Exhibit 2.3
AVANEX STOCK OPTION AGREEMENT
THIS AVANEX STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of March 18, 2002, between Avanex Corporation, a Delaware
corporation ("Avanex"), and Oplink Communications, Inc., a Delaware corporation
("Oplink"). Capitalized terms used but not otherwise defined herein will have
the meanings ascribed to them in the Merger Agreement (as defined below).
RECITALS
--------
A. Avanex, Pearl Acquisition Corp., a Delaware corporation and wholly
owned subsidiary of Avanex ("Merger Sub"), and Oplink have entered into an
Agreement and Plan of Reorganization (the "Merger Agreement") which provides for
the merger (the "Merger") of Merger Sub with and into Oplink. Pursuant to the
Merger, all outstanding capital stock of Oplink will be automatically converted
into Avanex Common Stock, as set forth in the Merger Agreement.
B. As a condition to Oplink's willingness to enter into the Merger
Agreement, Oplink has requested that Avanex agree, and Avanex has so agreed, to
grant to Oplink an option to purchase shares of Avanex Common Stock, par value
$0.001 per share (the "Avanex Shares"), upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. Subject to the terms and conditions of this
---------------
Agreement, Avanex hereby grants to Oplink an irrevocable option (the "Option")
to purchase up to 13,886,525 Avanex Shares, as adjusted pursuant to Section 9
hereof (the "Option Shares"), in the manner set forth below by (i) paying cash
at a price of $4.33 per Avanex Share (the "Exercise Price") and/or, at Oplink's
election, (ii) complying with the cashless exercise provision set forth in
Section 2(c).
2. Exercise of Option; Maximum Proceeds.
------------------------------------
(a) Subject to the terms and conditions of this Agreement, the
Option may be exercised by Oplink, in whole or in part, at any time or from
time to time (i) if the Merger Agreement is terminated pursuant to 7.1(g)
thereof or (ii) immediately prior to the occurrence of any event causing the
Avanex Termination Fee to become payable after termination of the Merger
Agreement pursuant to Section 7.1(b) or 7.1(d) thereof (any of the events being
referred to in clause (i) or (ii) herein as an "Exercise Event"). In the event
Oplink wishes to exercise the Option, Oplink will deliver to Avanex a written
notice (each an "Exercise Notice") specifying the total number of Option Shares
it wishes to purchase and the form of consideration to be paid. Each closing of
a purchase of Option Shares (a "Closing") will occur on a date and at a time
prior to the termination of the Option designated by Oplink in an Exercise
Notice delivered at least two (2) business days but not more than twenty (20)
business days prior to the date of such Closing, which Closing will be held at
the principal offices of Avanex.
(b) The Option will terminate upon the earliest of (i) the
Effective Time, (ii) twelve (12) months following the date on which the Merger
Agreement is terminated pursuant to Section 7.1(b) or 7.1(d) thereof, if no
event causing the Avanex Termination Fee to become payable pursuant to Section
7.3(b)(ii) of the Merger Agreement has occurred as a result of such
termination, (iii) twelve (12) months following payment of the Avanex
Termination Fee as a result of the Merger Agreement being terminated pursuant
to Section 7.1(g) thereof, (iv) in the event the Merger Agreement has been
terminated pursuant to Section 7.1(b) or 7.1(d) thereof and the Avanex
Termination Fee became payable pursuant to Section 7.3(b)(ii) thereof as a
result of such termination, twelve (12) months after payment of the Avanex
Termination Fee; provided, however, that with respect to this clause (iv), the
Option will terminate immediately after the payment of the Avanex Termination
Fee in the event that the Acquisition that was consummated as a condition to
the payment of such fee resulted in (A) the purchase from Avanex or acquisition
by any Person or "group" (as defined under Section 13(d) of the Exchange Act
and the rules and regulations thereunder) of a one hundred percent (100%)
interest in the total outstanding voting securities of Avanex or any tender
offer or exchange offer that if consummated would result in any Person or
"group" beneficially owning one hundred percent (100%) of the total outstanding
voting securities of Avanex, (B) any sale, lease (other than in the ordinary
course of business), acquisition or disposition of one hundred percent (100%)
of the assets of Avanex (including its subsidiaries taken as a whole) or (C)
any liquidation or dissolution of Avanex; and (v) the date on which the Merger
Agreement is terminated under circumstances in which the Avanex Termination Fee
is not then payable and could not, regardless of the lapse of time or the
occurrence or non-occurrence of any event, become payable; provided, however,
--------- -------
that if the Option cannot be exercised by reason of any applicable government
order, judgment or decree or because the waiting period related to the issuance
of the Option Shares under the HSR Act will not have expired or been
terminated, then the Option will not terminate until the tenth (10th) business
day after such impediment to exercise will have been removed or will have
become final and not subject to appeal.
