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EXHIBIT 10.12
AVANEX CORPORATION
SECOND AMENDED AND RESTATED CO-SALE AGREEMENT
This Second Amended and Restated Co-Sale Agreement (this "Co-Sale
Agreement") is made as of September 14, 1999 by and among Avanex Corporation, a
California corporation (the "Company"), Simon Xxxxxxx Xxx, Xxxxx Xxxx and Xxxx
Xxx-Xx Xxxxx (the "Founders"), the purchasers of the Company's Series A
Preferred Stock (the "Series A Preferred"), Series B Preferred Stock (the
"Series B Preferred") and Series C Preferred Stock (the "Series C Preferred")
pursuant to that certain Amended and Restated Series A Preferred, Series B
Preferred and Series C Preferred Stock Purchase Agreement dated February 19,
1999 between the Company and such purchasers (the "Prior Purchasers"), and the
purchasers of the Company's Series D Preferred Stock (the "Series D Preferred")
pursuant to that certain Series D Preferred Stock Purchase Agreement of even
date herewith (the "SERIES D AGREEMENT") between the Company and such purchasers
(including purchasers in subsequent closings under the Series D Agreement who
execute a counterpart signature page to this Agreement) (the "Series D
Purchasers") (the Series A Preferred, Series B Preferred, Series C Preferred and
Series D Preferred are collectively referred to herein as the "Preferred Stock")
(the Prior Purchasers and the Series D Purchasers being collectively referred to
herein as the "Purchasers").
RECITALS
A. The Founders are presently the beneficial owners of Four Million Two
Hundred Thousand (4,200,000) shares of the outstanding Common Stock of the
Company (the "Common Stock"). All said shares and any additional shares of
capital stock of the Company subsequently owned by the Founders are herein
collectively referred to as the "Co-Sale Shares";
B. Pursuant to that certain Amended and Restated Series A Preferred,
Series B Preferred and Series C Preferred Stock Purchase Agreement dated
February 19, 1999 (the "Prior Purchase Agreement"), the Purchasers thereto
acquired from the Company Four Million Five Hundred Thirty Thousand Eighty
(4,530,080) shares of the Company's Series A Preferred Stock (the "Series A
Preferred Stock"), after the Company met certain conditions set forth in the
Prior Purchase Agreement, Six Million Two Hundred Ninety Six Thousand Seven
Hundred Forty Four (6,296,744) shares of the Company's Series B Preferred Stock
(the "Series B Preferred Stock"), and, after the Company met certain conditions
set forth in the Prior Purchase Agreement, nine million thirty-two thousand one
hundred sixty-nine (9,032,169) shares of the Company's Series C Preferred Stock
(the "Series B Preferred Stock"). In connection with the Prior Purchase
Agreement, the Purchasers thereto, the Founders and the Company entered into
that certain First Amended and Restated Co-Sale Agreement dated February 19,
1999 (the "Prior Co-Sale Agreement");
C. Pursuant to the Series D Agreement, the Company shall sell to the
Series D Purchasers up to Three Million Four Hundred Eighty-Seven Thousand
Ninety-Seven (3,487,097) shares of the Company's Series D Preferred Stock (the
"Series D Preferred Stock");
Second Amended and Restated Co-Sale Agreement
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D. The obligations of each of the Purchasers to purchase its respective
amount of Series D Preferred Stock is conditioned upon, among other things, the
execution and delivery by the Founders, each of the Purchasers, and the Company
of this Co-Sale Agreement;
E. The Founders have agreed to grant the Purchasers the opportunity to
participate, upon the terms and conditions set forth in this Co-Sale Agreement,
in certain subsequent sales of the Co-Sale Shares made by the Founders to induce
the Purchasers to acquire shares of the Company's Preferred Stock; and
F. The parties to the Prior Co-Sale Agreement wish to amend, restate and
supersede such agreement and adopt this Co-Sale Agreement in lieu thereof.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the Purchasers, the Founders and the Company agree as follows:
AGREEMENT
1. Definitions
(a) "Common Stock Equivalents" shall mean the Company's Common Stock
then outstanding and the shares of Common Stock then issuable upon conversion of
all outstanding Preferred Stock, options and other securities convertible into
Common Stock of the Company or convertible into securities convertible into
Common Stock of the Company.
