<PAGE>
EXHIBIT 10.3
FORM OF
CORVIS CORPORATION
2000 LONG TERM INCENTIVE PLAN
-----------------------------
<PAGE>
CORVIS CORPORATION
------------------
Certificate
I,__________________, ___________________ of Corvis Corporation, having in
my custody and possession the corporate records of said corporation, do hereby
certify that attached hereto is a true and correct copy of Corvis Corporation
2000 Long Term Incentive Plan as in effect as of _____________, 2000.
WITNESS my hand this ____ day of ______________, 2000.
_____________________________
As Aforesaid
<PAGE>
CORVIS CORPORATION
2000 LONG TERM INCENTIVE PLAN
-----------------------------
1. Purpose; Effective Date. Corvis Corporation 2000 Long Term Incentive
-----------------------
Plan (the "Plan") has been established to increase stockholder value and to
advance the interests of Corvis Corporation ("Corvis") and its subsidiaries
(collectively, the "Company") by awarding equity and performance based
incentives designed to attract, retain and motivate employees and consultants
who perform services for the Company. As used in the Plan, the term
"subsidiary" means any business, whether or not incorporated, in which Corvis
has an ownership interest. The Plan shall be effective upon the later of its
adoption by the Board of Directors of Corvis (the "Board") or its approval by
the stockholders of Corvis (the "Effective Date"). The Plan shall be unlimited
in duration and, in the event of Plan termination, shall remain in effect as
long as any Awards (as defined in Section 3) under it are outstanding; provided,
however, that no Awards may be granted under the Plan after the ten year
anniversary of the Effective Date.
2. Administration.
--------------
2.1. Administration by Committee. The Plan shall be administered by a
---------------------------
committee designated by the Board (the "Committee"), which Committee shall
consist of two or more persons who constitute "non-employee directors" within
the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and "outside directors" within the meaning of
Treas. Reg. (S) 1.162-27(e)(3).
2.2. Authority. Subject to the provisions of the Plan, the Committee
---------
shall have the authority to (a) manage and control the operation of the Plan,
(b) conclusively interpret and construe the provisions of the Plan, and
prescribe, amend and rescind rules, regulations and procedures relating to the
Plan, (c) make Awards under the Plan, in such forms and amounts and subject to
such restrictions, limitations and conditions as it deems appropriate,
including, without limitation, Awards which are made in combination with or in
tandem with other Awards (whether or not contemporaneously granted) or
compensation or in lieu of current or deferred compensation, (d) modify the
terms of, cancel and reissue, or repurchase outstanding Awards (including, but
not limited to, repurchasing or settling any Option (as defined in subsection
5.1) in cash upon a Corporate Transaction (as defined in subsection 11.2)), (e)
prescribe the form of agreement, certificate or other instrument evidencing any
Award under the Plan, (f) correct any defect or omission and reconcile any
inconsistency in the Plan or in any Award hereunder, (g) extend the exercise or
vesting date of any Award under the Plan, (h) accelerate the vesting or exercise
date of any Award under the Plan, and (i) make all other determinations and take
all other actions as it deems necessary or desirable for the implementation and
administration of the Plan; provided, however, that in no event shall the
Committee cancel or modify any Option granted for the purpose of reissuing an
additional option to the option holder at a lower option price. The
determination of the Committee on matters within its authority shall be
conclusive and binding on the Company and all other persons.
<PAGE>
2.3. Delegation to Officers. Notwithstanding the foregoing provisions of
----------------------
this Section 2, the Committee, subject to the terms and conditions of the Plan,
may delegate to any officer of Corvis, if such individual is then serving as a
member of the Board, the authority to act as a subcommittee of the Committee for
purposes of making Awards under the Plan with respect to such number of shares
as the Committee shall designate annually, to such employees of the Company who
are not subject to section 16(a) of the Exchange Act as such officer shall
determine in his or her sole discretion, and such officer shall have the
authority and duties of the Committee with respect to such grants.