(c) Notwithstanding any provisions herein to the contrary, in
lieu of exercising the Option for cash, Oplink may elect to receive that number
of Option Shares equal to the value (as determined below) of the Option (or the
portion thereof being canceled) by delivery of an Exercise Notice indicating
that Oplink wishes to exercise in accordance with the cashless exercise
provision set forth in this Section 2(c), in which event Avanex shall issue to
Oplink a number of Option Shares computed using the following formula:
X=Y (A-B)
-------
A
Where X = the number of Option Shares to be issued to Oplink.
Y = the number of Option Shares purchasable under this
Agreement or, if the Option is being exercised to
purchase a number of Option Shares that is less than
the total number of Option Shares purchasable
hereunder, the portion of the Option being canceled
(at the date of such calculation).
A = the Market/Tender Offer Price (at the date of
such calculation).
-2-
B = Exercise Price (as adjusted to the date of such
calculation).
3. Conditions to Closing. The obligation of Avanex to issue Option
---------------------
Shares to Oplink hereunder is subject to the conditions that (A) any waiting
period under the HSR Act applicable to the issuance of the Option Shares
hereunder will have expired or been terminated; (B) all material consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission
or other Federal state or local governmental authority or instrumentality, if
any, required in connection with the issuance of the Option Shares hereunder
will have been obtained or made, as the case may be; (C) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance will be in effect; and (D)
the Option Shares shall have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance. It is understood and agreed
that at any time during which the Option is exercisable, the parties will use
their respective commercially reasonable efforts to satisfy all conditions to
Closing, so that a Closing may take place as promptly as practicable.
4. Closing. At any Closing, (A) Avanex will deliver to Oplink a
-------
single certificate in definitive form representing the number of Avanex Shares
designated by Oplink in its Exercise Notice, such certificate to be registered
in the name of Oplink and to bear the legend set forth in Section 11 hereof,
against delivery of (B) payment by Oplink to Avanex of the aggregate purchase
price for the Avanex Shares so designated and being purchased by (i) delivery
of a certified check or bank check and/or, at Oplink's election, (ii)
compliance with the cashless exercise provision set forth in Section 2(c).
5. Representations and Warranties
------------------------------
(a) Avanex. Avanex represents and warrants to Oplink that (A)
------
Avanex is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder; (B) the execution and delivery of this Agreement by Avanex and
consummation by Avanex of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Avanex and no other
corporate proceedings on the part of Avanex are necessary to authorize this
Agreement or any of the transactions contemplated hereby; (C) this Agreement
has been duly executed and delivered by Avanex and constitutes a legal, valid
and binding obligation of Avanex and, assuming this Agreement constitutes a
legal, valid and binding obligation of Oplink, is enforceable against Avanex in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting or relating to creditors' rights
generally, the availability of injunctive relief and other equitable remedies
and general principles of equity and limitations imposed by law on
indemnification for liability under federal securities laws; (D) except for any
filings required under the HSR Act and as may be required in accordance with
requirements of the Nasdaq National Market, Avanex has taken all necessary
corporate and other action to authorize and reserve for issuance and to permit
it to issue upon exercise of the Option, and at all times from the date hereof
until the termination of the Option will have reserved for issuance, a
sufficient number of unissued Avanex Shares for Oplink to exercise the Option
in full and will take all necessary corporate or other action to authorize and
reserve for issuance all additional Avanex Shares or other securities that may
be issuable pursuant to
-3-
Section 9(a) upon exercise of the Option, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable; (E) upon delivery of the Avanex Shares
and any other securities to Oplink upon exercise of the Option, Oplink will
acquire such Avanex Shares or other securities free and clear of all material
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, excluding those imposed by Oplink; (F) the execution and
delivery of this Agreement by Avanex do not, and the performance of this
Agreement by Avanex will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws or equivalent organizational documents of Avanex or any
of its subsidiaries, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Avanex or any of its subsidiaries or by
which its or any of their respective properties is bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or impair Avanex's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Avanex or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Avanex or any of its subsidiaries is a party or by which
Avanex or any of its subsidiaries or its or any of their respective properties
are bound or affected; and (G) the execution and delivery of this Agreement by
Avanex does not, and the performance of this Agreement by Avanex will not,
require any consent, approval, authorization or permit of, or filing with, or
notification to, any Governmental Entity except pursuant to the HSR Act or as
may be required in accordance with requirements of the Nasdaq National Market.
