Exhibit 1
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
AVANEX CORPORATION,
PEARL ACQUISITION CORP.
AND
OPLINK COMMUNICATIONS, INC.
Dated as of March 18, 2002
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of March 18, 2002 among Avanex Corporation, a Delaware
corporation ("Avanex"), Pearl Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Avanex ("Merger Sub"), and Oplink Communications,
Inc., a Delaware corporation ("Oplink").
RECITALS
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A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"), Avanex
and Oplink will enter into a business combination transaction pursuant to which
Merger Sub will merge with and into Oplink (the "Merger").
B. The Board of Directors of Avanex (i) has determined that the Merger is
fair to, and in the best interests of, Avanex and its stockholders, (ii) has
approved this Agreement, the Merger and the other transactions contemplated by
this Agreement and (iii) has approved and determined to recommend that the
stockholders of Avanex vote to approve the issuance of shares of Avanex Common
Stock (as defined below) to the stockholders of Oplink pursuant to the terms of
this Agreement (the "Share Issuance").
C. The Board of Directors of Oplink (i) has determined that the Merger is
advisable and fair to, and in the best interests of, Oplink and its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and has deemed this Agreement
advisable and (iii) has approved and determined to recommend the approval and
adoption of this Agreement and the approval of the Merger to the stockholders of
Oplink.
D. Concurrently with the execution of this Agreement and as a condition and
inducement to Avanex's and Oplink's willingness to enter into this Agreement,
Oplink shall execute and deliver a Stock Option Agreement in favor of Avanex in
substantially the form attached hereto as Exhibit A (the "Oplink Stock Option
Agreement"), and Avanex shall execute and deliver a Stock Option Agreement in
favor of Oplink in substantially the form attached hereto as Exhibit B (the
"Avanex Stock Option Agreement" and together with the Oplink Stock Option
Agreement, the "Option Agreements").
E. Concurrently with the execution of this Agreement and as a condition and
inducement to Avanex's and Oplink's willingness to enter into this Agreement,
Oplink and certain stockholders of Avanex are entering into voting agreements in
substantially the form attached hereto as Exhibit C (the "Avanex Voting
Agreements"), and Avanex and certain stockholders of Oplink are entering into
voting agreements in substantially the form attached hereto as Exhibit D (the
"Oplink Voting Agreements" and, collectively with the Avanex Voting Agreements,
the "Voting Agreements").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
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subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Oplink, the separate corporate existence of Merger Sub shall cease and Oplink
shall continue as the surviving corporation. Oplink as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
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the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in accordance with the relevant provisions of Delaware
Law (the time of such filing with the Secretary of State of the State of
Delaware (or such later time as may be agreed in writing by the parties and
specified in the Certificate of Merger) being the "Effective Time") as soon as
practicable on or after the Closing Date (as herein defined). The closing of the
Merger (the "Closing") shall take place at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, located at 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx, at a time and date to be specified by the parties, which shall
be no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
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shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of Oplink and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Oplink and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended and restated in its entirety to be
identical to the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, until thereafter amended in accordance
with Delaware Law and as provided in such Certificate of Incorporation;
provided, however, that at the Effective Time Article I of the Certificate of
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Incorporation shall be amended to read as follows: "The name of the corporation
is Oplink Communications, Inc."
(b) At the Effective Time, the Bylaws of the Surviving Corporation
shall be amended and restated in their entirety to be identical to the Bylaws of
Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter amended in accordance with Delaware Law and as provided in such
Bylaws.
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1.5 Effect on Capital Stock. Subject to the terms and conditions of this
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Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Oplink or the holders of any of the following
securities, the following shall occur:
(a) Conversion of Oplink Common Stock. Each share of Common Stock,
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$0.001 par value per share, of Oplink (the "Oplink Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than any shares of
Oplink Common Stock to be canceled pursuant to Section 1.5(c)), will be canceled
and extinguished and automatically converted (subject to Sections 1.5(f) and
1.5(g)) into .405344 (the "Exchange Ratio") of a share of Common Stock, par
value $0.001 per share, of Avanex (the "Avanex Common Stock") at the Effective
Time.