3. Participation. Subject to the terms and conditions of the Plan, the
-------------
Committee shall determine and designate, from time to time, from among the
employees, consultants and directors who provide services to the Company those
persons who will be granted one or more Awards under the Plan, and thereby
become "Participants" in the Plan. In the discretion of the Committee, and
subject to the terms of the Plan, a Participant may be granted any Award
permitted under the provisions of the Plan, and more than one Award may be
granted to a Participant; provided, however, that Incentive Stock Options (as
defined in subsection 5.1) under the Plan may only be granted to persons who are
employees of Corvis and its subsidiary corporations (within the meaning of
section 424(f) of Internal Revenue Code of 1986, as amended (the "Code")).
Except as otherwise agreed by the Committee and the Participant, or except as
otherwise provided in the Plan, an Award under the Plan shall not affect any
previous Award under the Plan or an award under any other plan maintained by the
Company. For purposes of the Plan, the term "Award" shall mean any award or
benefit granted to any Participant under the Plan.
4. Shares Subject to the Plan.
--------------------------
4.1. Number of Shares Reserved. The shares of common stock of Corvis
-------------------------
("Stock") with respect to which Awards may be made under the Plan shall be
shares currently authorized but unissued or currently held or subsequently
acquired by Corvis as treasury shares, including shares purchased in the open
market or in private transactions. Subject to the provisions of subsection 4.4,
the number of shares of Stock which may be issued with respect to Awards under
the Plan shall not exceed 20,000,000, plus, if on January 1 of any year in which
the Plan is in effect the number of shares of Stock with respect to which Awards
may be granted is less than five percent (5%) of the number of outstanding
shares of Stock on such date, an annual increase (determined as of January 1 of
each year) to the lesser of (a) five percent (5%) of the number of outstanding
shares of Stock on such date or (b) such other number of shares as determined by
the Board.
4.2. Number of Shares for Incentive Stock Options. Notwithstanding the
--------------------------------------------
provisions of subsection 4.1 but subject to the provisions of subsection 4.4,
the number of shares of Stock which may be issued with respect to Incentive
Stock Options under the Plan shall not exceed 40,000,000.
-2-
<PAGE>
4.3. Reusage of Shares.
-----------------
(a) In the event of the termination (by reason of forfeiture, expiration,
cancellation, surrender or otherwise) of any Award under the Plan,
that number of shares of Stock that was subject to the Award but not
delivered shall again be available for Awards under the Plan.
(b) In the event that shares of Stock are delivered under the Plan as a
Restricted Stock Award (as defined in Section 7) and are thereafter
forfeited or reacquired by Corvis pursuant to rights reserved upon
the award thereof, such forfeited or reacquired shares shall again be
available for Awards under the Plan.
(c) Notwithstanding the provisions of paragraphs (a) or (b), the
following shares shall not be available for reissuance under the
Plan: (i) shares with respect to which the Participant has received
the benefits of ownership (other than voting rights), either in the
form of dividends or otherwise; (ii) shares which are withheld from
any Award or payment under the Plan to satisfy tax withholding
obligations (as described in subsection 10.5); and (iii) shares which
are surrendered to fulfill tax obligations (as described in
subsection 10.5).
4.4. Adjustments to Shares Reserved. In the event of any transaction
------------------------------
involving Corvis (including, without limitation, any merger, consolidation,
reorganization, recapitalization, spinoff, stock dividend, extraordinary cash
dividend, stock split, reverse stock split, combination, exchange or other
distribution with respect to shares of Stock or other change in the corporate
structure or capitalization affecting the Stock), the Committee may adjust
Awards under the Plan to preserve the benefits or potential benefits of the
Awards. Action by the Committee may include (a) adjustment of the number and
kind of shares which are or may be subject to Awards under the Plan (b)
adjustment of the number and kind of shares subject to outstanding Awards under
the Plan, (c) adjustment to the exercise price of outstanding Awards under the
Plan, and (d) any other adjustments that the Committee determines to be
equitable.