(b) Oplink. Oplink represents and warrants to Avanex that the
------
Option and any Option Shares that Oplink may hereafter purchase are being
purchased by Oplink for its own account, for investment and not with a view to
the distribution or resale thereof, except in compliance with the Securities
Act and applicable state securities and blue sky laws. Oplink has sufficient
knowledge and experience in investing in securities similar to the Option and
to the Option Shares so as to be able to evaluate the risks and merits of any
investment in the Option and in the Option Shares and is able financially to
bear the risks thereof, including a complete loss of its investment.
6. Oplink Put. At the request of and upon notice by Oplink (the "Put
----------
Notice"), at any time during the period during which the Option is exercisable
pursuant to Section 2 (the "Purchase Period"), Avanex (or any successor entity
thereof) will purchase from Oplink the Option, to the extent not previously
exercised, at the price set forth in subparagraph (a) below (as limited by
Section 10 below), and the Option Shares, if any, acquired by Oplink pursuant
thereto, at the price set forth in subparagraph (b) below (as limited by Section
10 below):
(a) The amount, if any, by which the "Market/Tender Offer Price"
for Avanex Shares as of the date Oplink gives notice of its intent to exercise
its rights under this Section 6(a) exceeds the Exercise Price, multiplied by
the number of Avanex Shares purchasable pursuant to the Option. "Market/Tender
Offer Price" shall mean the highest of: (i) the highest purchase price per
share paid after the date of this Agreement and on or prior to the delivery of
the Put Notice pursuant to any tender or exchange offer made for shares of
Avanex Common Stock, (ii) the highest price per share paid or to be paid by any
Person for shares of Avanex Common Stock pursuant to any
-4-
agreement contemplating a merger or other business combination transaction
involving Avanex that was entered into after the date of this Agreement and on
or prior to the delivery of the Put Notice or (iii) the average of the highest
bid prices per share of Avanex Common Stock as quoted on the Nasdaq National
Market (or if Avanex Common Stock is not quoted on the Nasdaq National Market,
the highest bid price per share of Avanex Common Stock as quoted on any other
market comprising a part of the Nasdaq Stock Market or, if the shares of Avanex
Common Stock are not quoted thereon, on the principal trading market (as
defined in Regulation M under the Exchange Act) on which such shares are traded
as reported by a recognized source) during the 20-day period ending on the date
of delivery of the Put Notice. For purposes of determining the highest price
offered pursuant to any Acquisition Proposal with respect to Avanex which
involves consideration other than cash, the value of such consideration will be
equal to the higher of (x) if securities of the same class of the proponent as
such consideration are traded on any national securities exchange or by any
registered securities association, a value based on the closing sale price or
asked price for such securities on their principal trading market on such date
and (y) the value ascribed to such consideration by the proponent of such
Acquisition Proposal, or if no such value is ascribed, a value determined in
good faith by the Board of Directors of Avanex.
(b) The product of the Market/Tender Offer Price multiplied by
-------------
the number of Avanex Shares so purchased.
7. Payment and Redelivery of Option or Shares. In the event Oplink
------------------------------------------
exercises its rights under Section 6, Avanex will, within five (5) business
days after Oplink delivers notice pursuant to Section 6, pay the required
amount to Oplink in immediately available funds and Oplink will surrender to
Avanex the Option and the certificates evidencing the Avanex Shares purchased
by Oplink pursuant thereto.