(b) If any shares of Oplink Common Stock outstanding immediately prior
to the Effective Time are unvested or are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with Oplink, then the shares of Avanex Common Stock
issued in exchange for such shares of Oplink Common Stock will also be unvested
and subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of Avanex Common Stock
may accordingly be marked with appropriate legends. Oplink shall take all action
that may be necessary to ensure that, from and after the Effective Time, the
Surviving Corporation is entitled to exercise any such repurchase option or
other right set forth in any such restricted stock purchase agreement or other
agreement.
(c) Cancellation of Treasury and Avanex-Owned Stock. Each share of
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Oplink Common Stock held by Oplink, Merger Sub or Avanex, or any direct or
indirect wholly owned subsidiary of Oplink or Avanex, immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
(d) Stock Options; Employee Stock Purchase Plan. At the Effective
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Time, all options to purchase Oplink Common Stock then outstanding (the "Oplink
Options") under Oplink's 1995 Stock Plan, 1998 Stock Plan and 2000 Equity
Incentive Plan (collectively, the "Oplink Stock Option Plans") shall be assumed
by Avanex in accordance with Section 5.9 hereof. Rights outstanding under
Oplink's 2000 Employee Stock Purchase Plan shall be treated as set forth in
Section 5.9 hereof.
(e) Capital Stock of Merger Sub. Each share of Common Stock, $0.001
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par value per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of Common Stock, $0.001 par value, of the
Surviving Corporation. Each stock certificate of Merger Sub evidencing ownership
of any such shares shall, as of the Effective Time, evidence ownership of such
shares of Common Stock of the Surviving Corporation.
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
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adjusted to reflect fully the appropriate effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into, or exercisable for, Avanex Common Stock or Oplink
Common Stock), extraordinary cash dividend, reorganization, recapitalization,
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reclassification, combination, exchange of shares or other like change with
respect to Avanex Common Stock or Oplink Common Stock occurring or having a
record date on or after the date hereof and prior to the Effective Time.
(g) Fractional Shares. No fraction of a share of Avanex Common Stock
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will be issued by virtue of the Merger, but in lieu thereof, each holder of
shares of Oplink Common Stock who would otherwise be entitled to receive a
fraction of a share of Avanex Common Stock (after aggregating all fractional
shares of Avanex Common Stock to be received by such holder) shall receive from
Avanex an amount of cash (rounded to the nearest whole cent), without interest,
equal to the product of (i) such fraction, multiplied by (ii) the average of the
closing prices of one share of Avanex Common Stock for the five (5) most recent
days that Avanex Common Stock has traded ending on the full trading day
immediately prior to the Effective Time, as reported on the Nasdaq National
Market System ("Nasdaq").
1.6 Surrender of Certificates.
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(a) Exchange Agent. Prior to the Effective Time, Avanex shall select
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an institution reasonably satisfactory to Oplink to act as the exchange agent
(the "Exchange Agent") in the Merger.
(b) Avanex to Provide Common Stock. Promptly after the Effective Time,
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Avanex shall make available to the Exchange Agent for exchange in accordance
with this Article I, (i) certificates representing the shares of Avanex Common
Stock issuable pursuant to Section 1.5(a) in exchange for outstanding shares of
Oplink Common Stock, (ii) cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 1.5(g) and (iii) any dividends or
distributions to which holders of shares of Oplink Common Stock may be entitled
pursuant to Section 1.6(d).