(b) "Transactions" shall mean any transaction or series of related
transactions which require the giving of notice by a Founder in accordance with
Section 2(a).
(c) "Participant" shall mean a Purchaser who elects to participate
in a Founder's sale pursuant to Section 2(b) or Section 3(b).
2. Sales by a Founder
(a) Before a Founder attempts to transfer any Co-Sale Shares in one
or more transactions, such Founder shall promptly notify all Purchasers and the
Company of the terms and conditions of the transaction at least twenty (20) days
prior to the proposed closing date of the transaction.
(b) A Purchaser shall have the right, exercisable upon written
notice to such Founder within ten (10) days after receipt of the Founder's
notice pursuant to Section 2(a), to participate in the Founder's sale of Co-Sale
Shares pursuant to the specified terms and conditions of such Transaction. The
Founder shall have the exclusive right to determine the terms and conditions of
such sale and the Participants participating in any such sale shall each pay a
pro rata share of the reasonable expenses reasonably incurred by the Founder in
connection therewith. In order to participate in the Founder's sale of Common
Stock, a Participant may be required to sell Common Stock in the Transaction
and, accordingly, may be required to convert such Participant's Preferred Stock
into Common Stock immediately prior to the closing of the Transaction. To the
extent one or
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more of the Purchasers exercise such right of participation in accordance with
the terms and conditions set forth below, the number of shares of Common Stock
which the Founder may sell in the Transaction shall be correspondingly reduced.
The right of participation of each of the Participants shall be subject to the
following terms and conditions.
(i) Each of the Participants may sell all or any part of
that number of shares of Common Stock Equivalents of the Company then held by
such Participant equal to the product obtained by multiplying (x) the aggregate
number of shares of Common Stock Equivalents covered by the Transaction by (y) a
fraction, the numerator of which is the number of shares of Common Stock
Equivalents owned by the Participant prior to the Transaction, and the
denominator of which is the aggregate number of shares of Common Stock
Equivalents outstanding prior to the Transaction.
(ii) Each of the Participants shall effect its
participation in the sale by delivering to the Founder for transfer to the
purchase offeror one or more certificates, properly endorsed for transfer, which
represent the number of shares of Common Stock Equivalents which the Participant
elects to sell pursuant to this Section 2(b).
(c) The certificates which the Participants deliver to the Founders
pursuant to Section 2(b) shall be transferred by the Founders to the purchase
offeror in consummation of the Transaction pursuant to the terms and conditions
specified in the Section 2(a) notice to the Participants, and the Founders shall
promptly thereafter remit to each Participant that portion of the sale proceeds
to which the Participant is entitled by reason of its participation in such
sale.
(d) The exercise or non-exercise of the rights of the Participants
hereunder to participate in one or more Transactions made by the Founders shall
not adversely affect their rights to participate in subsequent Transactions
which satisfy the circumstances specified in Section 2(a).
(e) The provisions of Section 2(a) shall not apply to (i) any pledge
of Co-Sale Shares made by a Founder which creates a mere security interest,
provided the pledgee shall furnish the Participants with a written agreement
providing that such pledgee shall be bound by and comply with all provisions of
this Co-Sale Agreement applicable to the Founder, (ii) the sale or other
transfer by a Founder or any transferee of a Founder, on a cumulative basis, of
up to 1% of the number of Co-Sale Shares held by such Founder or transferee on
the date of this Agreement in any twelve-month period (as adjusted for stock
splits, stock dividends or other recapitalizations), (iii) any transfer by a
Founder or any transferee or beneficiary of a Founder to his spouse, siblings,
parents or lineal descendants, or a trust or trusts for the benefit of any of
them, provided the transferee or beneficiary shall furnish the Participant with
a written agreement to be bound by and comply with all provisions of this
Agreement applicable to the Founders, (iv) any transfer in connection with (x)
the merger or consolidation of the Company with or into any other corporation or
other entity or person, or any other corporate reorganization in which the
Company shall not be the surviving or continuing entity of such merger,
consolidation or reorganization, so long as such merger, consolidation, or other
corporate reorganization shall have been approved by the Purchasers, or (y) the
sale of all or substantially all of the assets of the Company, (v) any transfer
in connection with an underwritten public offering of the Company's Common Stock
registered under the Securities Act of 1933, as
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amended, (vi) any sale, assignment or transfer of Co-Sale Shares in connection
with the repurchase of unvested shares of Common Stock by the Company pursuant
to contractual arrangements and (vii) any sale made with the unanimous approval
of the Board of Directors.