8. Registration Rights.
-------------------
(a) During the period beginning on the date of the termination of
the Merger Agreement until such time as all Option Shares issued to Oplink may
be sold pursuant to Rule 144(k) of the Securities Act (the "Registration
Period"), Oplink (sometimes referred to herein as the "Holder") may by written
notice (a "Registration Notice") to Avanex (the "Registrant") request the
Registrant to register under the Securities Act all or any part of the shares
acquired by the Holder pursuant to this Agreement (such shares requested to be
registered, the "Registrable Securities") in order to permit the sale or other
disposition of any or all shares of the Registrable Securities that have been
acquired by or are issuable to the Holder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by the
Holder, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision. The Holder agrees to cause, and to
cause any underwriters of any sale or other disposition to cause, any sale or
other disposition pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no purchaser or
transferee will own beneficially more than five (5) percent of the
then-outstanding voting power of the Registrant. Upon a request for
registration, the Registrant will have the option exercisable by written notice
delivered to the Holder within ten (10) business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities for cash at a price (the "Option Price") equal to the
product of (i) the number of Registrable Securities so purchased and (ii) the
per share average of
-5-
the closing sale prices of Avanex Common Stock on the Nasdaq National Market
for the ten (10) trading days immediately preceding the date of the
Registration Notice. Any such purchase of Registrable Securities by the
Registrant hereunder will take place at a closing to be held at the principal
executive offices of the Registrant or its counsel at any reasonable date and
time designated by the Registrant in such notice within ten (10) business days
after delivery of such notice. The payment for the shares to be purchased will
be made by delivery at the time of such closing of the Option Price in
immediately available funds.
(b) The Registrant will use all commercially reasonable
efforts to effect, as promptly as practicable, the registration under the
Securities Act of the unpurchased Registrable Securities requested to be
registered in the Registration Notice and to keep such registration statement
effective for such period not in excess of 120 calendar days from the day such
registration statement first becomes effective as may be reasonably necessary
to effect such sale or other disposition; provided, however, that the Holder
-------- -------
will not be entitled to more than an aggregate of two (2) effective
registration statements hereunder. The obligations of the Registrant hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for up to 90 calendar days in the aggregate if the Board of Directors
of the Registrant shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require premature
disclosure of material nonpublic information that would materially and
adversely affect the Registrant or otherwise interfere with or adversely affect
any pending or proposed offering of securities of the Registrant or any other
material transaction involving the Registrant. If consummation of the sale of
any Registrable Securities pursuant to a registration hereunder does not occur
within 90 days after the filing with the SEC of the initial registration
statement therefor, the provisions of this Section 8 will again be applicable
to any proposed registration. The Registrant will use all commercially
reasonable efforts to cause any Registrable Securities registered pursuant to
this Section 8 to be qualified for sale under the securities or blue sky laws
of such jurisdictions as the Holder may reasonably request and will continue
such registration or qualification in effect in such jurisdictions; provided,
--------
however, that the Registrant will not be required to qualify to do business in,
-------
or consent to general service of process in, any jurisdiction by reason of this
provision. If, during the Registration Period, the Registrant shall propose to
register under the Securities Act the offering, sale and delivery of Avanex
Common Stock for cash pursuant to a firm commitment underwriting, it shall, in
addition to the Registrant's other obligations under this Section 8, allow the
Holder the right to participate in such registration provided that the Holder
participates in the underwriting; provided that, if the managing underwriter of
such offering advises the Registrant in writing that in its opinion the number
of shares of Avanex Common Stock requested to be included in such registration
exceeds the number that can be sold in such offering, the Registrant shall
include the shares requested to be included therein by the Holder pro rata
(based on the number of shares intended to be included therein) with the shares
intended to be included therein by the Registrant and Persons other than the
Registrant. In connection with any offering, sale and delivery of Avanex Common
Stock pursuant to a registration statement effected pursuant to this Section 8,
the Registrant and the Holder shall provide each other and each underwriter of
the offering with customary representations, warranties and covenants,
including covenants of indemnification and contribution, and opinions of
counsel.
(c) The registration rights set forth in this Section 8 are
subject to the condition that the Holder will provide the Registrant with such
information with respect to the Holder's
-6-
Registrable Securities, the plan for distribution thereof, and such other
information with respect to the Holder as, in the reasonable judgment of
counsel for the Registrant, is necessary to enable the Registrant to include in
a registration statement all facts required to be disclosed with respect to a
registration thereunder.
(d) A registration effected under this Section 8 will be effected
at the Registrant's expense, except for underwriting discounts and commissions
and the fees and expenses of counsel to the Holder, and the Registrant will
provide to the underwriters such documentation (including certificates,
opinions of counsel and "comfort" letters from auditors) as are customary in
connection with underwritten public offerings and as such underwriters may
reasonably require. In connection with any registration, the Holder and the
Registrant agree to enter into an underwriting agreement reasonably acceptable
to each such party, in form and substance customary for transactions of this
type with the underwriters participating in such offering.
(e) Indemnification.
