EXHIBIT 10.11
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
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Xxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Date of Grant January 14, 1999
Vesting Commencement Date February 1, 1999
Exercise Price per Share $0.04
Total Number of Shares Granted 450,000
Total Exercise Price $18,000.00
Type of Option: X Incentive Stock Option
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_____ Nonstatutory Stock Option
Term/Expiration Date: January 14, 2009
Exercise and Vesting Schedule:
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The Shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service
Provider of the Company, Optionee shall vest and the Option shall be exercisable
as to 12/48ths of the Shares on the one year anniversary of the Vesting
Commencement Date and at the rate of 1/48th of the Shares on the last day of
each full calendar month thereafter, provided that the Purchaser is a Service
Provider of the Company as of such date.
Termination Period:
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This Option shall be exercisable for thirty (30) days after Optionee ceases
to be a Service Provider. Upon Optionee's death or disability, this Option may
be exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.
II. AGREEMENT
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13. Grant of Option. The Plan Administrator of the Company hereby grants
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to the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
14. Exercise of Option.
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(a) Right to Exercise. This Option shall be exercisable during its
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term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by delivery
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of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
15. Optionee's Representations. In the event the Shares have not been
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registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required
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by the Company, concurrently with the exercise of all or any portion of this
option, deliver to the Company his or her Investment Representation Statement in
the form attached hereto as Exhibit B.
16. Lock-Up Period. Optionee hereby agrees that, if so requested by the
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Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
17. Method of Payment. Payment of the aggregate Exercise Price shall be by
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any of the following, or a combination thereof, at the election of the Optionee:
(a) cash or check,
(b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
18. Restrictions on Exercise. This Option may not be exercised until such
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time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
19. Non-Transferability of Option. This Option may not be transferred in
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any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
20. Term of Option. This Option may be exercised only within the term set
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out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
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21. Tax Consequences. Set forth below is a brief summary as of the date of
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this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there will
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be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of ISO Following Disability. If the Optionee ceases to
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be an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an ISO within three
months of such termination for the ISO to be qualified as an ISO.
(c) Exercise of Nonstatutory Stock Option, There may be a regular
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federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee 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 Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(d) Disposition of Shares. In the case of an NSO, if Shares are held
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for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(e) Notice of Disqualifying Disposition of ISO Shares. If the Option
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granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date
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one year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
22. Lock-up Period. Purchaser hereby agrees that if so requested by the
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Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended (the "Securities Act"),
Purchaser shall not sell or otherwise transfer any Shares or other securities of
the Company during the 180-day period (or such longer period as may be requested
in writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
23. Entire Agreement; Governing Law. The Plan is incorporated herein by
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reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.
24. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
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THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
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(b) Exercise of Right of First Refusal. At any time within
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thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for
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the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at
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the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within thirty (30) days after receipt of the
Notice or in the manner and at the times set forth in the Notice.
(e) Xxxxxx's Right to Transfer. If all of the Shares proposed
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in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee
at the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice, that any
such sale or other transfer is effected in accordance with any applicable
securities laws and that the Proposed Transferee agrees in writing that the
provisions of this Section shall continue to apply to the Shares in the hands
of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall
be given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal before any Shares held by the Holder may be
sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the
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contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of
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First Refusal shall terminate as to any Shares upon the first sale of Common
Stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
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6. Tax Consultation. Optionee understands that Optionee may suffer
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adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
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(a) Legends. Optionee understands and agrees that the Company shall
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cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
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compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
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transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
8. Successors and Assigns. The Company may assign any of its rights under
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this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.
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9. Interpretation. Any dispute regarding the interpretation of this
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Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
10. Lock-Up Period. Purchaser hereby agrees that if so requested by the
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Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended (the "Securities Act"),
Purchaser shall not sell or otherwise transfer any Shares or other securities of
the Company during the 180-day period (or such longer period as may be requested
in writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
11. Governing Law; Severability. This Agreement is governed by the
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internal substantive laws, but not the choice of law rules, of California.
12. Entire Agreement. The Plan and Option Agreement are incorporated
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herein by reference. This Agreement, the Plan, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE: AVANEX CORPORATION
______________________________ By: ________________________________
Xxxxxxx Xxx
Title: _____________________________
Address: Address:
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00000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
____________________________________
Date Received
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EXHIBIT B
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INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: Xxxxxxx Xxx
COMPANY: AVANEX CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE: ________________________
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted
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securities" acquired, directly or indirectly from the issuer thereof, in a
non-public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of the grant of
the Option to the Optionee, the exercise will be exempt from registration under
the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
______________________________
Xxxxxxx Xxx
Date: ________________________
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AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AWARD AGREEMENT
(Amendment No. 1)
Unless otherwise defined herein, the terms defined in the 1998 Stock Plan
(the "Plan") and the Stock Option Agreement, dated January 14, 1999 (the
"Agreement") shall have the same defined meanings in this Amendment No. 1 to the
Stock Option Agreement (the "Amendment").
WHEREAS, Xxxxxxx Xxx (the "Optionee") entered into the Agreement with
Avanex Corporation (the "Company") on January 14, 1999; and
WHEREAS, both parties think it is in their best interest to amend the
Agreement as set forth below.
NOW, THEREFORE, the parties hereto agree that Section I of the Agreement is
deleted and replaced in its entirety with the following:
I. NOTICE OF STOCK OPTION GRANT
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Xxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant January 14, 1999
Vesting Commencement Date February 1, 1999
Exercise Price per Share $0.04
Total Number of Shares Granted 450,000
Total Exercise Price $18,000.00
Type of Option X Incentive Stock Option
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_____ Nonstatutory Stock Option
Term/Expiration Date: January 13, 2009
A. Exercise and Vesting Schedule:
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The shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service
Provider of the Company, Optionee shall vest and the Option shall be
exercisable as to 12/48ths of the Shares on the one year anniversary of the
Vesting Commencement Date and at the rate of 1/48/th/ of the Shares on the
last day of each full calendar month thereafter, provided that the Optionee
is a Service Provider of the Company as of such date.
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible during any exercise period, it shall
be exercisable, in whole or in part, with respect to all shares not so purchased
at any time prior to the Expiration Date or the earlier termination of this
option. This option may not be exercised at any time on or after the Expiration
Date.
(i) Acceleration Upon a Change of Control. Notwithstanding the foregoing,
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upon a Change of Control, as defined below, that occurs while Optionee provides
services to the Company, this Option shall become vested and exercisable as to
fifty percent (50%) of the shares subject to this option on the date the event
constituting a Change of Control is consummated. The balance of the shares
subject to this option shall continue to vest on the same schedule (i.e., the
same number of shares shall vest each month) as existed prior to the Change of
Control. For example, if a Change of Control occurs on a date when 25% of
Optionee's shares have vested, then an additional 25% of the shares shall be
vested pursuant to this paragraph. The remaining 50% of the shares subject to
this option shall vest at the rate of 1/48/th/ of the shares per month
thereafter, such that all shares are fully vested after an additional 24-month
period. If a Change of Control occurs on a date where more than 50% of
Optionee's shares have already vested, then no additional Shares shall vest
pursuant to this paragraph.
(ii) Acceleration Upon a Change of Control and Termination of Employment.
