<PAGE>
                                                                   Exhibit 10.02

                                ONI SYSTEMS CORP.

                      DAVIS STOCK OPTION PLAN AND AGREEMENT

          This Davis Stock Option Plan and Agreement (this "Agreement")
is made and entered into as of the date of grant set forth below (the "Date of
Grant") by and between ONI Systems Corp., a Delaware corporation (the
"Company"), and the participant named below (the "Participant"). Capitalized
terms not defined herein shall have the meaning ascribed to them in Exhibit A
                                                                    ---------
attached hereto.

<TABLE>
<S>                                         <C>
Participant:                                 Chris A. Davis
                                            ---------------------------------------------------------
Social Security Number:
                                            ---------------------------------------------------------
Address:
                                            ---------------------------------------------------------

Total Option Shares:                         1,000,000
                                            ---------------------------------------------------------
Exercise Price Per Share:                    $4.00
                                            ---------------------------------------------------------
Date of Grant:                               May 3, 2000
                                            ---------------------------------------------------------
Vesting Start Date:                          May 1, 2000
                                            ---------------------------------------------------------

Expiration Date:                             May 2, 2010
                                            ---------------------------------------------------------
                                            (unless earlier terminated under this Agreement)

Type of Stock Option                        Nonqualified Stock Option
</TABLE>

          1.   Grant of Option. The Company hereby grants to Participant an
               ---------------
option (this "Option") to purchase the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Agreement. In the event that the number of
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Agreement, and (b) the Exercise Price of and number of Shares subject to
the Option will be proportionately adjusted, subject to any required action by
the Board or the shareholders of the Company and compliance with applicable
securities laws; provided, however, that fractions of a Share will not be issued
but will either be paid in cash at Fair Market Value of such fraction of a Share
or will be rounded down to the nearest whole Share, as determined by the
Committee.

          2.   Exercise Period.
               ---------------

               2.1  Exercise  Period  of  Option.  This  Option  is  immediately
                    ----------------------------
exercisable.  Provided Participant  continues to provide services to the Company
or any Subsidiary or Parent of the Company,  the Option will become vested as to
portions of the Shares as follows:  (i) this Option  shall not vest with respect
to any of the Shares until the first  anniversary of the Vesting Start Date (the
"First  Vesting  Date");  (ii) on the First  Vesting Date the Option will become
vested as to twenty-five  percent (25%) of the Shares;  and (iii)  thereafter at
the end of each full succeeding month the Option will become vested as to 1/48th
(2.0833%)  of the Shares until the Shares are vested with respect to one hundred
percent (100%) of the Shares. If application of the vesting  percentage causes a
fractional  share,  such share shall be rounded down to the nearest  whole share
for each month except for the last month in such vesting  period,  at the end of
which last month this Option shall become  vested for the full  remainder of the
Shares.


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<PAGE>

               2.2  Vesting of Options. Shares that are vested pursuant to the
                    ------------------
schedule set forth in Section 2.1, including as provided in Section 2.4, are
"Vested Shares." Shares that are not Vested Shares are "Unvested Shares."

               2.3  Expiration. The Option shall expire on the Expiration Date
                    ----------
set forth above or earlier as provided

in Section 3 below.

               2.4  Change of Control. In the event of a Change in Control of
                    -----------------
the Company (as defined below), which is immediately preceded by or followed by,
within twelve (12) months, an actual or "Involuntary Termination" (as defined
below) without cause, the Shares issuable upon exercise of this Option will
become vested with respect to an additional fifty percent (50%) of the then
Unvested Shares. For the purposes of this Section 2.4, a "Change in Control of
the Company" means the occurrence of any of the following events: (i) a merger
or consolidation in which the Company is not the surviving corporation (other
than a merger or consolidation with a wholly-owned subsidiary, a
re-incorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the shareholders of the
Company or their relative stock holdings) (ii) a merger in which the Company is
the surviving corporation but after which the shareholders of the Company
immediately prior to such merger cease to own shares or other equity interests
in the Company representing at least fifty percent (50%) of the voting power of
all securities of the Company; or (iii) the sale of all, or substantially all,
of the assets of the Company. For purposes of this Section 2.4, an "Involuntary
Termination" shall have the meaning set forth in Participant's offer letter
dated April 14, 2000.