---------------
(i) The Registrant will indemnify the Holder, each of its
directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Registrant of any rule or
regulation promulgated under the Securities Act applicable to the Registrant in
connection with any such registration, qualification or compliance, and the
Registrant will reimburse the Holder and, each of its directors and officers
and each person who controls the Holder within the meaning of Section 15 of the
Securities Act, and each underwriter for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action; provided, that the
--------
Registrant will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to the
Registrant by such Holder or director or officer or controlling person or
underwriter seeking indemnification.
(ii) The Holder will indemnify the Registrant, each of its
directors and officers and each underwriter of the Registrant's securities
covered by such registration statement and each person who controls the
Registrant within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make
-7-
the statements therein not misleading, or any violation by the Holder of any
rule or regulation promulgated under the Securities Act applicable to the
Holder in connection with any such registration, qualification or compliance,
and will reimburse the Registrant, such directors, officers or control persons
or underwriters for any legal or any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Registrant by the Holder for use therein;
provided, that in no event will any indemnity under this Section 8(e) exceed
the net proceeds of the offering received by the Holder.
(iii) Each party entitled to indemnification under this
Section 8(e) (the "Indemnified Party") will give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and will permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided, that counsel for
--------
the Indemnifying Party, who will conduct the defense of such claim or
litigation, will be approved by the Indemnified Party (whose approval will not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
-------- -------
will pay such expense if representation of the Indemnified Party by counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding, and provided further, however,
---------------- -------
that the failure of any Indemnified Party to give notice as provided herein
will not relieve the Indemnifying Party of its obligations under this Section
8(e) unless the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action. No Indemnifying Party, in
the defense of any such claim or litigation will, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. No Indemnifying Party will be
required to indemnify any Indemnified Party with respect to any settlement
entered into without such Indemnifying Party's prior consent (which will not be
unreasonably withheld).
9. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of any change in the Avanex Shares by reason
of stock dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchanges of shares and the like, the
type and number of shares or securities subject to the Option and the Exercise
Price will be adjusted appropriately, and proper provision will be made in the
agreements governing such transaction so that Oplink will receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Oplink would have received in respect of the Avanex Shares if the
Option had been exercised immediately prior to such event or the record date
therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, if the number of outstanding shares of Avanex Common
Stock increases or decreases
-8-
after the date of this Agreement (other than pursuant to an event described in
Section 9(a)), the number of shares of Avanex Common Stock subject to the
Option (including those Option Shares which may have already been exercised)
will be adjusted so that it equals 19.99% of the number of shares of Avanex
Common Stock then issued and outstanding, without giving effect to any Option
Shares.
10. Profit Limitation.
-----------------
(a) Notwithstanding any other provision in this Agreement or the
Merger Agreement, in no event shall Oplink's Total Profit (as defined below)
exceed the amount of the Avanex Termination Fee (the "Maximum Profit") and, if
----------------
Oplink's Total Profit otherwise would exceed the Maximum Profit, Oplink, at its
sole discretion, shall either (i) reduce the number of Option Shares subject to
the Option, (ii) deliver to Avanex for cancellation Option Shares (or other
securities into which such Option Shares are converted or exchanged) previously
purchased by Oplink, (iii) pay cash to Avanex, or (iv) any combination of the
foregoing, so that Oplink's actually realized Total Profit shall not exceed the
Maximum Profit after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean:
------------
(i) the aggregate amount (before taxes) of (A) any excess of (x) the net cash
amounts or fair market value of any property received by Oplink pursuant to a
sale of Option Shares (or securities into which such shares are converted or
exchanged) over (y) Oplink's aggregate purchase price for such Option Shares
(or other securities), plus (B) any amounts received by Oplink pursuant on the
repurchase of the Option by Avanex pursuant to Section 6, plus (C) the Avanex
Termination Fee paid in cash by Avanex pursuant to the Merger Agreement, minus
(ii) the amounts of any cash previously paid by Oplink to Avanex pursuant to
this Section 10 plus the value of the Option Shares (or other securities)
previously delivered by Oplink to Avanex for cancellation pursuant to this
Section 10.
(c) For purposes of Section 10(a) and clause (ii) of Section
10(b), the value of any Option Shares delivered by Oplink to Avanex shall be
the Market/Tender Offer Price of such Option Shares.
11. Restrictive Legends. Each certificate representing Option Shares
-------------------
issued to Oplink hereunder will include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION
AGREEMENT DATED AS OF MARCH 18, 2002, A COPY OF WHICH MAY BE OBTAINED
FROM THE ISSUER.