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Notwithstanding the foregoing, in the event the Optionee's employment with the
Company terminates as a result of an Involuntary Termination other than for
Cause upon or within 12 months after a Change of Control, this option shall be
fully (i.e. 100%) vested and this option may be exercised, in whole or in part,
upon the date of such termination.
The following terms referred to in this Agreement shall have the following
meanings:
Cause. "Cause" shall mean (i) any act of personal dishonesty taken by
the Optionee in connection with his responsibilities as an employee and intended
to result in substantial personal enrichment of the Optionee, (ii) conviction of
a felony that is injurious to the Company, and (iii) a willful act by the
Optionee which constitutes gross misconduct and which is injurious to the
Company.
Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of Avanex Corporation or its
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successor ("Avanex") representing 50% or more of the total voting power
represented by Xxxxxx's then outstanding voting securities other than in a
private financing transaction approved by the Board of Directors;
(b) the direct or indirect sale or exchange by the shareholders of
Avanex of all or substantially all of the stock of Avanex;
(c) merger or consolidation in which Avanex is a party and in which
the shareholders of Avanex before such merger or consolidation do not retain,
directly or indirectly, at a least majority of the beneficial interest in the
voting stock of Avanex after such transaction; or
(d) the sale or disposition by Avanex of all or substantially all of
Avanex's assets.
Disability. "Disability" shall mean that the Optionee has been unable to
substantially perform his duties as the result of his incapacity due to physical
or mental illness, and such inability, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Optionee or the Optionee's legal
representative (such agreement as to acceptability not to be unreasonably
withheld.)
Involuntary Termination. "Involuntary Termination" shall mean (i) without
the Optionee's express written consent, the significant reduction of the
Optionee's duties or responsibilities relative to the Optionee's duties or
responsibilities in effect immediately prior to such reduction; provided,
however, that a reduction in duties or responsibilities solely by virtue of the
Company or its parent being acquired and made part of a larger entity (as, for
example, when the Chief Financial Officer remains as such following a Change of
Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute an "Involuntary Termination"; (ii) without the
Optionee's express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including office space and
location) available to the Optionee immediately prior to such reduction' (iii)
without the Optionee's express written consent, a material reduction in the base
compensation of the Optionee as in effect immediately prior to such reduction,
or the ineligibility of the Optionee to continue to participate in any long-term
incentive plan of the Company; (iv) a material reduction in the kind or level of
employee benefits to which the Optionee is entitled immediately prior to such
reduction with the result that the Optionee's overall benefits package is
significantly reduced; (v) the relocation of the Optionee to a facility or a
location more than 50 miles from the Optionee's then present location, without
the Optionee's express written consent; (vi) any purported termination of the
Optionee which is not effected for death or Disability or for Cause, or any
purported termination for which the grounds relied upon are not valid; or (vii)
the failure to obtain the assumption of this agreement by any successors of the
Company in a Change of Control.
B. Termination Period:
------------------
This Option shall be exercisable for thirty (30) days after Optionee ceases
to be a Service Provider. Upon Optionee's death or disability, this Option may
be exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.
-3-
All other terms and conditions of the Stock Option Agreement shall remain
in full force and effect and as applicable are incorporated herein by reference.
The "Exercise Price Per Share" and the "Total Number of Shares Granted"
reflected in the Agreement and this Amendment do not reflect the 3-for-2 stock
split effected after January 14, 1999 in conjunction with the Company's
re-incorporation into the State of Delaware.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-4-
By Optionee's signature below, Optionee represents that he is familiar with
the terms and provisions of the Plan, the Agreement and this Amendment, and
hereby accepts this Amendment subject to all of the terms and provisions
thereof. Optionee has reviewed the Plan, the Agreement and this Amendment in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Amendment and fully understands all provisions of this Amendment.
Optionee agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan,
the Agreement or this Amendment. Optionee further agrees to notify the Company
upon any change in the residence indicated in the Notice of Stock Option Grant.
OPTIONEE: AVANEX CORPORATION:
/s/ Xxxxxxx Xxx By: /s/ Xxxxxx Xxxxxxxxxxxx
------------------------------------ ------------------------------------
Signature
Xxxxxxx Xxx Title: Chairman and CEO
------------------------------------ ---------------------------------
Print Name
Date: February 14, 2001
-5-
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Xxxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Date of Grant November 12, 1999
Vesting Commencement Date November 12, 1999
Exercise Price per Share $3.00
Total Number of Shares Granted 50,000.00
Total Exercise Price $150,000.00
Type of Option: X Incentive Stock Option
-----
_____ Nonstatutory Stock Option
Term/Expiration Date: November 11, 1999
Exercise and Vesting Schedule:
-----------------------------
The Shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service
Provider of the Company, Optionee shall vest and the Option shall be exercisable
as to 12/48ths of the Shares on the one year anniversary of the Vesting
Commencement Date and at the rate of 1/48th of the Shares on the last day of
each full calendar month thereafter, provided that the Purchaser is a Service
Provider of the Company as of such date.
Termination Period:
------------------
This Option shall be exercisable for thirty (30) days after Optionee
ceases to be a Service Provider. Upon Optionee's death or disability, this
Option may be exercised for such longer period as provided in the Plan. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby
---------------
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during its
-----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by delivery
------------------
of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. Optionee's Representations. In the event the Shares have not been
--------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B.
4. Lock-Up Period. Optionee hereby agrees that, if so requested by
--------------
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of
-2-
the offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period (or such other period as may be requested in
writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on behalf
of the Company to the public in an underwritten public offering under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall
-----------------
be by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
6. Restrictions on Exercise. This Option may not be exercised until
------------------------
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be transferred
-----------------------------
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the term
--------------
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the
----------------
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there
---------------
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
-3-
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of ISO Following Disability. If the Optionee ceases to
------------------------------------
be an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an ISO within three
months of such termination for the ISO to be qualified as an ISO.
(c) Exercise of Nonstatutory Stock Option. There may be a regular
-------------------------------------
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee 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 Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(d) Disposition of Shares. In the case of an NSO, if Shares are held
---------------------
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an IS0
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the IS0 Shares were held.
(e) Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
10. Lock-Up Period. Purchaser hereby agrees that if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended (the "Securities Act"),
Purchaser shall not sell or otherwise transfer any Shares or other securities of
the Company durin g the 180-day period (or such longer period as may be
requested in writing by the Managing Underwriter and agreed to in writing by the
Company) (the "Market Standoff Period") following the effective date of a
registration statement of the Company filed under the Securities Act; provided,
however, that such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the
-4-
Company to the public in an underwritten public offering under the Securities
Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
11. Entire Agreement; Governing Law. The Plan is incorporated herein
-------------------------------
by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the internal
substantive laws but not the choice of law rules of California.
12. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND
---------------------------------
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE: AVANEX CORPORATION
/s/ Xxxxxxxx Xxx /s/ Xxxxxx Xxxxxxxxxxxx
-------------------------------------
Xxxxxxxx Xxx By: Xxxxxx Xxxxxxxxxxxx
-5-
purchase all, but not less than all, of the Shares proposed to be transferred to
any one or more of the Proposed Transferees, at the purchase price determined in
accordance with subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for
--------------
the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation
of all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Xxxxxx's Right to Transfer. If all of the Shares proposed in
--------------------------
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section, then the Holder
may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the
--------------------------------------
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of First
-------------------------------------
Refusal shall terminate as to any Shares upon the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
-2-
(a) Legends. Optionee understands and agrees that the Company
-------
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(b) Stop-Transfer Notices. Optionee agrees that, in order to
---------------------
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i)
-------------------
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
8. Successors and Assigns. The Company may assign any of its
----------------------
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of
--------------
this Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
10. Lock-Up Period. Purchaser hereby agrees that if so requested by
--------------
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act of 1933, as amended (the
"Securities Act"), Purchaser shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period (or such longer period
as may be requested in writing by the Managing Underwriter and agreed to in
writing by the Company) (the "Market Standoff Period")
-3-
following the effective date of a registration statement of the Company filed
under the Securities Act; provided, however, that such restriction shall apply
only to the first registration statement of the Company to become effective
under the Securities Act that includes securities to be sold on behalf of the
Company to the public in an underwritten public offering under the Securities
Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
11. Governing Law; Severability. This Agreement is governed by the
---------------------------
internal substantive laws, but not the choice of law rules, of California.
12. Entire Agreement. The Plan and Option Agreement are
----------------
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subjeet matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE: AVANEX CORPORATION
By: ______________________________
Xxxxxxxx Xxx
Title: ___________________________
Address: Address:
------- -------
42501 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
__________________________________
Date Received
-4-
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: Xxxxxxxx Xxx
COMPANY: AVANEX CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE: __________________________________
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Optionee is acquiring these Securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the
-1-
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (l), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
______________________________________
Xxxxxxxx Xxx
Date: ________________________________
-2-
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AWARD AGREEMENT
(Amendment No. 1)
Unless otherwise defined herein, the terms defined in the 1998 Stock Plan
(the "Plan") and the Stock Option Agreement, dated November 12, 1999 (the
"Agreement") shall have the same defined meanings in this Amendment No. 1 to the
Stock Option Agreement (the "Amendment").
WHEREAS, Xxxxxxxx Xxx (the "Optionee") entered into the Agreement with
Avanex Corporation (the "Company") on November 12, 1999; and
WHEREAS, both parties think it is in their best interest to amend the
Agreement as set forth below.
NOW, THEREFORE, the parties hereto agree that Section I of the Agreement is
deleted and replaced in its entirety with the following:
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Xxxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant November 12, 1999
Vesting Commencement Date November 12, 1999
Exercise Price per Share $3.00
Total Number of Shares Granted 50,000.00
Total Exercise Price $150,000.00
Type of Option X Incentive Stock Option
-----
_____ Nonstatutory Stock Option
Term/Expiration Date: November 11, 2009
A. Exercise and Vesting Schedule:
-----------------------------
The shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service
Provider of the Company, Optionee shall vest and the Option shall be
exercisable as to 12/48ths of the Shares on the one year anniversary of the
Vesting Commencement Date and at the rate of 1/48/th/ of the Shares on the
last day of each full calendar month thereafter, provided that the Optionee
is a Service Provider of the Company as of such date.
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible during any exercise period, it shall
be exercisable, in whole or in part, with respect to all shares not so purchased
at any time prior to the Expiration Date or the earlier termination of this
option. This option may not be exercised at any time on or after the Expiration
Date.
(i) Acceleration Upon a Change of Control. Notwithstanding the foregoing,
-------------------------------------
upon a Change of Control, as defined below, that occurs while Optionee provides
services to the Company, this Option shall become vested and exercisable as to
fifty percent (50%) of the shares subject to this option on the date the event
constituting a Change of Control is consummated. The balance of the shares
subject to this option shall continue to vest on the same schedule (i.e., the
same number of shares shall vest each month) as existed prior to the Change of
Control. For example, if a Change of Control occurs on a date when 25% of
Optionee's shares have vested, then an additional 25% of the shares shall be
vested pursuant to this paragraph. The remaining 50% of the shares subject to
this option shall vest at the rate of 1/48th of the shares per month thereafter,
such that all shares are fully vested after an additional 24-month period. If a
Change of Control occurs on a date where more than 50% of Optionee's shares have
already vested, then no additional Shares shall vest pursuant to this paragraph.
(ii) Acceleration Upon a Change of Control and Termination of Employment.
-------------------------------------------------------------------
Notwithstanding the foregoing, in the event the Optionee's employment with the
Company terminates as a result of an Involuntary Termination other than for
Cause upon or within 12 months after a Change of Control, this option shall be
fully (i.e. 100%) vested and this option may be exercised, in whole or in part,
upon the date of such termination.
The following terms referred to in this Agreement shall have the following
meanings:
Cause. "Cause" shall mean (i) any act of personal dishonesty taken by
the Optionee in connection with his responsibilities as an employee and intended
to result in substantial personal enrichment of the Optionee, (ii) conviction of
a felony that is injurious to the Company, and (iii) a willful act by the
Optionee which constitutes gross misconduct and which is injurious to the
Company.
Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Avanex Corporation or its
-2-
successor ("Avanex") representing 50% or more of the total voting power
represented by Xxxxxx's then outstanding voting securities other than in a
private financing transaction approved by the Board of Directors;
(b) the direct or indirect sale or exchange by the shareholders of
Avanex of all or substantially all of the stock of Avanex;
(c) merger or consolidation in which Avanex is a party and in which
the shareholders of Avanex before such merger or consolidation do not retain,
directly or indirectly, at a least majority of the beneficial interest in the
voting stock of Avanex after such transaction; or
(d) the sale or disposition by Avanex of all or substantially all of
Avanex's assets.
Disability. "Disability" shall mean that the Optionee has been unable to
substantially perform his duties as the result of his incapacity due to physical
or mental illness, and such inability, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Optionee or the Optionee's legal
representative (such agreement as to acceptability not to be unreasonably
withheld.)
Involuntary Termination. "Involuntary Termination" shall mean (i) without
the Optionee's express written consent, the significant reduction of the
Optionee's duties or responsibilities relative to the Optionee's duties or
responsibilities in effect immediately prior to such reduction; provided,
however, that a reduction in duties or responsibilities solely by virtue of the
Company or its parent being acquired and made part of a larger entity (as, for
example, when the Chief Financial Officer remains as such following a Change of
Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute an "Involuntary Termination"; (ii) without the
Optionee's express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including office space and
location) available to the Optionee immediately prior to such reduction' (iii)
without the Optionee's express written consent, a material reduction in the base
compensation of the Optionee as in effect immediately prior to such reduction,
or the ineligibility of the Optionee to continue to participate in any long-term
incentive plan of the Company; (iv) a material reduction in the kind or level of
employee benefits to which the Optionee is entitled immediately prior to such
reduction with the result that the Optionee's overall benefits package is
significantly reduced; (v) the relocation of the Optionee to a facility or a
location more than 50 miles from the Optionee's then present location, without
the Optionee's express written consent; (vi) any purported termination of the
Optionee which is not effected for death or Disability or for Cause, or any
purported termination for which the grounds relied upon are not valid; or (vii)
the failure to obtain the assumption of this agreement by any successors of the
Company in a Change of Control.
