in relation to any election made by the Employee
hereunder. The Employee is 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.

 

(c) 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.

 

(d) Employee Undertaking. The Employee 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 under this Agreement.

 

(e) 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.

 

(f) Modification of Agreement. This Agreement may only be modified, amended,
suspended or terminated, and any terms or conditions may be waived by a written
instrument executed by the parties hereto.

 

(g) 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

 

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the United States mail, registered or certified, postage prepaid and addressed
to the party entitled to such notice at the address listed on the signature page
hereto or at such other address as such party may designate by three days
advance written notice under this Section 5(g) to all other parties to this
Agreement.

 

(h) Entire Agreement. This Agreement, the Stock Option Agreement and the
Non-Compete Agreement constitute the entire agreement and understanding among
the parties hereto with regard to the subject matter hereof and supersede any
and all prior understandings and agreements, whether oral or written, between or
among the parties hereto with respect to the subject matter hereof.

 

(i) 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.

 

(j) 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 the Employee’s legal representatives, heirs, legatees,
distributes, executors, administrators, successors, assigns and transferees by
operation of law. All obligations imposed upon the Employee and all rights
granted to the Company under this Agreement shall be final, binding and
conclusive upon the Employee and the Employee’s legal representatives, heirs,
legatees, distributees, executors, administrators, successors, assigns and
transferees.

 

(k) Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by applicable law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

 

(l) Headings. The section headings herein are for convenience only and shall not
be used in interpreting or construing this Agreement.

 

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IN WITNESS WHEREOF, the parties have executed this Option Award Agreement on the
day and year first indicated above.

 

 

THE COMPANY:

 

 

    

TELLIUM, INC.

 

 

    

By:

              

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Name:

              

Title:

              

Address:

  

2 Crescent Place Oceanport, New Jersey 07757

 

 

THE EMPLOYEE:

 

 

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Name:

Address:

         

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ANNEX A

 

OPTION AWARD SCHEDULE

 

Stock Options cancelled:

 

Stock Options issued:

 

 

 

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