5. Options.
-------
5.1. Definitions. The grant of an "Option" under this Section 5 entitles
-----------
the Participant to purchase shares of Stock at the Option Price (as defined in
subsection 5.3), subject to the terms of this Section 5. Options granted under
this Section 5 may be either Incentive Stock Options or Non-Qualified Stock
Options, as determined in the discretion of the Committee. An "Incentive Stock
Option" is an Option that is intended to satisfy the requirements applicable to
an "incentive stock option" described in section 422(b) of the Code. A ANon-
Qualified Stock Option" is an Option that is not intended to be an "incentive
stock option" as that term is described in section 422(b) of the Code.
5.2. Restrictions Relating to Incentive Stock Options. To the extent that
------------------------------------------------
the aggregate fair market value of Stock with respect to which Incentive Stock
Options are exercisable for the
-3-
<PAGE>
first time by any individual during any calendar year (under all plans of Corvis
and its subsidiary corporations (as defined in section 424(f) of the Code)
exceeds $100,000, such options shall be treated as Non-Qualified Stock Options,
to the extent required by section 422 of the Code.
5.3. Option Price. The price at which shares of Stock may be purchased
------------
upon the exercise of an Option (the "Option Price") shall be established by the
Committee or shall be determined by a method established by the Committee at the
time the Option is granted; provided, however, that in no event shall such price
be less than the par value of a share of Stock on such date and, in the case of
an Incentive Stock Option, in no event shall such price less than 100% of the
Fair Market Value (as defined in subsection 10.11) of a share of Stock as of the
date on which the Incentive Stock Option is granted.
5.4. Exercise. Except as otherwise expressly provided in the Plan, an
--------
Option may be exercised, in whole or in part, in accordance with terms and
conditions established by the Committee at the time of grant; provided, however,
that no Option shall be exercisable after the Expiration Date (as defined in
Section 9) applicable to that Option. The full Option Price of each share of
Stock purchased upon the exercise of any Option shall be paid at the time of
such exercise (except that, in the case of a cashless exercise arrangement
approved by the Committee, payment may be made as soon as practicable after the
exercise) and, as soon as practicable thereafter, a certificate representing the
shares so purchased shall be delivered to the person entitled thereto. The
Option Price shall be payable in cash or in shares of Stock (valued at Fair
Market Value as of the day of exercise), or in any combination thereof, as
determined by the Committee and, to the extent provided by the Committee, a
Participant may elect to pay the Option Price upon the exercise of an Option
through a cashless exercise arrangement. The exercise of an Option will result
in the surrender of the corresponding rights under a tandem Stock Appreciation
Right (as defined in subsection 6.1), if any.
5.5. Post-Exercise Limitations. The Committee, in its discretion, may
-------------------------
impose such restrictions on shares of Stock acquired pursuant to the exercise of
an Option (including stock acquired pursuant to the exercise of a tandem Stock
Appreciation Right) as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance, Stock ownership by the Participant,
and such other factors as the Committee determines to be appropriate.
6. Stock Appreciation Rights
-------------------------
6.1. Definition. Subject to the terms of this Section 6, a "Stock
----------
Appreciation Right" granted under the Plan entitles the Participant to receive,
in cash or Stock, value equal to all or a portion of the excess of: (a) the Fair
Market Value of a specified number of shares of Stock at the time of exercise;
over (b) a specified price which shall not be less than 100% of the Fair Market
Value of the Stock at the time the Stock Appreciation Right is granted, or, if
granted in tandem with an Option, the Option Price with respect to shares under
the tandem Option.