B. Termination Period:
------------------
This Option shall be exercisable for thirty (30) days after Optionee ceases
to be a Service Provider. Upon Optionee's death or disability, this Option may
be exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.
-3-
All other terms and conditions of the Stock Option Agreement shall remain
in full force and effect and as applicable are incorporated herein by reference.
The "Exercise Price Per Share" and the "Total Number of Shares Granted"
reflected in the Agreement and this Amendment do not reflect the 3-for-2 stock
split effected after November 12, 1999 in conjunction with the Company's
re-incorporation into the State of Delaware.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-4-
By Optionee's signature below, Optionee represents that he is familiar with
the terms and provisions of the Plan, the Agreement and this Amendment, and
hereby accepts this Amendment subject to all of the terms and provisions
thereof. Optionee has reviewed the Plan, the Agreement and this Amendment in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Amendment and fully understands all provisions of this Amendment.
Optionee agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan,
the Agreement or this Amendment. Optionee further agrees to notify the Company
upon any change in the residence indicated in the Notice of Stock Option Grant.
OPTIONEE: AVANEX CORPORATION:
/s/ Xxxxxxx Xxx By: /s/ Xxxxxx Xxxxxxxxxxxx
------------------------------------- ------------------------------
Signature
Xxxxxxx Xxx Title: Chairman and CEO
------------------------------------- -----------------
Print Name
Date: February 14, 2001
-5-
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Xxxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant December 24, 1999
Vesting Commencement Date December 24, 1999
Exercise Price per Share $6.00
Total Number of Shares Granted 100,000.00
Total Exercise Price $600,000.00
Type of Option: X Incentive Stock Option
---
___ Nonstatutory Stock Option
Term/Expiration Date: December 23,2009
Exercise and Vesting Schedule:
------------------------------
The Shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service Provider
of the Company, Optionee shall vest and the Option shall be exercisable as to
12/48ths of the Shares on the one year anniversary of the Vesting Commencement
Date and at the rate of 1/48th of the Shares on the last day of each full
calendar month thereafter, provided that the Purchaser is a Service Provider of
the Company as of such date.
Termination Period:
------------------
This Option shall be exercisable for thirty (30) days after Optionee ceases
to be a Service Provider. Upon Optionee's death or disability, this Option may
be exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby grants
---------------
to the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shaI1 be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during its
-----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by delivery
------------------
of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. Optionee's Representations. In the event the Shares have not been
--------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B.
4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of
-2-
the offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period (or such other period as may be requested in
writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on behalf
of the Company to the public in an underwritten public offering under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall be by
-----------------
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
6. Restrictions on Exercise. This Option may not be exercised until such
------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the date of
----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there will
---------------
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
-3-
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of IS0 Following Disability. If the Optionee ceases to
------------------------------------
be an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an IS0 within three
months of such termination for the IS0 to be qualified as an ISO.
(c) Exercise of Nonstatutory Stock Option. There may be a regular
-------------------------------------
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee 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 Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(d) Disposition of Shares. In the case of an NSO, if Shares are held
---------------------
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an IS0
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the IS0 Shares were held.
(e) Notice of Disqualifying Disposition of IS0 Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the IS0 on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
10. Lock-Up Period. Purchaser hereby agrees that if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended (the "Securities Act"),
Purchaser shall not sell or otherwise transfer any Shares or other securities of
the Company during the 180-day period (or such longer period as may be requested
in writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities to
be sold on behalf of the
-4-
Company to the public in an underwritten public offering under the Securities
Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
11. Entire Agreement; Governing Law. The Plan is incorporated herein by
-------------------------------
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.
12. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
---------------------------------
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE: AVANEX CORPORATION
/s/ Xxxxxxxx Xxx /s/ Xxxxxx Xxxxxxxxxxxx
---------------------------------------
Xxxxxxxx Xxx By: Xxxxxx Xxxxxxxxxxxx
-5-
EXHIBIT A
---------
AVANEX CORPORATION
1998 STOCK PLAN
EXERCISE NOTICE
Avanex Corporation
00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today, the ("Optionee") hereby
-------------------
elects to exercise Optionee's option to purchase ____________ shares of the
Common Stock (the "Shares") of Avanex Corporation (the "Company") under and
pursuant to the 1998 Stock Plan (the "Plan") and the Stock Option Agreement
granted December 24, 1999 (the "Option Agreement").
-----------------
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price of the Shares, as set forth in the Option Agreement.
3. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
---------------------
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to
-1-
purchase all, but not less than all, of the Shares proposed to be transferred to
any one or more of the Proposed Transferees, at the purchase price determined in
accordance with subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Xxxxxx's Right to Transfer. If all of the Shares proposed in the
--------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
-2-
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THIS PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
8. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the ADministrator shall be final and binding on
all parties.
10. Lock-Up Period. Purchaser hereby agrees that if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended (the "Securities Act"),
Purchaser shall not sell or otherwise transfer any Shares or other securities of
the Company during the 180-day period (or such longer period as may be requested
in writing by the Managing Underwriter and agreed to in writing by the
Company) (the "Market Standoff Period")
-3-
following the effective date of a registration statement of the Company filed
under the Securities Act; provided, however, that such restriction shall apply
only to the first registration statement of the Company to become effective
under the Securities Act that includes securities to be sold on behalf of the
Company to the public in an underwritten public offering under the Securities
Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
11. Governing Law; Severability. This Agreement is governed by the
---------------------------
internal substantive laws, but not the choice of law rules, of California.
12. Entire Agreement. The Plan and Option Agreement are incorporated
----------------
herein by reference. This Agreement, the Plan, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE: AVANEX CORPORATION
By: ________________________________
Xxxxxxxx Xxx
Title: _____________________________
Address: Address:
------- -------
40919 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
_____________
Date Received
-4-
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: Xxxxxxxx Xxx
COMPANY: AVANEX CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE: ________________________________
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the
-1-
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities
were sold by the Company or the date the Securities were sold by an affiliate of
the Company, within the meaning of Rule 144; and, in the case of acquisition of
the Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
________________________________________
Xxxxxxxx Xxx
Date: __________________________________
-2-
ADDENDUM
TO
STOCK OPTION AGREEMENT
----------------------
The following provision is hereby incorporated into, and is hereby made a
part of that certain Stock Option Agreement by and between the Company and the
Optionee evidencing the Option granted on this date to Optionee under the terms
of the Company's 1998 Stock Plan, and such provisions shall be effective
immediately. All capitalized terms in this Addendum shall have the meanings
assigned to them in the Stock Option Agreement or Plan. In the event of a
conflict between the terms and conditions of this Plan, the Stock Option
Agreement and this Addendum, the terms and conditions of this Addendum shall
prevail.
MERGER OR ASSET SALE
Notwithstanding anything in the Plan or the Stock Option Agreement to the
contrary, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option and Stock Purchase Right shall be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully exercisable for a period of fifteen (15) days from
the date of such notice, and the Option or Stock Purchase Right shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
OPTIONEE AVANEX CORPORATION
/s/ Xxxxxxxx Xxx
--------------------------------- _______________________________
Signature By
Xxxxxxxx Xxx
--------------------------------- _______________________________
Print Name Title
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AWARD AGREEMENT
(Amendment No. 1)
Unless otherwise defined herein, the terms defined in the 1998 Stock Plan
(the "Plan") and the Stock Option Agreement, dated December 24, 1999 (the
"Agreement") shall have the same defined meanings in this Amendment No. 1 to the
Stock Option Agreement (the "Amendment").