(c) Exchange Procedures. Promptly after the Effective Time, Avanex
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shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of Oplink
Common Stock whose shares were converted into shares of Avanex Common Stock
pursuant to Section 1.5, cash in lieu of any fractional shares pursuant to
Section 1.5(g) and any dividends or other distributions pursuant to Section
1.6(d), (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Avanex may reasonably specify), (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing whole shares of Avanex Common Stock, cash in lieu of
any fractional shares pursuant to Section 1.5(g) and any dividends or other
distributions pursuant to Section 1.6(d), and (iii) such other documents as may
reasonably be required by the Exchange Agent. Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Avanex, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto and such other
documents as may reasonably be required by the Exchange Agent, each holder of a
Certificate shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Avanex Common Stock (after taking
into account all Certificates surrendered by such holder) to
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which such holder is entitled pursuant to Section 1.5(a) (which shall be in
uncertificated book entry form unless a physical certificate is requested or is
otherwise required by applicable law rule or regulation), payment in lieu of
fractional shares which such holder has the right to receive pursuant to Section
1.5(g) and any dividends or distributions payable pursuant to Section 1.6(d),
and the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, outstanding Certificates will be deemed from and after the
Effective Time, for all corporate purposes, to evidence the ownership of, the
number of whole shares of Avanex Common Stock issuable pursuant to Section
1.5(a), and the right to receive an amount of cash in lieu of the issuance of
any fractional shares in accordance with Section 1.5(g) and any dividends or
distributions payable pursuant to Section 1.6(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
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other distributions declared or made after the date of this Agreement with
respect to Avanex Common Stock with a record date after the Effective Time and
no payment in lieu of fractional shares pursuant to Section 1.5(g) will be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Avanex Common Stock issuable pursuant to Section 1.5, until the holder of record
of such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent or any other
agent designated by Avanex shall deliver to the holders thereof, without
interest, (i) promptly after such surrender, the number of whole shares of
Avanex Common Stock issued in exchange therefor along with payment in lieu of
fractional shares pursuant to Section 1.5(g) and the amount of any such
dividends or other distributions with a record date after the Effective Time and
theretofore paid with respect to such whole shares of Avanex Common Stock and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time and a payment date
subsequent to such surrender payable with respect to such whole shares of Avanex
Common Stock.
(e) Transfers of Ownership. If certificates for shares of Avanex
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Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Avanex or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
for shares of Avanex Common Stock in any name other than that of the registered
holders of the Certificates surrendered, or established to the reasonable
satisfaction of Avanex or any agent designated by it that such tax has been paid
or is not payable.
(f) Required Withholding. Each of Avanex, the Exchange Agent and the
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Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
former holder of Oplink Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code and the rules and regulations
promulgated thereunder, or under any provision of state, local or foreign tax
law or under any other applicable legal requirement. To the extent such amounts
are so deducted or withheld, the amount of such consideration shall be treated
for all purposes under this Agreement as having been paid to the person to whom
such consideration would otherwise have been paid.
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(g) No Liability. Notwithstanding anything to the contrary in this
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Section 1.6, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to a holder of shares of Avanex Common Stock or Oplink
Common Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.7 No Further Ownership Rights in Oplink Common Stock. All shares of
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Avanex Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.5(g) and 1.6(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Oplink Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Oplink Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
1.8 Lost, Stolen or Destroyed Certificates. In the event that any
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Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue and pay in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Avanex Common Stock to which such holder is entitled pursuant to Section 1.5(a),
cash for fractional shares, if any, as may be required pursuant to Section
1.5(g) and any dividends or distributions payable pursuant to Section 1.6(d);
provided, however, that Avanex may, in its discretion and as a condition
precedent to the issuance and payment thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Avanex, Oplink or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.9 Tax Consequences. It is intended by the parties hereto that the Merger
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shall constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations promulgated under the Code (the "Treasury Regulations").
1.10 Taking of Necessary Action; Further Action. If, at any time after the
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Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Oplink and Merger Sub, the officers and directors of Oplink
and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF OPLINK
Oplink represents and warrants to Avanex and Merger Sub, subject to such
exceptions as are disclosed in writing in the disclosure letter supplied by
Oplink to Avanex, dated as of the date hereof and certified by a duly authorized
officer of Oplink (the "Oplink Disclosure Letter"), which disclosure shall
provide an exception to or otherwise qualify the representations and warranties
of Oplink contained in the section of this Agreement corresponding by number to
such disclosure and
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the other representations and warranties herein to the extent such disclosure is
readily apparent on its face to be applicable to such other representations or
warranties, as follows:
2.1 Organization of Oplink.
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(a) Oplink and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the failure to be so qualified, individually or in the aggregate, would
have a Material Adverse Effect (as defined in Section 8.3) on Oplink.