-4-
<PAGE>
6.2. Exercise. If a Stock Appreciation Right is not in tandem with an
--------
Option, then the Stock Appreciation Right shall be exercisable in accordance
with the terms established by the Committee at the time of the grant of such
Stock Appreciation Right; provided, however, that no Stock Appreciation Right
shall be exercisable after the Expiration Date applicable to that Stock
Appreciation Right. If a Stock Appreciation Right is in tandem with an Option,
then the Stock Appreciation Right shall be exercisable at the time the tandem
Option is exercisable. The exercise of a Stock Appreciation Right will result
in the surrender of the corresponding rights under the tandem Option.
6.3. Settlement of Award. Upon the exercise of a Stock Appreciation
-------------------
Right, the value to be distributed to the Participant, in accordance with
subsection 6.1, shall be distributed in shares of Stock (valued at their Fair
Market Value at the time of exercise), in cash, or in a combination thereof, in
the discretion of the Committee.
6.4. Post-Exercise Limitations. The Committee, in its discretion, may
-------------------------
impose such restrictions on shares of Stock acquired pursuant to the exercise of
a Stock Appreciation Right as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance, ownership of Stock by the
Participant, and such other factors as the Committee determines to be
appropriate.
7. Restricted Stock Awards.
-----------------------
7.1. Definition. Subject to the terms of this Section 7, a "Restricted
----------
Stock Award" under the Plan is a grant of shares of Stock to a Participant, the
earning, vesting or distribution of which is subject to one or more conditions
established by the Committee. Such conditions may relate to events (such as
performance or continued service) occurring before or after the date the
Restricted Stock Award is granted, or the date the Stock is earned by, vested in
or delivered to the Participant. If the vesting of Restricted Stock Awards is
subject to conditions occurring after the date of grant, the period beginning on
the date of grant of a Restricted Stock Award and ending on the vesting or
forfeiture of such Stock (as applicable) is referred to as the "Restricted
Period". Restricted Stock Awards may provide for delivery of the shares of
Stock at the time of grant, or may provide for a deferred delivery date.
7.2. Terms and Conditions of Restricted Stock Awards. Beginning on the
-----------------------------------------------
date of grant (or, if later, the date of distribution) of shares of Stock
comprising a Restricted Stock Award, and including any applicable Restricted
Period, the Participant, as owner of such shares, shall have the right to vote
such shares; provided, however, that payment of dividends with respect to
Restricted Stock Awards shall be subject to the following:
(a) On and after the date that a Participant has a fully earned and
vested right to the shares comprising a Restricted Stock Award, and
the shares have been distributed to the Participant, the Participant
shall have all dividend rights (and other rights) of a stockholder
with respect to such shares.
-5-
<PAGE>
(b) Prior to the date that a Participant has a fully earned and vested
right to the shares comprising a Restricted Stock Award, the
Committee, in its sole discretion, may award Dividend Rights (as
defined below) with respect to such shares.
(c) On and after the date that a Participant has a fully earned and
vested right to the shares comprising a Restricted Stock Award, but
before the shares have been distributed to the Participant, the
Participant shall be entitled to Dividend Rights with respect to such
shares, at the time and in the form determined by the Committee.
A "Dividend Right" with respect to shares comprising a Restricted Stock Award
shall entitle the Participant, as of each dividend payment date, to an amount
equal to the dividends payable with respect to a share of Stock multiplied by
the number of such shares. Dividend Rights shall be settled in cash or in
shares of Stock, as determined by the Committee, shall be payable at the time
and in the form determined by the Committee, and shall be subject to such other
terms and conditions as the Committee may determine.
8. Performance Units.
-----------------
8.1. Definition. Subject to the terms of this Section 8, the Award of
----------
"Performance Units" under the Plan entitles the Participant to receive value for
the units (which value may be stated either in cash or in units representing
shares of Stock), which Performance Units are earned based on the satisfaction
such conditions, restrictions and contingencies as determined by the Committee.
The number of units earned, and the value received for them, will be contingent
on the degree to which the criteria established at the time of grant of the
Award are met.