3. Prohibited Transfers
(a) In the event a Founder should sell any Co-Sale Shares in
contravention of the participation rights of the Purchasers under this Agreement
(a "Prohibited Transfer"), the Purchasers shall have the put option provided in
Section 3(b) below, and the Founder shall be bound by the applicable provisions
of such put option.
(b) In the event of a Prohibited Transfer, each Purchaser shall have
the option to sell to the Founder a number of shares of Common Stock Equivalents
of the Company equal (after giving effect to any stock dividends, stock splits
or other recapitalization) to the number of shares such Purchaser would have
been entitled to sell if the Founder had complied with the provisions of Section
2 on the following terms and conditions:
(i) The price per share at which the shares are to be sold
to the Founder shall be equal to the price per share paid by the third party
purchaser or purchasers to the Founder.
(ii) The Purchaser shall deliver to the Founder, within ten
(10) days after it has received written notice of the Prohibited Transfer, the
certificate or certificates representing shares to be sold, each certificate to
be properly endorsed for transfer.
(iii) The Founder shall, upon receipt of the
certificates for the shares subject to the put option, pay the aggregate Section
3(b) purchase price therefor, by certified check or bank draft made payable to
the order of the Participants exercising the Section 3(b) option, and shall
reimburse the Participants for any additional expenses, including legal fees and
expenses, incurred in effecting such purchase and resale.
(iv) The parties agree that the foregoing is a liquidated
damages provision, and not a penalty, which is reasonable in light of the
difficulty of determining damages for the breach hereof.
(c) Notwithstanding the foregoing, any attempt to transfer shares of
the Company in violation of Section 2 hereof shall be void, and the Company
agrees that it will not effect such a transfer nor will it treat any alleged
transferee as the holder of such shares without the written consent of the
number of the Founders and Purchasers having the right to amend this Co-Sale
Agreement as provided below.
4. Legended Certificates
(a) Each certificate representing the Co-Sale Shares now or
hereafter owned by the Founders or any permitted assignee in accordance
herewith, shall be endorsed with the following legend:
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"THE SALE OF TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE AGREEMENT BY AND AMONG
THE ORIGINAL OWNER OF THESE SHARES AND CERTAIN SHAREHOLDERS OF THE ISSUER.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY
OF THE ISSUER.
(b) Each Founder hereby agrees to imprint the foregoing legend on
all certificates of Co-Sale Shares now or hereafter in such Founder's possession
and further agrees that the Company may instruct its transfer agent to impose
transfer restrictions on the shares represented by such certificates to enforce
the provisions of this Co-Sale Agreement. Such legend and transfer restrictions
referenced above shall be removed upon termination of this Co-Sale Agreement in
accordance with the provisions of Section 5(a).
5. Miscellaneous Provisions
(a) This Co-Sale Agreement shall terminate and no longer be in
effect upon the earlier of (i) the liquidation, dissolution or winding up of the
Company, (ii) the execution by the Company of a general assignment for the
benefit of creditors or the appointment of a receiver or trustee to take
possession of the property and assets of the Company, (iii) the closing of a
firm underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, (the "Securities Act")
covering the offer and sale of securities for the account of the Company to the
public, (iv) the closing of the acquisition of the Company by another entity by
means of merger or consolidation resulting in the exchange of the outstanding
shares of the Company's capital stock for securities or consideration issued, or
caused to be issued, by the acquiring entity or its subsidiary which are
registered under the Securities Act, or (v) the sale of all or substantially all
of the assets of the Company. In addition, this Co-Sale Agreement shall
terminate with respect to a particular Founder six months after the termination
of his employment and consulting relationship with the Company, or at such time
as the Company is required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended.
(b) Each Founder represents and warrants that (subject to any
community property rights of such Founder's spouse) he or she is the sole legal
and beneficial owner of the Co-Sale Shares and that no other person has any
interest in such shares.