WHEREAS, Xxxxxxxx Xxx (the "Optionee") entered into the Agreement with
Avanex Corporation (the "Company") on January 14, 1999; and
WHEREAS, both parties think it is in their best interest to amend the
Agreement as set forth below.
NOW, THEREFORE, the parties hereto agree that Section I of the Agreement is
deleted and replaced in its entirety with the following:
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Xxxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant December 24, 1999
Vesting Commencement Date December 24, 1999
Exercise Price per Share $6.00
Total Number of Shares Granted 100,000
Total Exercise Price $600,000.00
Type of Option X Incentive Stock Option
-----
_____ Nonstatutory Stock Option
Term/Expiration Date: December 23, 2009
A. Exercise and Vesting Schedule:
-----------------------------
The shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service
Provider of the Company, Optionee shall vest and the Option shall be
exercisable as to 12/48ths of the Shares on the one year anniversary of the
Vesting Commencement Date and at the rate of 1/48/th/ of the Shares on the
last day of each full calendar month thereafter, provided that the Optionee
is a Service Provider of the Company as of such date.
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible during any exercise period, it shall
be exercisable, in whole or in part, with respect to all shares not so purchased
at any time prior to the Expiration Date or the earlier termination of this
option. This option may not be exercised at any time on or after the Expiration
Date.
(i) Acceleration Upon a Change of Control. Notwithstanding the foregoing,
-------------------------------------
upon a Change of Control, as defined below, that occurs while Optionee provides
services to the Company, this Option shall become vested and exercisable as to
fifty percent (50%) of the shares subject to this option on the date the event
constituting a Change of Control is consummated. The balance of the shares
subject to this option shall continue to vest on the same schedule (i.e., the
same number of shares shall vest each month) as existed prior to the Change of
Control. For example, if a Change of Control occurs on a date when 25% of
Optionee's shares have vested, then an additional 25% of the shares shall be
vested pursuant to this paragraph. The remaining 50% of the shares subject to
this option shall vest at the rate of 1/48/th/ of the shares per month
thereafter, such that all shares are fully vested after an additional 24-month
period. If a Change of Control occurs on a date where more than 50% of
Optionee's shares have already vested, then no additional Shares shall vest
pursuant to this paragraph.
(ii) Acceleration Upon a Change of Control and Termination of Employment.
-------------------------------------------------------------------
Notwithstanding the foregoing, in the event the Optionee's employment with the
Company terminates as a result of an Involuntary Termination other than for
Cause upon or within 12 months after a Change of Control, this option shall be
fully (i.e. 100%) vested and this option may be exercised, in whole or in part,
upon the date of such termination.
The following terms referred to in this Agreement shall have the following
meanings:
Cause. "Cause" shall mean (i) any act of personal dishonesty taken by
the Optionee in connection with his responsibilities as an employee and intended
to result in substantial personal enrichment of the Optionee, (ii) conviction of
a felony that is injurious to the Company, and (iii) a willful act by the
Optionee which constitutes gross misconduct and which is injurious to the
Company.
Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of Avanex Corporation or its
-2-
successor ("Avanex") representing 50% or more of the total voting power
represented by Xxxxxx's then outstanding voting securities other than in a
private financing transaction approved by the Board of Directors;
(b) the direct or indirect sale or exchange by the shareholders of
Avanex of all or substantially all of the stock of Avanex;
(c) merger or consolidation in which Avanex is a party and in which
the shareholders of Avanex before such merger or consolidation do not retain,
directly or indirectly, at a least majority of the beneficial interest in the
voting stock of Avanex after such transaction; or
(d) the sale or disposition by Avanex of all or substantially all of
Avanex's assets.
Disability. "Disability" shall mean that the Optionee has been unable to
substantially perform his duties as the result of his incapacity due to physical
or mental illness, and such inability, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Optionee or the Optionee's legal
representative (such agreement as to acceptability not to be unreasonably
withheld.)
Involuntary Termination. "Involuntary Termination" shall mean (i) without
the Optionee's express written consent, the significant reduction of the
Optionee's duties or responsibilities reiative to the Optionee's duties or
responsibilities in effect immediately prior to such reduction; provided,
however, that a reduction in duties or responsibilities solely by virtue of the
Company or its parent being acquired and made part of a larger entity (as, for
example, when the Chief Financial Officer remains as such following a Change of
Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute an "Involuntary Termination"; (ii) without the
Optionee's express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including office space and
location) available to the Optionee immediately prior to such reduction' (iii)
without the Optionee's express written consent, a material reduction in the base
compensation of the Optionee as in effect immediately prior to such reduction,
or the ineligibility of the Optionee to continue to participate in any long-term
incentive plan of the Company; (iv) a material reduction in the kind or level of
employee benefits to which the Optionee is entitled immediately prior to such
reduction with the result that the Optionee's overall benefits package is
significantly reduced; (v) the relocation of the Optionee to a facility or a
location more than 50 miles from the Optionee's then present location, without
the Optionee's express written consent; (vi) any purported termination of the
Optionee which is not effected for death or Disability or for Cause, or any
purported termination for which the grounds relied upon are not valid; or (vii)
the failure to obtain the assumption of this agreement by any successors of the
Company in a Change of Control.
B. Termination Period:
------------------
This Option shall be exercisable for thirty (30) days after Optionee ceases
to be a Service Provider. Upon Optionee's death or disability, this Option may
be exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.
-3-
All other terms and conditions of the Stock Option Agreement shall remain
in full force and effect and as applicable are incorporated herein by reference.
The "Exercise Price Per Share" and the "Total Number of Shares Granted"
reflected in the Agreement and this Amendment do not reflect the 3-for-2 stock
split effected after December 23, 1999 in conjunction with the Company's
re-incorporation into the State of Delaware.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-4-
By Optionee's signature below, Optionee represents that he is familiar with
the terms and provisions of the Plan, the Agreement and this Amendment, and
hereby accepts this Amendment subject to all of the terms and provisions
thereof. Optionee has reviewed the Plan, the Agreement and this Amendment in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Amendment and fully understands all provisions of this Amendment.
Optionee agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan,
the Agreement or this Amendment. Optionee further agrees to notify the Company
upon any change in the residence indicated in the Notice of Stock Option Grant.
OPTIONEE: AVANEX CORPORATION:
/s/ Xxxxxxx Xxx By:/s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------- ----------------------------
Signature
Xxxxxxx Xxx Title: Chairman and CEO
----------------------------------- ----------------------
Print Name
Date: February 14, 2001
-5-
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Xxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant April 17, 2001
Vesting Commencement Date April 17, 2001
Exercise Price per Share $13.69
Total Number of Shares Granted 100,000
Total Exercise Price $1,369,000.00
Type of Option X Incentive Stock Option
-----
_____ Nonstatutory Stock Option
Term/Expiration Date: April 16, 2011
A. Exercise and Vesting Schedule:
-----------------------------
The shares subject to this Option shall vest according to the following
schedule:
Provided that Optionee maintains a continuous status as a Service
Provider of the Company, Optionee shall vest and the Option shall be
exercisable as to 6/48ths of the Shares six months after the Vesting
Commencement Date and at the rate of 1/48/th/ of the Shares on the last
day of each full calendar month thereafter, provided that the Optionee is
a Service Provider of the Company as of such date.