8.2. Terms and Conditions of Awards. For each Participant, the Committee
------------------------------
will determine the conditions, restrictions and contingencies applicable to any
Performance Units and all other terms and conditions relating thereto.
8.3. Settlement. Settlement of Performance Units shall be subject to the
----------
following:
(a) Settlement of Performance Units earned shall be wholly in cash,
wholly in Stock or in a combination of the two, to be distributed in
a lump sum or installments, as determined by the Committee.
(b) For Performance Units stated in units representing shares of Stock
when granted, one share of Stock will be distributed for each unit
earned, or cash will be distributed for each unit earned equal to
either (i) the Fair Market Value of a share of Stock as of the date
of the settlement, or (ii) the average Stock value over a period
determined by the Committee.
(c) For Performance Units stated in cash when granted, the value of each
unit earned will be distributed in its initial cash value, or shares
of Stock will be distributed
-6-
<PAGE>
based on the cash value of the units earned divided by (i) the Fair
Market Value of a share of Stock as of the date of the settlement, or
(ii) the average Stock value over a period determined by the
Committee.
(d) Shares of Stock distributed in settlement of the Performance Units
shall be subject to such vesting requirements and other conditions,
if any, as the Committee shall determine. Without limiting the
generality of the foregoing, the Committee may permit or require the
deferral of any Performance Unit payment, subject to such rules and
procedures as it may establish, which may include provisions for the
payment or crediting of interest or dividend equivalents and may
include converting such credits into Stock equivalents.
9. Expiration of Awards. The "Expiration Date" with respect to an Award
--------------------
under the Plan means the date established as the Expiration Date by the
Committee at the time of the grant; provided, however, that the Expiration Date
with respect to any Award shall not be later than the ten-year anniversary of
the date on which the Award is granted. If a Stock Appreciation Right is in
tandem with an Option, then the "Expiration Date" for the Stock Appreciation
Right shall be the Expiration Date for the related Option.
10. Miscellaneous.
-------------
10.1. Compliance with Applicable Laws; Limits on Distribution. Distribution
-------------------------------------------------------
of shares of Stock or other amounts under the Plan shall be subject to the
following:
(a) Notwithstanding any other provision of the Plan, Corvis shall have no
liability to deliver any shares of Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including,
without limitation, the requirements of the Securities Act of 1933
(the "1933 Act")) and the applicable regulations or requirements of
any securities exchange or similar entity.
(b) In the case of a Participant who is subject to Section 16(a) and
16(b) of the Exchange Act, the Committee may, at any time, add such
conditions and limitations to any Award to such Participant, or any
feature of any such Award, as the Committee, in its sole discretion,
deems necessary or desirable to comply with Section 16(a) or 16(b) of
the Exchange Act and the rules and regulations thereunder or to
obtain any exemption therefrom.
(c) To the extent that the Plan provides for issuance of certificates to
reflect the transfer of shares of Stock, the transfer of such shares
may be effected on a non-certificated basis, to the extent not
prohibited by applicable law or the rules of any securities exchange
or similar entity.
-7-
<PAGE>
(d) Prior to the delivery of any shares of Stock under the Plan, Corvis
may require a written statement that the recipient is acquiring the
shares for investment and not for the purpose or with the intention
of distributing the shares and will not dispose of them in violation
of the registration requirements of the 1933 Act.
10.2. Performance-Based Compensation. To the extent that the Committee
------------------------------
determines that it is necessary or desirable to conform any Awards under the
Plan with the requirements applicable to "Performance-Based Compensation", as
that term is used in section 162(m)(4)(C) of the Code, it may, at or prior to
the time an Award is granted, take such steps and impose such restrictions with
respect to such Award as it determines to be necessary or desirable.