(b) Oplink has delivered to Avanex a true and complete list of all of
Oplink's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and Oplink's equity interest therein.
(c) Oplink has delivered or made available to Avanex a true and
correct copy of the Certificate of Incorporation and Bylaws of Oplink and
similar governing instruments of each of its material subsidiaries, each as
amended to date, and each such instrument is in full force and effect. Neither
Oplink nor any of its subsidiaries is in violation of any of the provisions of
its Certificate of Incorporation or Bylaws or equivalent governing instruments.
(d) Oplink has timely paid in its capital contribution to the
registered capital of each of Shanghai Oplink Communications Co., Ltd., Zhuhai
FTZ Oplink Communications, Inc., Zhuhai Oplink Communications Technology, Ltd.,
Zhuhai FTZ Telelight Communications, Inc., Beijing Oplink Communications, Inc.
and Chengdu Oplink Communications, Inc. (each, a "PRC Subsidiary" and
collectively, the "PRC Subsidiaries") as such capital contributions have become
due. The People's Republic of China is defined herein as the "PRC."
2.2 Oplink Capital Structure. The authorized capital stock of Oplink
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consists of (i) 400,000,000 shares of Oplink Common Stock, par value $0.001 per
share, and (ii) 20,000,000 shares of Preferred Stock, par value $0.001 per
share. As of the close of business on March 15, 2002, 163,927,229 shares of
Oplink Common Stock were issued and outstanding. As of the date hereof, no
shares of Oplink Preferred Stock were issued or outstanding. As of March 15,
2002, Oplink had reserved an aggregate of 35,796,028 shares of Oplink Common
Stock for issuance pursuant to the Oplink Stock Option Plans, under which
options to purchase 29,346,497 shares were outstanding, and 13,076,769 shares of
Oplink Common Stock were available for issuance pursuant to the Oplink 2000
Employee Stock Purchase Plan. Except as set forth in the immediately preceding
sentence, no shares of capital stock or other equity securities of Oplink are
issued, reserved for issuance or outstanding except as set forth in the Oplink
Financials and except for rights issuable pursuant to the Oplink Rights
Agreement (as defined in Section 2.22) or any other right issued in substitution
thereof (the "Oplink Rights"). Under the Oplink Rights Agreement, until the
distribution date, (i) the Oplink Rights will be evidenced by the certificates
for Oplink Common Stock registered in the names of the holders thereof (which
certificates shall also be deemed to be
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certificates for the Oplink Rights (the "Oplink Rights Certificates") and not by
separate Oplink Rights Certificates and (ii) the right to receive Oplink Rights
Certificates will be transferable only in connection with the transfer of Oplink
Common Stock. All of the outstanding shares of Oplink's capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. All
shares of Oplink Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable.
Section 2.2 of the Oplink Disclosure Letter sets forth for each outstanding
Oplink Option as of the date hereof, (i) the name and location of the holder of
such Oplink Option, (ii) the Oplink Stock Option Plan pursuant to which such
option was issued, (iii) the number of shares of Oplink Common Stock issuable
upon the exercise of such Oplink Option, (v) the exercise price of such Oplink
Option, (vi) the date on which such Oplink Option was granted, (vii) the
applicable vesting schedule for such Oplink Option, and (viii) the date on which
such Oplink Option expires.
2.3 Obligations With Respect to Capital Stock. As of the date hereof,
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except as set forth in Section 2.2, there are no equity securities, partnership
interests or similar ownership interests of any class of Oplink, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests issued,
reserved for issuance or outstanding. As of the date hereof, except for
securities Oplink owns, directly or indirectly through one or more subsidiaries,
there are no equity securities, partnership interests or similar ownership
interests of any class of any subsidiary of Oplink, or any security exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests issued, reserved for issuance or
outstanding. As of the date hereof, except as set forth in Section 2.2, and
other than the rights to purchase shares of Oplink Company Stock pursuant to
offer letters for prospective employees of Oplink in the ordinary course of
business and consistent with past practice set forth in Section 2.3 of the
Oplink Disclosure Letter, there are no options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Oplink
or any of its subsidiaries is a party or by which it is bound obligating Oplink
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock of Oplink
or any of its subsidiaries or obligating Oplink or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, partnership interest or similar ownership interest, call,
right, commitment or agreement. Except for the Oplink Voting Agreements and
Oplink Stock Option Agreement, there are no registration rights and, to the
Knowledge of Oplink there are no voting trusts, proxies or other agreements or
understandings with respect to the registration or voting of any equity security
of any class of Oplink or with respect to the registration or voting of any
equity security, partnership interest or similar ownership interest of any class
of any of its subsidiaries.