          3.   Termination.
               -----------

               3.1  Termination for Any Reason Except Death, Disability or Cause
                    ------------------------------------------------------------
If Participant is Terminated for any reason, except death, Disability or for
Cause, the Option, to the extent (and only to the extent) that it would have
been exercisable by Participant on the Termination Date or pursuant to
Participant's Offer Letter dated April 14, 2000 between the Company and Chris A.
Davis, may be exercised by Participant no later than three (3) months after the
Termination Date, but in any event no later than the Expiration Date.

               3.2  Termination Because of Death or Disability. If Participant
                    ------------------------------------------
is Terminated because of death or Disability of Participant (or Participant dies
within three (3) months of Termination when Termination is for any reason other
than Participant's Disability or for Cause), the Option, to the extent that it
is exercisable by Participant on the Termination Date, may be exercised by
Participant (or Participant's legal representative) no later than twelve (12)
months after the Termination Date, but in any event no later than the Expiration
Date. Any exercise beyond (i) three (3) months after the Termination Date when
the Termination is for any reason other than the Participant's death or
disability, within the meaning of Section 22(e)(3) of the Code; or (ii) twelve
(12) months after the Termination Date when the termination is for Participant's
disability, within the meaning of Section 22(e)(3) of the Code, is deemed to be
an NQSO.

               3.3  Termination for Cause. If Participant is Terminated for
                    ---------------------
Cause, then the Option will expire on Participant's Termination Date after
giving Participant at least five business days notice of such termination for
Cause for purposes of this Section 3.3, or at such later time and on such
conditions as are determined by the Committee.

               3.4  No Obligation to Employ. Nothing in this Agreement shall
                    -----------------------
confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.

          4.   Manner of Exercise.
               ------------------

               4.1  Stock Option Exercise Agreement. To exercise this Option,
                    -------------------------------
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit B, or in such other form as may be approved by the
                   ---------
Committee from time to time (the "Exercise Agreement"), which shall set forth,
inter alia, (i) Participant's election to exercise the Option, (ii) the number
----- ----
of Shares being purchased, (iii) any restrictions imposed on the Shares and (iv)
any representations, warranties and


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<PAGE>

agreements regarding Participant's investment intent and access to information
as may be required by the Company to comply with applicable securities laws. If
someone other than Participant exercises the Option, then such person must
submit documentation reasonably acceptable to the Company verifying that such
person has the legal right to exercise the Option.

               4.2  Limitations on Exercise. The Option may not be exercised
                    -----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option may
not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.

               4.3  Payment. The Exercise Agreement shall be accompanied by full
                    -------
payment of the Exercise Price for the shares being purchased in cash (by check),
or where permitted by law:

          (a)  by surrender of shares of the Company's Common Stock that (i)
               either (A) have been owned by Participant for more than six (6)
               months and have been paid for within the meaning of SEC Rule 144
               (and, if such shares were purchased from the Company by use of a
               promissory note, such note has been fully paid with respect to
               such shares); or (B) were obtained by Participant in the open
               public market; and (ii) are clear of all liens, claims,
               encumbrances or security interests; (b) by tender of a full
               recourse promissory note having such terms as may be approved by
               the Committee and bearing interest at a rate sufficient to avoid
               imputation of income under Sections 483 and 1274 of the Code;
               provided, however, that Participants who are not employees or
               directors of the Company shall not be entitled to purchase Shares
               with a promissory note unless the note is adequately secured by
               collateral other than the Shares;