(c) All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given upon personal delivery to the party to be
notified or three (3) days after deposit in the United States mail, by
registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth in the records of the Company or at such other
address as such party may designate by ten days' advance written notice to the
other parties hereto.
(d) The rights and obligations of the parties hereunder shall inure
to the benefit of and be binding upon, their respective successors, assigns and
legal representatives.
(e) In the event one or more of the provisions of this Co-Sale
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity,
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illegality or unenforceability shall not affect any other provisions of this
Co-Sale Agreement, and this Co-Sale Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(f) Any provision of this Co-Sale Agreement may be amended, waived
or modified only upon the written consent of (i) the Company, (ii) the holders
of a majority of the outstanding shares of the Company's Preferred Stock (or
Common Stock issued upon conversion thereof), acting together as a single class
and (iii) the Founders, provided that any Purchaser may waive any of his rights
hereunder without obtaining the consent of any other Purchaser.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
(h) In the event of any dispute involving the terms hereof, the
prevailing parties shall be entitled to collect reasonable legal fees and
expenses from the other party(ies) to the dispute.
(i) This Co-Sale Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
(j) This Co-Sale Agreement constitutes the full and entire
understanding and agreement between the parties regarding the subject matter
hereof. This Co-Sale Agreement shall supersede and cancel all prior agreements
between the parties hereto with regard to the subject matter hereof, including,
but not limited to, the Prior Co-Sale Agreement.
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IN WITNESS WHEREOF, the parties have executed this Second Amended and
Restated Co-Sale Agreement on the day and year indicated above.
"COMPANY"
AVANEX CORPORATION
By:
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Xxxxxx Xxxxxxxxxxxx, Chief Executive
Officer
Address: 00000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
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"PURCHASERS"
SEQUOIA CAPITAL FRANCHISE FUND
SEQUOIA CAPITAL FRANCHISE PARTNERS
SEQUOIA CAPITAL VII
a California Limited Partnership
SEQUOIA TECHNOLOGY PARTNERS VII
a California Limited Partnership
SQP 1997
SEQUOIA 1997 LLC
SEQUOIA INTERNATIONAL PARTNERS
By: SC VII-A Management, LLC
A California Limited Liability Company,
its General Partner
By:
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Managing Member
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CROSSPOINT VENTURE PARTNERS 1997
By:
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Xxxx Xxxxxx
Partner
CROSSPOINT VENTURE PARTNERS LS 1999
By:
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Xxxx Xxxxxx
Partner
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WS INVESTMENT 98
By:
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Partner
WS INVESTMENTS 99B
By:
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Partner
XXXXXXXX X. X'XXXXX AND
XXXXXX X. X'XXXXX, TRUSTEES OF THE
O'BRIEN FAMILY
TRUST U/D/T DATED 7/1/92
By:
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XXXXX XXXXXXXX
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XXXXXXXX X. XXXXXXX AND XXXXXXX X. XXXXX
AS COMMUNITY PROPERTY
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XXXXXX X. XXXXXX AND XXXXX X. XXX JTWROS
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XXXXX XXXXX
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JAFCO CO., LTD.
By:
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JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO R-3 INVESTMENT ENTERPRISE
PARTNERSHIP
By:
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JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO JS-3 INVESTMENT ENTERPRISE
PARTNERSHIP
By:
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JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO G6-(A) INVESTMENT ENTERPRISE
PARTNERSHIP
By:
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JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO G6-(B) INVESTMENT ENTERPRISE
PARTNERSHIP
By:
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JAFCO America Ventures, Inc.
Its Executive Partner
U.S. INFORMATION TECHNOLOGY NO. 2
INVESTMENT ENTERPRISE PARTNERSHIP
By:
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JAFCO Co., Ltd.
Its Executive Partner
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XXXXXXXX IX
A Delaware Limited Partnership
By:
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Xxxxxxxx IX Management, L.L.C.
Its General Partner
XXXXXXXX ASSOCIATES FUND IV
A Delaware Limited Partnership
By:
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Xxxxxxxx IX Management, L.L.C.
Its General Partner
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"FOUNDERS"
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Xxxxx X. Xxx
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Xxxxx Xxxx
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Xxxx Xxx-Xx Xxxxx
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