2.4 Authority.
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(a) Oplink has all requisite corporate power and authority to enter
into this Agreement and the Option Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Option Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Oplink, subject only to the approval and adoption of this
Agreement and the approval of the Merger by Oplink's stockholders and the filing
and recordation of the Certificate of Merger pursuant to Delaware Law. This
Agreement and the Option Agreements have been duly executed and delivered by
Oplink and, assuming the due authorization, execution and delivery by Avanex and
Merger Sub, constitute the valid and binding obligations of Oplink, enforceable
in accordance with their terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement and the Option Agreements by Oplink do
not, and the performance of this Agreement and the Option Agreements by Oplink
will not, (i) conflict with or violate the Certificate of Incorporation or
Bylaws of Oplink or the equivalent organizational documents of any of its
subsidiaries, (ii) subject to obtaining the approval and adoption of this
Agreement and the approval of the Merger by Oplink's stockholders as
contemplated in Section 5.2 (the "Oplink Stockholder Approval") and compliance
with the requirements set forth in Section 2.4(b) below, conflict with or
violate any law, rule, regulation, order, judgment or decree (each a "Legal
Requirement") applicable to Oplink 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 Oplink's rights or alter the
rights or obligations of Oplink or 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, including any
leased real property, or assets of Oplink or any of its subsidiaries pursuant
to, any Oplink Contract (as defined in Section 2.15). The Oplink Disclosure
Letter lists all consents, waivers and approvals under any of Oplink's or any of
its subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby, which, if not obtained, would have a Material Adverse Effect on Oplink
or the Surviving Corporation or have a material adverse effect on the ability of
the parties to consummate the Merger.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Oplink in connection with the execution and
delivery of this Agreement and the Option Agreements or the consummation of the
transactions contemplated hereby and thereby, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (ii)
the filing of the Joint Proxy Statement/Prospectus (as defined in Section 2.17)
with the SEC in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to be included in the Form S-4 Registration Statement (the
"Registration Statement") to be filed by Avanex with the Securities and Exchange
Commission ("SEC") in accordance with the Securities Act of 1933, as amended
(the "Securities Act"), and the effectiveness of the Registration Statement,
(iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
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amended (the "HSR Act") and the comparable laws of any foreign country
reasonably determined by the parties to be required and (iv) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be material to Oplink or Avanex or have a material
adverse effect on the ability of the parties to consummate the Merger. The
consents, approvals, orders, authorizations, registrations, declarations and
filings set forth in (i) through (iii) are referred to herein as the "Necessary
Consents".
2.5 SEC Filings; Oplink Financial Statements.
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(a) Oplink has filed all forms, reports and documents required to be
filed by Oplink with the SEC since October 5, 2000, and has made available to
Avanex such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Oplink may file
subsequent to the date hereof) are referred to herein as the "Oplink SEC
Reports." As of their respective dates, the Oplink SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Oplink SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing before the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Oplink's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Oplink SEC Reports (the
"Oplink Financials"), including any Oplink SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act)
and (iii) fairly presented the consolidated financial position of Oplink and its
subsidiaries at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not, or are not expected to be, material in
amount. The balance sheet of Oplink contained in the Oplink SEC Reports as of
December 31, 2001 is hereinafter referred to as the "Oplink Balance Sheet."
Except as disclosed in the Oplink Financials, neither Oplink nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Oplink and its subsidiaries taken as a
whole, except liabilities incurred since the date of the Oplink Balance Sheet in
the ordinary course of business consistent with past practices.