          (c)  provided that a public market for the Company's stock exists: (i)
               through a "same day sale" commitment from Participant and a
               broker-dealer that is a member of the National Association of
               Securities Dealers (an "NASD Dealer") whereby Participant
               irrevocably elects to exercise the Option and to sell a portion
               of the Shares so purchased sufficient to pay for the total
               Exercise Price and whereby the NASD Dealer irrevocably commits
               upon receipt of such Shares to forward the total Exercise Price
               directly to the Company, or (ii) through a "margin" commitment
               from Participant and an NASD Dealer whereby Participant
               irrevocably elects to exercise the Option and to pledge the
               Shares so purchased to the NASD Dealer in a margin account as
               security for a loan from the NASD Dealer in the amount of the
               total Exercise Price, and whereby the NASD Dealer irrevocably
               commits upon receipt of such Shares to forward the total Exercise
               Price directly to the Company;

          (d)  any other form of consideration approved by the Committee; or

          (e)  by any combination of the foregoing.

               4.4  Tax Withholding. Prior to the issuance of the Shares upon
                    ---------------
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain the minimum number
of Shares with a Fair Market Value equal to the minimum amount of taxes required
to be withheld; but in no event will the Company withhold Shares if such
withholding would result in adverse accounting consequences to the Company. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.

               4.5  Issuance of Shares. Provided that the Exercise Agreement and
                    ------------------
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.


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<PAGE>

          5.   Compliance with Laws and Regulations. This Agreement is intended
               ------------------------------------
to comply with applicable securities laws. The exercise of the Option and the
issuance and transfer of Shares shall be subject to compliance by the Company
and Participant with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which the
Company's Common Stock may be listed at the time of such issuance or transfer.
Participant understands that the Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

          6.   Nontransferability of Option. The Option may not be transferred
               ----------------------------
in any manner other than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Participant only by Participant or in
the event of Participant's incapacity, by Participant's legal representative;
provided, however, that options may be transferred by the Participant to an
Approved Transferee as set forth below. Upon transfer, the Option continues to
be governed by and subject to the terms and limitations of the Option and the
transferee is required to abide by the same rights thereunder as Participant, as
if no transfer had taken place. "Approved Transferees" includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee's household (other than a tenant
or employee) a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the employee)
control the management of assets, and any other entity in which these persons
(or the employee) own more that fifty percent of the voting interests.

          7.   Company's Repurchase Option for Unvested Shares. The Company, or
               -----------------------------------------------
its assignee, shall have the option to repurchase Participant's Unvested Shares
(as defined in Section 2.2 of this Agreement) on the terms and conditions set
forth in the Exercise Agreement (the "Repurchase Option") if Participant is
Terminated for any reason, or no reason, including without limitation
Participant's death, Disability, voluntary resignation or termination by the
Company with or without Cause. Notwithstanding the foregoing, the Company shall
retain the Repurchase Option for Unvested Shares only as to that number of
Unvested Shares (whether or not exercised) that exceeds the number of shares
which remain unexercised.

          8.   Company's Right of First Refusal. Unvested Shares may not be sold
               --------------------------------
or otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Vested Shares to
be sold or transferred on the terms and conditions set forth in the Exercise
Agreement (the "Right of First Refusal"). The Company's Right of First Refusal
will terminate when the Company's securities become publicly traded.

          9.   Tax Consequences. Set forth below is a brief summary as of the
               ----------------
Effective Date of this Agreement of some of the federal and California tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.

               9.1 Exercise of Nonqualified Stock Option. There may be a regular
                   -------------------------------------
federal and California income tax liability upon the exercise of the Option.
Participant will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Participant is
a current or former employee of the Company, the Company may be required to
withhold from Participant's compensation or collect from Participant and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

               9.2  Disposition of Shares. The following tax consequences may
                    ---------------------
apply upon disposition of the Shares.

                    (a)  Nonqualified Stock Options. If the Shares are held for
                         --------------------------
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long term capital gain.