10.3. Transferability. Awards under the Plan are not transferable except
---------------
as designated by a Participant by will or by the laws of descent and
distribution. To the extent that the Participant who receives an Award under the
Plan has the right to exercise such Award, the Award may be exercised during the
lifetime of the Participant only by the Participant.
10.4. Notices. Any notice or document required to be filed with the
-------
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of Corvis, at its
principal executive offices. The Committee may, by advance written notice to
affected persons, revise such notice procedure from time to time. Any notice
required under the Plan (other than a notice of election) may be waived by the
person entitled to notice.
10.5. Withholding. All distributions under the Plan are subject to
-----------
withholding of applicable taxes and the Committee may condition the delivery of
any shares or other benefits under the Plan on satisfaction of the applicable
withholding obligations. The Company shall be entitled to deduct from any
payment under the Plan the amount of any tax required by law to be withheld with
respect to such payment or may require any participant to pay such amount to the
Company prior to and as a condition of making such payment. In addition, the
Committee may, in its discretion and subject to such rules as it may adopt from
time to time, permit a Participant to elect to have the Company withhold from
any payment under the Plan (or to have the Company accept from the participant),
for tax withholding purposes, shares of Stock, valued at their Fair Market
Value, but in no event shall the Fair Market Value of the number of shares so
withheld (or accepted) exceed the amount necessary to meet the minimum Federal,
state and local marginal tax rates then in effect that are applicable to the
Participant and to the particular transaction.
10.6. Form and Time of Elections. Unless otherwise specified herein, each
--------------------------
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
-8-
<PAGE>
10.7. Agreement With Corvis. At the time of an Award to a Participant
---------------------
under the Plan, the Committee may require a Participant to enter into an
agreement with Corvis (the "Agreement") in a form specified by the Committee,
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the Committee may, in its
sole discretion, prescribe.
10.8. Limitation of Implied Rights.
----------------------------
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property
of the Company whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company, in its
sole discretion, may set aside in anticipation of a liability under
the Plan. A Participant shall have only a contractual right to
benefits or amounts, if any, payable under the Plan, unsecured by
any assets of the Company. Nothing contained in the Plan shall
constitute a guarantee by the Company that the assets of the Company
shall be sufficient to pay any amounts or benefits to any person.
(b) The Plan does not constitute a contract of employment or continued
service, and selection as a Participant will not give any employee
the right to be retained in the employ or other service of the
Company, nor any right or claim to any benefit or payment under the
Plan, unless such right or claim has specifically accrued under the
terms of the Plan. Except as otherwise provided in the Plan, no
Award under the Plan shall confer upon the holder thereof any right
as a stockholder of Corvis prior to the date on which he fulfills
all service requirements and other conditions for receipt of such
rights.
10.9. Evidence. Evidence required of anyone under the Plan may be by
--------
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
10.10. Gender and Number. Where the context admits, words in one gender
-----------------
shall include the other gender, words in the singular shall include the plural
and the plural shall include the singular.
10.11. Definition of Fair Market Value. For purposes of the Plan, the "Fair
-------------------------------
Market Value" of a share of common stock of Corvis as of any date shall be the
closing market composite price for such Stock as reported on the Nasdaq National
Market on that date or, if Stock is not traded on that date, on the immediately
preceding date on which Stock was traded. In the event that the Stock is not
listed for trading on a national exchange or quoted on an inter-dealer quotation
system, the Fair Market Value shall be determined by the Committee.
-9-
<PAGE>
11. Corporate Transaction.
---------------------
11.1. Acceleration. Except as otherwise provided in the Plan or the
------------
Agreement reflecting the applicable Award:
(a) If, within 24 months following the occurrence of a Corporate
Transaction, a Participant's employment or service with the Company
is terminated by the Company for reasons other than Cause (as
defined below), then:
(i) all outstanding Options (regardless of whether in tandem with
Stock Appreciation Rights) and Stock Appreciation Rights
(regardless of whether in tandem with Options) shall become
fully exercisable;
(ii) all Restricted Stock Awards shall become fully vested; and
(iii) Performance Units may be paid out in such manner and amounts
as determined by the Committee.