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible during any exercise period, it shall
be exercisable, in whole or in part, with respect to all shares not so purchased
at any time prior to the Expiration Date or the earlier
termination of this option. This option may not be exercised at any time on or
after the Expiration Date.
(i) Acceleration Upon a Change of Control. Notwithstanding the
-------------------------------------
foregoing, upon a Change of Control, as defined below, that occurs while
Optionee provides services to the Company, this Option shall become vested and
exercisable as to fifty percent (50%) of the shares subject to this option on
the date the event constituting a Change of Control is consummated. The balance
of the shares subject to this option shall continue to vest on the same schedule
(i.e., the same number of shares shall vest each month) as existed prior to the
Change of Control. For example, if a Change of Control occurs on a date when 25%
of Optionee's shares have vested, then an additional 25% of the shares shall be
vested pursuant to this paragraph. The remaining 50% of the shares subject to
this option shall vest at the rate of 1/48th of the shares per month thereafter,
such that all shares are fully vested after an additional 24-month period. If a
Change of Control occurs on a date where more than 50% of Optionee's shares have
already vested, then no additional Shares shall vest pursuant to this paragraph.
(ii) Acceleration Upon a Change of Control and Termination of
--------------------------------------------------------
Employment. Notwithstanding the foregoing, in the event the Optionee's
----------
employment with the Company terminates as a result of an Involuntary Termination
other than for Cause upon or within 12 months after a Change of Control, this
option shall be fully (i.e. 100%) vested and this option may be exercised, in
whole or in part, upon the date of such termination.
The following terms referred to in this Agreement shall have the following
meanings:
Cause. "Cause" shall mean (i) any act of personal dishonesty taken
by the Optionee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Optionee, (ii)
conviction of a felony that is injurious to the Company, and (iii) a willful act
by the Optionee which constitutes gross misconduct and which is injurious to the
Company.
Change of Control. "Change of Control" shall mean the occurrence
of any of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Avanex Corporation or its successor ("Avanex")
representing 50% or more of the total voting power represented by Xxxxxx's then
outstanding voting securities other than in a private financing transaction
approved by the Board of Directors;
(b) the direct or indirect sale or exchange by the shareholders of
Avanex of all or substantially all of the stock of Avanex;
(c) merger or consolidation in which Avanex is a party and in
which the shareholders of Avanex before such merger or consolidation do not
retain, directly or indirectly, at a least majority of the beneficial interest
in the voting stock of Avanex after such transaction; or
(d) the sale or disposition by Avanex of all or substantially all
of Avanex's assets.
Disability. "Disability" shall mean that the Optionee has been unable to
substantially perform his duties as the result of his incapacity due to physical
or mental illness, and such inability, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Optionee or the Optionee's legal
representative (such agreement as to acceptability not to be unreasonably
withheld.)
Involuntary Termination. "Involuntary Termination" shall mean (i) without
the Optionee's express written consent, the significant reduction of the
Optionee's duties or responsibilities relative to the Optionee's duties or
responsibilities in effect immediately prior to such reduction; provided,
however, that a reduction in duties or responsibilities solely by virtue of the
Company or its parent being acquired and made part of a larger entity (as, for
example, when the Chief Financial Officer remains as such following a Change of
Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute an "Involuntary Termination"; (ii) without the
Optionee's express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including office space and
location) available to the Optionee immediately prior to such reduction' (iii)
without the Optionee's express written consent, a material reduction in the base
compensation of the Optionee as in effect immediately prior to such reduction,
or the ineligibility of the Optionee to continue to participate in any long-term
incentive plan of the Company; (iv) a material reduction in the kind or level of
employee benefits to which the Optionee is entitled immediately prior to such
reduction with the result that the Optionee's overall benefits package is
significantly reduced; (v) the relocation of the Optionee to a facility or a
location more than 50 miles from the Optionee's then present location, without
the Optionee's express written consent; (vi) any purported termination of the
Optionee which is not effected for death or Disability or for Cause, or any
purported termination for which the grounds relied upon are not valid; or (vii)
the failure to obtain the assumption of this agreement by any successors of the
Company in a Change of Control.
B. Termination Period:
------------------
This Option may be exercised for three months after Optionee ceases to be
a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for twelve months after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
---------
X. Xxxxx of Option.
---------------
The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
------------------
(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
C. Method of Payment.
------------------
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check; or
3. consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or
4. surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
D. Non-Transferability of Option.
-----------------------------
This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
E. Term of Option.
--------------
This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.
F. Tax Consequences.
----------------
Some of the federal tax consequences relating to this Option, as of
the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
G. Exercising the Option.
---------------------
1. Nonstatutory Stock Option. The Optionee may incur regular federal
-------------------------
income tax liability upon exercise of a NSO. The Optionee 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 Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.
2. Incentive Stock Option. If this Option qualifies as an ISO, the
----------------------
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.
3. Disposition of Shares.
---------------------
(a) NSO. If the Optionee holds NSO Shares for at least one year,
---
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.
(b) ISO. If the Optionee holds ISO Shares for at least one year
---
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. If the Optionee disposes
of ISO Shares within one year after exercise or two years after the grant date,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
lesser of (A) the difference between the Fair Market Value of the Shares
acquired on the date of exercise and the aggregate Exercise Price, or (B) the
difference between the sale price of such Shares and the aggregate Exercise
Price. Any additional gain will be taxed as capital gain, short-term or
long-term depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
H. Entire Agreement; Governing Law.
-------------------------------
The Plan is incorporated herein by reference. The Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
I. NO GUARANTEE OF CONTINUED SERVICE.
----------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: AVANEX CORPORATION
/s/ Xxxxxxx Xxx /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------- --------------------------
Signature By
Xxxxxxx Xxx Chairman and CEO
----------------------------- --------------------------
Print Name Title
_____________________________
Residence Address
_____________________________
EXHIBIT A
---------
AVANEX CORPORATION
1998 STOCK PLAN
EXERCISE NOTICE
Avanex Corporation
00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________, _____,
------------------
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Avanex Corporation (the "Company") under
and pursuant to the 1998 Stock Plan (the "Plan") and the Stock Option Agreement
dated, April 17, 2001 (the "Option Agreement"). The purchase price for the
Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: AVANEX CORPORATION
________________________________ ________________________________
Signature By
________________________________ ________________________________
Print Name
Address: Address:
------- -------
________________________________ AVANEX CORPORATION
________________________________ 00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
________________________________
Date Received
AVANEX CORPORATION
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1998 Stock
Plan, as amended (the "Plan") shall have the same defined meanings in this
Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Xxxxxxx Xxx
You have been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant November 5, 2001
Vesting Commencement Date November 5, 2001
Exercise Price per Share $4.90
Total Number of Shares Granted 500,000
Total Exercise Price $2,450,000.00
Type of Option ___ Incentive Stock Option
X Nonstatutory Stock Option
---
Term/Expiration Date: November 4, 2011
Exercise and Vesting Schedule:
-----------------------------
Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance to the following vesting schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter on the same day of the month as the Vesting
Commencement Date, subject to the Optionee continuing to be a Service Provider
on such dates.