(c) Oplink has heretofore furnished to Avanex a complete and correct
copy of any amendments or modifications that have not yet been filed with the
SEC but that are required to be
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filed, to agreements, documents or other instruments that previously had been
filed by Oplink with the SEC pursuant to the Securities Act or the Exchange Act.
2.6 Absence of Certain Changes or Events. Since the date of the Oplink
------------------------------------
Balance Sheet, there has not been: (i) any Material Adverse Effect on Oplink,
(ii) any change by Oplink in its accounting methods, principles or practices,
except as required by concurrent changes in GAAP or the rules and regulations
promulgated by the SEC, (iii) any revaluation by Oplink of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business, or (iv) any split, combination or reclassification of any of Oplink's
or any of its subsidiaries' capital stock.
2.7 Taxes.
-----
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
-------------------
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts.
(b) Tax Returns and Audits.
----------------------
(i) Oplink and each of its subsidiaries have timely filed all
material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to be filed by
Oplink and each of its subsidiaries with any Tax authority. Such Returns are
true and correct in all material respects and have been completed in accordance
with applicable law. Oplink and each of its subsidiaries have paid all Taxes
shown to be due on such Returns.
(ii) Oplink and each of its subsidiaries as of the Effective Time
will have withheld with respect to its employees (and timely paid over to the
appropriate Taxing authority) all federal and state income taxes, Taxes pursuant
to the Federal Insurance Contribution Act ("FICA") and the Federal Unemployment
Tax Act ("FUTA") and other Taxes required to be withheld, except such Taxes that
are not material to Oplink.
(iii) Neither Oplink nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency or adjustment outstanding, proposed or assessed against Oplink or any
of its subsidiaries, nor has Oplink or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any material Tax.
(iv) No audit or other examination of any material Return of
Oplink or any of its subsidiaries by any Tax authority is presently in progress,
nor has Oplink or any of its subsidiaries been notified in writing of any
request for such an audit or other examination.
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(v) Neither Oplink nor any of its subsidiaries had, as of
December 31, 2001, any liability for any material unpaid Taxes that has not been
accrued or reserved against on the Oplink Balance Sheet in accordance with GAAP,
whether asserted or unasserted, contingent or otherwise. Since December 31,
2001, neither Oplink nor any of its subsidiaries has incurred any liability for
any material Taxes other than in the ordinary course of business.
(vi) There is no contract, agreement, plan or arrangement to
which Oplink or any of its subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of Oplink or any of its subsidiaries
that, individually or collectively, would reasonably be expected to give rise to
the payment of any amount in excess of $250,000 that would not be deductible
pursuant to Sections 404 or 162(m) of the Code. There is no contract, agreement,
plan or arrangement to which Oplink is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of the
Code.
(vii) Neither Oplink nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Oplink or any of its
subsidiaries.
(viii) Neither Oplink nor any of its subsidiaries (a) is party to
or has any obligation under any Tax sharing, indemnity or allocation agreement
or arrangement, (b) has ever been a member of an affiliated group (within the
meaning of Code ss.1504(a)) filing a consolidated federal income Tax Return
(other than a group the common parent of which was Oplink), or (c) has any
liability for the Taxes of any person (other than Oplink or any of its
subsidiaries) under Treas. Reg. ss. 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise.
(ix) Neither Oplink nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement or (y)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
2.8 Oplink Intellectual Property. For the purposes of this Agreement, the
----------------------------
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("Patents"); (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor, and all other
rights corresponding thereto
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throughout the world ("Copyrights"); (iv) all industrial designs and any
registrations and applications therefor throughout the world; (v) all trade
names, logos, common law trademarks and service marks, trademark and service
xxxx registrations and applications therefor and all goodwill associated
therewith throughout the world ("Trademarks"); (vi) all databases and data
collections and all rights therein throughout the world; (vii) all moral and
economic rights of authors and inventors, however denominated, throughout the
world, and (viii) any similar or equivalent rights to any of the foregoing
anywhere in the world.
"Oplink Intellectual Property" shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Oplink or any of its subsidiaries.