For purposes of this paragraph (a), the term "Cause" shall mean (1)
habitual intoxication, (2) illegal drug use or illegal drug
addiction, (3) conviction of a felony (or plea of guilty or nolo
contendre), (4) a material failure or inability to perform duties or
obligations as an employee, consultant or director, other than from
illness or injury, (5) willful misconduct or negligence in the
performance of duties or obligations as an employee, consultant or
director, or (6) in the case of any Participant who is a party to an
employment agreement or other arrangement pursuant to which the
Participant provides services to the Company, any act or failure to
act which would constitute cause under such agreement or
arrangement.
(b) If, within 24 months following the occurrence of a Corporate
Transaction, a Participant terminates his employment or service with
the Company for Good Reason (as defined below), then:
(i) fifty percent (50%) of all outstanding unvested Options
(regardless of whether in tandem with Stock Appreciation
Rights) and unvested Stock Appreciation Rights (regardless of
whether in tandem with Options) shall become fully
exercisable;
(ii) fifty percent (50%) of all Restricted Stock Awards shall
become fully vested; and
(iii) Performance Units may be paid out in such manner and amounts
as determined by the Committee.
-10-
<PAGE>
For purposes of this paragraph (b), the term "Good Reason" shall
mean (1) a material reduction in the Participant's compensation, (2)
a material reduction in the Participant's position, duties or
responsibilities, (3) a requirement that the Participant move his
principal residence because his primary place of employment or
service is moved to a location greater than fifty (50) miles away
from its then current location, or (4) Corvis (or a successor) has
not paid to the Participant when due any salary, bonus or other
material benefit.
11.2. Definition of Corporate Transaction. For purposes of the Plan, the
-----------------------------------
term "Corporate Transaction" means the first to occur of any of the following:
(a) any sale, lease, exchange, or other transfer (in one transaction or
a series of transactions) of all or substantially all of the assets
of Corvis;
(b) individuals who, as of the Effective Date, constitute the entire
Board ("Incumbent Directors") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date
whose election was approved by a vote of a majority of the then
Incumbent Directors shall be, for the purpose of this provision,
considered as though such individual were an Incumbent Director;
(c) any consolidation or merger of Corvis with any other entity where
the stockholders of Corvis immediately prior to the consolidation or
merger (other than any stockholder directly or indirectly acquiring
control in said consolidation or merger), would not, immediately
after the consolidation or merger, beneficially own, directly or
indirectly, fifty percent (50%) of the combined voting power of all
of the outstanding securities of the entity issuing cash or
securities in the consolidation or merger (or its parent
corporation, if any);
(d) a person or entity becomes the beneficial owner, directly or
indirectly, of securities of Corvis representing seventy-five (75%)
or more of the total number of votes that may be cast for the
election of the directors of Corvis; or
(e) the Board, by vote of a majority of all of the directors, adopts a
resolution to the effect that a Corporate Transaction has occurred
for purposes of the Plan.
Notwithstanding any other provision of this Section 11 to the contrary, an
initial public offering of Corvis' Stock shall not constitute a Change in
Control for purposes of the Plan.
12. Amendment and Termination.
-------------------------
The Board may, at any time, amend or terminate the Plan, provided that,
subject to subsection 4.4 (relating to certain adjustments to shares), no
amendment or termination may materially adversely affect the rights of any
Participant or beneficiary under any Award made
-11-
<PAGE>
under the Plan prior to the date such amendment is adopted by the Board.
Notwithstanding the foregoing or any other provision of the Plan or any Award
agreement, the Board or the Committee may amend the Plan or the terms of any
Award to the extent it deems necessary to preserve pooling-of-interest
accounting treatment for any transaction which is intended to be accounted for
through such accounting method.
-12-