Acceleration Upon a Change of Control. Notwithstanding the foregoing,
-------------------------------------
upon a Change of Control, as defined below, that occurs while Optionee provides
services to the Company, this Option shall become vested and exercisable as to
fifty percent (50%) of the shares subject to this Option on the date the event
constituting a Change of Control is consummated. The balance of the shares
subject to this Option shall continue to vest on the same schedule (i.e., the
same number of shares
shall vest each month) as existed prior to the Change of Control. For example,
if a Change of Control occurs on a date when 25% of Optionee's shares have
vested, then an additional 25% of the shares shall be vested pursuant to this
paragraph. The remaining 50% of the shares subject to this Option shall vest at
the rate of 1/48th of the shares per month thereafter, such that all shares are
fully vested after an additional 24-month period. If a Change of Control occurs
on a date where more than 50% of Optionee's shares have already vested, then no
additional Shares shall vest pursuant to this paragraph.
Acceleration Upon a Change of Control and Termination of Employment.
-------------------------------------------------------------------
Notwithstanding the foregoing, in the event the Optionee's employment with the
Company terminates as a result of an Involuntary Termination other than for
Cause upon or within 12 months after a Change of Control, this Option shall be
fully (i.e. 100%) vested and this Option may be exercised, in whole or in part,
upon the date of such termination.
The following terms referred to in this Agreement shall have the
following meanings:
(i) Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the Optionee in connection with his responsibilities as an
employee and intended to result in substantial personal enrichment of the
Optionee, (ii) conviction of a felony that is injurious to the Company, and
(iii) a willful act by the Optionee which constitutes gross misconduct and which
is injurious to the Company.
(ii) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
50% or more of the total voting power represented by the Company's
then outstanding voting securities other than in a private
financing transaction approved by the Board of Directors;
the direct or indirect sale or exchange by the stockholders of the
Company of all or substantially all of the stock of the Company;
a merger or consolidation in which the Company is a party and in
which the stockholders of the Company before such merger or
consolidation do not retain, directly or indirectly, at a least
majority of the beneficial interest in the voting stock of the
Company after such transaction; or
the sale or disposition by the Company of all or substantially all
the Company's assets.
(iii) Disability. "Disability" shall mean that the Optionee has
been unable to substantially perform his duties as the result of his incapacity
due to physical or mental illness, and such inability, at least 26 weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Optionee or
-2-
the Optionee's legal representative (such agreement as to acceptability not to
be unreasonably withheld).
(iv) Involuntary Termination. "Involuntary Termination"
shall mean (i) without the Optionee's express written consent, the significant
reduction of the Optionee's duties or responsibilities relative to the
Optionee's duties or responsibilities in effect immediately prior to such
reduction; provided, however, that a reduction in duties or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, when the Chief Financial Officer of Company remains as such
following a Change of Control and is not made the Chief Financial Officer of the
acquiring corporation) shall not constitute an "Involuntary Termination"; (ii)
without the Optionee's express written consent, a substantial reduction, without
good business reasons, of the facilities and perquisites (including office space
and location) available to the Optionee immediately prior to such reduction;
(iii) without the Optionee's express written consent, a material reduction by
the Company in the base compensation of the Optionee as in effect immediately
prior to such reduction, or the ineligibility of the Optionee to continue to
participate in any long-term incentive plan of the Company; (iv) a material
reduction by the Company in the kind or level of employee benefits to which the
Optionee is entitled immediately prior to such reduction with the result that
the Optionee's overall benefits package is significantly reduced; (v) the
relocation of the Optionee to a facility or a location more than 50 miles from
the Optionee's then present location, without the Optionee's express written
consent; (vi) any purported termination of the Optionee by the Company which is
not effected for death or Disability or for Cause, or any purported termination
for which the grounds relied upon are not valid; or (vii) the failure of the
Company to obtain the assumption of this agreement by any successors
contemplated in Section I.(ii) above.
Termination Period:
------------------
This Option may be exercised for three months after Optionee ceases to be
a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for twelve months after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
In addition, upon an Involuntary Termination of the Optionee's
employement other than for Cause upon or within 12 months after a Change of
Control, this Option may be exercised for twenty-four months after Optionee
ceases to be a Service Provider.
II. AGREEMENT
---------
X. Xxxxx of Option.
------------------
The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a
-3-
conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall
prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
-------------------
(a) Right to Exercise. This Option is exercisable during its
-----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery
------------------
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
C. Method of Payment.
------------------
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check; or
3. consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or
4. surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
-4-
D. Non-Transferability of Option.
-----------------------------
This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
E. Term of Option.
--------------
This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.
F. Tax Consequences.
----------------
Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
G. Exercising the Option.
---------------------
1. Nonstatutory Stock Option. The Optionee may incur regular
-------------------------
federal income tax liability upon exercise of a NSO. The Optionee 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 Exercised
Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to
withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
2. Incentive Stock Option. If this Option qualifies as an ISO,
----------------------
the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
3. Disposition of Shares.
---------------------
(a) NSO. If the Optionee holds NSO Shares for at least
---
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
-5-
(b) ISO. If the Optionee holds ISO Shares for at least
---
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares.
-------------------------------------------------
If the Optionee sells or otherwise disposes of any of the Shares acquired
pursuant to an ISO on or before the later of (i) two years after the grant date,
or (ii) one year after the exercise date, the Optionee shall immediately notify
the Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in cash
or out of the current earnings paid to the Optionee.
H. Entire Agreement; Governing Law.
-------------------------------
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
I. NO GUARANTEE OF CONTINUED SERVICE.
----------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A
SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator
-6-
upon any questions relating to the Plan and Option Agreement. Optionee further
agrees to notify the Company upon any change in the residence address indicated
below.
-7-
OPTIONEE: AVANEX CORPORATION
/s/ Xxxxxxx Xxx By /s/ Xxxx Xxxxx
-------------------------------------- -----------------------------------
Signature
Xxxxxxx Xxx President & Chief Executive Officer
-------------------------------------- -------------------------------------
Print Name Title
______________________________________
Residence Address
______________________________________
EXHIBIT A
---------
AVANEX CORPORATION
1998 STOCK PLAN
EXERCISE NOTICE
Avanex Corporation
00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________, _____,
------------------
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Avanex Corporation (the "Company") under
and pursuant to the 1998 Stock Plan (the "Plan") and the Stock Option Agreement
dated, _____ (the "Option Agreement"). The purchase price for the Shares shall
be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: AVANEX CORPORATION
_____________________________________ _____________________________________
Signature By
_____________________________________ _____________________________________
Print Name
Address: Address:
------- -------
_____________________________________ AVANEX CORPORATION
_____________________________________ 00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
_____________________________________
Date Received
-2-
TO: Xxxxxxx Xxx
FROM: Xxxx Xxxxx, President and CEO
DATE: January 24, 2002
RE: Important Change to your Options under the 1998 Stock Plan
________________________________________________________________________________
I am pleased to inform you of an important change, as approved by the
Compensation Committee on October 18, 2001, to the options previously granted to
you, dated January 14, 1999, November 12, 1999 and December 24, 1999 under the
Avanex Corporation 1998 Stock Plan (the "Plan").