It is understood and agreed that (i) the reference to restrictions
arising under the Securities Act in the above legend will be removed by delivery
of substitute certificate(s) without such
-9-
reference if such Option Shares have been registered pursuant to the Securities
Act, such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act or the Holder has delivered to the Registrant
a copy of a letter from the staff of the SEC, or an opinion of counsel in form
and substance reasonably satisfactory to the Registrant and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend will be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
12. Listing and HSR Filing. Avanex, upon the request of Oplink, will
----------------------
promptly file an application to list the Avanex Shares to be acquired upon
exercise of the Option for quotation on the Nasdaq National Market and will use
its commercially reasonable efforts to obtain approval of such listing as soon
as practicable. Promptly after the date hereof, each of the parties hereto will
promptly file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice all required premerger notification and
report forms and other documents and exhibits required to be filed under the
HSR Act to permit the acquisition of the Avanex Shares subject to the Option at
the earliest possible date.
13. Binding Effect. This Agreement will be binding upon and inure to
--------------
the benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement, express or implied, is intended
to confer upon any person other than the parties hereto and their respective
successors and permitted assigns any rights or remedies of any nature
whatsoever by reason of this Agreement. Any shares sold by a party in
compliance with the provisions of Section 8 will, upon consummation of such
sale, be free of the restrictions imposed with respect to such shares by this
Agreement and any transferee of such shares will not be entitled to the rights
of such party. Certificates representing shares sold in a registered public
offering pursuant to Section 8 will not be required to bear the legend set
forth in Section 11.
14. Specific Performance. The parties hereto recognize and agree that
--------------------
if for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party hereto agrees that in addition to
other remedies the other party hereto will be entitled to an injunction
restraining any violation or threatened violation of the provisions of this
Agreement or the right to enforce any of the covenants or agreements set forth
herein by specific performance. In the event that any action will be brought in
equity to enforce the provisions of the Agreement, neither party hereto will
allege, and each party hereto hereby waives the defense, that there is an
adequate remedy at law.
15. Entire Agreement. This Agreement, the Confidentiality Agreement
-----------------
and the Merger Agreement (including the appendices thereto) constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof.
-10-
16. Further Assurances. Each party hereto will execute and deliver
------------------
all such further documents and instruments and take all such further action as
may be necessary in order to consummate the transactions contemplated hereby.
17. Validity. The invalidity or unenforceability of any provision of
--------
this Agreement will not affect the validity or enforceability of the other
provisions of this Agreement, which will remain in full force and effect. In
the event any Governmental Entity of competent jurisdiction holds any provision
of this Agreement to be null, void or unenforceable, the parties hereto will
negotiate in good faith and will execute and deliver an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision.
18. Notices. All notices and other communications hereunder will be in
-------
writing and will be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the date of confirmation of receipt (or, the first business
day following such receipt if the date is not a business day) of transmission
by telecopy or telefacsimile or (c) on the date of confirmation of receipt (or
the first business day following such receipt if the date is not a business
day) if delivered by a nationally recognized courier service. All notices
hereunder shall be delivered to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy numbers for a party as
will be specified by like notice):
(a) if to Avanex, to:
Avanex Corporation
00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with copies to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx,
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
-11-
and to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation
One Market
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Oplink to:
Oplink Communications, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Xxxxxxx Xxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
19. Governing Law. This Agreement will be governed by and construed
-------------
in accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State.
20. Expenses. Except as otherwise expressly provided herein or in the
--------
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement will be paid by the party incurring
such expenses.
21. Amendments; Waiver. This Agreement may be amended by the parties
------------------
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
22. Assignment. Neither of the parties hereto may sell, transfer,
----------
assign or otherwise dispose of any of its rights or obligations under this
Agreement or the Option created hereunder to any other person, without the
express written consent of the other party, except that the rights and
obligations hereunder will inure to the benefit of and be binding upon any
successor of a party hereto.
-12-
23. Counterparts. This Agreement may be executed in counterparts,
------------
each of which will be deemed to be an original, but both of which, taken
together, will constitute one and the same instrument.
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
AVANEX CORPORATION
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: President and Chief Executive Officer
OPLINK COMMUNICATIONS,INC.
By: /s/ Xxxxxxxxx Xxxxx
Name: Xxxxxxxxx Xxxxx
Title: President and Chief Executive Officer
[Signature Page to Avanex Stock Option Agreement]