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<PAGE>


                   (b) Withholding. The Company may be required to withhold from
                       -----------
the Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.

               9.3. Section 83(b) Election for Unvested Shares. With respect to
                    ------------------------------------------
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the purchase
                                                 --------------
of the Unvested Shares, electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.

          10. Privileges of Stock Ownership. Participant shall not have any of
              -----------------------------
the rights of a shareholder with respect to any Shares until the Shares are
issued to Participant.

          11. Corporate Transactions.

              11.1 Assumption or Replacement of Option by Successor or Acquiring
              ------------------------------------------------------------------
Corporation. In the event of (a) a dissolution or liquidation of the
-----------
Company, (b) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the Option granted under this
Agreement is assumed, converted or replaced by the successor or acquiring
corporation, which assumption, conversion or replacement will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company immediately prior to such merger
(other than any shareholder which merges with the Company in such merger, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
or (d) the sale of all or substantially all of the assets of the Company, this
Agreement may be assumed, converted or replaced by the successor or acquiring
corporation (if any), which assumption, conversion or replacement will be
binding on the Participant. In the alternative, the successor or acquiring
corporation may substitute an equivalent Option or provide substantially similar
consideration to Participant as was provided to shareholders (after taking into
account the existing provisions of the Option). The successor or acquiring
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Section 11.1. In the event such
successor or acquiring corporation (if any) does not assume or substitute this
Agreement, as provided above, pursuant to a transaction described in this
Section 11.1, then notwithstanding any other provision in this Agreement to the
contrary, the vesting of the Option will accelerate and this Option will become
exercisable in full prior to the consummation of such event at such times and on
such conditions as the Committee determines, and if this Option is not exercised
prior to the consummation of the corporate transaction, it shall terminate in
accordance with the provisions of this Agreement.

              11.2 Other Treatment of Option. Subject to any greater rights
                   -------------------------
granted to Participant under the foregoing provisions of this Section 11, in the
event of the occurrence of any transaction described in Section 11.1 hereof, any
outstanding Option will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation or sale of assets.

          12. Interpretation. Any dispute regarding the interpretation of this
              --------------
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.

          13. Entire Agreement. This Agreement and the Offer Letter, dated April
              ----------------
14, 2000, between the Company and Chris A. Davis, constitute the entire
agreement of the parties and supersede all prior undertakings and agreements
with respect to the subject matter hereof.


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<PAGE>
          14. Notices. Any notice required to be given or delivered to the
              -------
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: (i) personal
delivery; (ii) three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); (iii) one (1) business
day after deposit with any return receipt express courier (prepaid); or (iv) one
(1) business day after transmission by facsimile, rapifax or telecopier.

          15. Successors and Assigns. The Company may assign any of its rights
              ----------------------
under this Agreement, including its rights to purchase Shares under the
Repurchase Option and the Right of First Refusal. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Participant and Participant's heirs, executors,
administrators, legal representatives, successors and assigns.

          16. Governing Law. This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.

          17. Acceptance. Participant hereby acknowledges receipt of a copy of
              ----------
this Agreement. Participant has read and understands the terms and provisions
thereof, and accepts the Option subject to all the terms and conditions of this
Agreement. Participant acknowledges that there may be adverse tax consequences
upon exercise of the Option or disposition of the Shares and that Participant
should consult a tax adviser prior to such exercise or disposition.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in triplicate by its duly authorized representative and Participant has
executed this Agreement in triplicate, effective as of the Date of Grant.



ONI SYSTEMS CORP.                            PARTICIPANT

By: /s/ Hugh C. Martin                       /s/ Chris A. Davis
    ------------------------------------     -----------------------------------
                                             (Signature)

Hugh C. Martin                               Chris A. Davis
----------------------------------------     -----------------------------------
(Please print name)                          (Please print name)

Chairman, President and CEO
----------------------------------------
(Please print title)





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