As explained more fully below, you now will have up to twenty-four (24)
months to exercise any vested options if your employment with the Company
terminates due to an Involuntary Termination without Cause within twelve (12)
months after a Change of Control. (However, in no event may you exercise your
options after the Term/Expiration Date of your option). Previously, the maximum
time to exercise following your Involuntary Termination without Cause was thirty
(30) days. Please refer to your stock option agreements (the "Agreements")
and/or the Plan for the definition of capitalized terms (such as "Involuntary
Termination" and "Cause") that are used but not defined in this memo.
Before the change described in this memo, the applicable portion of each
of your Agreements read as follows:
Termination Period: This Option shall be exercisable for thirty
------------------
(30) days after Optionee ceases to be a Service Provider. Upon Optionee's
death or disability, this Option may be exercised for such longer period
as provided in the Plan. In no event may Optionee exercise this Option
after the Term/Expiration Date as provided above.
The applicable portion of each of your Agreements now will be deemed to
read as follows:
Termination Period: This Option may be exercised for three months
------------------
after Optionee ceases to be a Service Provider, except as follows. If
Optionee ceases to be a Service Provider within 12 months after a Change
of Control and due to an Involuntary Termination other than for Cause,
this Option may be exercised for twenty-four (24) months after Optionee
ceases to be a Service Provider. Upon the death or Disability of the
Optionee, this Option may be exercised for twelve months after Optionee
ceases to be a Service Provider. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.
If your options originally were intended to be Incentive Stock Options
("ISOs"), those options instead now may be nonstatutory stock options ("NSOs").
The reason for this is that Internal Revenue Service rules state that an ISO may
not be "modified" after it is granted. Under current IRS rules, a change (such
as the above extension of post-termination of employment exercisability) will be
considered to have "modified" your ISOs (thus turning them into NSOs) if the
exercise price of the option is less than $4.55 per share. Any ISOs that have an
exercise price of at least $4.55 per share will remain ISOs even after the
change described in this memo. In any case, there is no immediate tax effect to
you of converting an ISO to an NSO; it merely affects the tax treatment upon
exercise of the option. Please refer to the prospectus for the Plan (dated
February 16, 2002) for more information about the tax effects of receiving and
exercising stock options under the Plan. If you need another copy of the
prospectus, please do not hesitate to call or email Xxxxxxxx Xxxxx as indicated
below. You should consult with your personal tax advisor before exercising or
selling shares of Avanex stock to make sure that you understand all of the
potential state and federal tax consequences of any such transactions.
Please acknowledge your receipt and understanding of this memo by signing
one copy of this memo and returning it to Xxxxxxxx Xxxxx in Human Resources.
Please keep the enclosed copy of this memo for your records.
Again, I am very pleased that we are able to provide you with this
important change to your options.
If you have any questions or comments, please do not hesitate to contact
me or Xxxxxxxx Xxxxx, Vice President, Human Resources and Administration by
phone at (000) 000-0000 or by e-mail at Xxxxxxxx_Xxxxx@xxxxxx.xxx.
-------------------------
Sincerely,
Xxxx Xxxxx
President and CEO
EMPLOYEE SIGNATURE:
I have read and understand the change to my options that is described in
this memo.
/s/ Xxxxxxx Xxx
-------------------------------------- -----------------------------------
Signature Date
-2-
TO: Xxxxxxx Xxx
FROM: Xxxx Xxxxx, President and CEO
DATE: January 24, 2002
RE: Important Change to your Options under the 1998 Stock Plan
________________________________________________________________________________
I am pleased to inform you of an important change, as approved by the
Compensation Committee on October 18, 2001, to the options previously granted to
you, dated April 17, 2001 under the Avanex Corporation 1998 Stock Plan (the
"Plan").
As explained more fully below, you now will have up to twenty-four (24)
months to exercise any vested options if your employment with the Company
terminates due to an Involuntary Termination without Cause within twelve (12)
months after a Change of Control. (However, in no event may you exercise your
options after the Term/Expiration Date of your option). Previously, the maximum
time to exercise following your Involuntary Termination without Cause was three
(3) months. Please refer to your stock option agreements (the "Agreements")
and/or the Plan for the definition of capitalized terms (such as "Involuntary
Termination" and "Cause") that are used but not defined in this memo.
Before the change described in this memo, the applicable portion of each of
your Agreements read as follows:
Termination Period: This Option may be exercised for three months
------------------
after Optionee ceases to be a Service Provider. Upon the death or
Disability of the Optionee, this Option may be exercised for twelve months
after Optionee ceases to be a Service Provider. In no event shall this
Option be exercised later than the Term/Expiration Date as provided above.
The applicable portion of each of your Agreements now will be deemed to
read as follows:
Termination Period: This Option may be exercised for three months
------------------
after Optionee ceases to be a Service Provider, except as follows. If
Optionee ceases to be a Service Provider within 12 months after a Change of
Control and due to an Involuntary Termination other than for Cause, this
Option may be exercised for twenty-four (24) months after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee,
this Option may be exercised for twelve months after Optionee ceases to be
a Service Provider. In no event shall this Option be exercised later than
the Term/Expiration Date as provided above.
If your options originally were intended to be Incentive Stock Options
("ISOs"), those options instead now may be nonstatutory stock options ("NSOs").
The reason for this is that Internal Revenue Service rules state that an ISO may
not be "modified" after it is granted. Under current IRS rules, a change (such
as the above extension of post-termination of employment exercisability) will be
considered to have "modified" your ISOs (thus turning them into NSOs) if the
exercise price of the option is less than $4.55 per share. Any ISOs that have an
exercise price of at least $4.55 per share will remain ISOs even after the
change described in this memo. In any case, there is no immediate tax effect to
you of converting an ISO to an NSO; it merely affects the tax treatment upon
exercise of the option. Please refer to the prospectus for the Plan (dated
February 16, 2002) for more information about the tax effects of receiving and
exercising stock options under the Plan. If you need another copy of the
prospectus, please do not hesitate to call or email Xxxxxxxx Xxxxx as indicated
below. You should consult with your personal tax advisor before exercising or
selling shares of Avanex stock to make sure that you understand all of the
potential state and federal tax consequences of any such transactions.
Please acknowledge your receipt and understanding of this memo by signing
one copy of this memo and returning it to Xxxxxxxx Xxxxx in Human Resources.
Please keep the enclosed copy of this memo for your records.
Again, I am very pleased that we are able to provide you with this
important change to your options.
If you have any questions or comments, please do not hesitate to contact me
or Xxxxxxxx Xxxxx, Vice President, Human Resources and Administration by phone
at (000) 000-0000 or by e-mail at Xxxxxxxx_Xxxxx@xxxxxx.xxx.
-------------------------
Sincerely,
Xxxx Xxxxx
President and CEO
EMPLOYEE SIGNATURE:
I have read and understand the change to my options that is described in
this memo.
/s/ Xxxxxxx Xxx
----------------------------------- ---------------------------
Signature Date
-2-