"Registered Intellectual Property" means all United States, international
and foreign: (i) Patents and Patent applications (including provisional
applications); (ii) registered Trademarks, applications to register Trademarks,
intent-to-use applications, or other registrations or applications related to
Trademarks; (iii) registered Copyrights and applications for Copyright
registration; and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued, filed
with, or recorded by any state, government or other public legal authority.
"Oplink Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Oplink or any of its
subsidiaries.
(a) Except with respect to Oplink Registered Intellectual Property
that Oplink intentionally abandoned and/or is no longer used by or intended to
be used by Oplink, Section 2.8(a) of the Oplink Disclosure Letter lists all
Registered Intellectual Property owned by, filed in the name of, or applied for
by Oplink or any of its subsidiaries, and lists any proceedings or actions
before any court, tribunal (including the United States Patent and Trademark
Office or equivalent authority anywhere in the world) related to Oplink
Registered Intellectual Property.
(b) To the Knowledge of Oplink, no Oplink Intellectual Property or
product or service of Oplink or any of its subsidiaries is subject to any
proceeding or outstanding decree, order, judgment, contract, license, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by Oplink or any of its subsidiaries in a manner that would reasonably be
expected to have a Material Adverse Effect, or that may affect the validity, use
or enforceability of such Oplink Intellectual Property in a manner that would
reasonably be expected to have a Material Adverse Effect.
(c) Except with respect to Oplink Registered Intellectual Property
that Oplink intentionally abandoned and/or is no longer used by or intended to
be used by Oplink as set forth in Section 2.8(c) of the Oplink Disclosure
Letter, each material item of Oplink Registered Intellectual Property is valid
and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Oplink Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Oplink Registered Intellectual Property have been filed
with the relevant Patent, Copyright, Trademark or other
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authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Oplink Registered Intellectual Property.
(d) Other than inbound "shrink-wrap" and similar publicly available
commercial binary code end-user licenses, Section 2.8(d) of the Oplink
Disclosure Letter lists all material contracts, licenses and agreements to which
Oplink and any of its subsidiaries is a party (i) with respect to any Oplink
Intellectual Property licensed or transferred to any third party, or placed into
escrow with any third party; or (ii) pursuant to which a third party has
licensed or transferred any material Intellectual Property to Oplink or any of
its subsidiaries.
(e) Oplink owns and has good and exclusive title to, or has licensed
(sufficient for the conduct of its business as currently conducted and as
presently proposed to be conducted), each material item of Oplink Intellectual
Property or other Intellectual Property used by Oplink free and clear of any
lien or encumbrance (excluding licenses and related restrictions and any lien
for current taxes not yet due and payable; provided, however, that claims of
-------- -------
infringement or misappropriation of Oplink Intellectual Property shall not be
deemed liens or encumbrances for the purpose of this Section 2.8(e)); and Oplink
is the owner of all Trademarks listed in Section 2.8(a) of the Oplink Disclosure
Letter used in connection with the operation or conduct of the business of
Oplink and its subsidiaries, including the sale of any products or the provision
of any services by Oplink and its subsidiaries.
(f) Oplink owns exclusively, and has good title to, all copyrighted
works that are Oplink products or that Oplink or any of its subsidiaries
otherwise expressly purports to own, including any documentation related to such
products.
(g) To the extent that any material Oplink Intellectual Property has
been developed or created by a third party for Oplink or any of its
subsidiaries, Oplink has a written agreement with such third party with respect
thereto and pursuant to which Oplink either (i) has obtained ownership of, and
is the exclusive owner of all of that third party's rights in such Intellectual
Property, or (ii) has obtained a license (sufficient for the conduct of its
business as currently conducted and as proposed to be conducted) to all such
third party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment.
(h) Neither Oplink nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Oplink Intellectual Property owned by Oplink or
any of its subsidiaries, to any third party or has permitted rights in material
Oplink Intellectual Property owned by Oplink to lapse or enter the public domain
(except to the extent that Oplink intentionally permitted such rights to lapse
or become public and/or is no longer used by or intended to be used by Oplink or
its subsidiaries).
(i) To the Knowledge of Oplink, all material contracts, licenses and
agreements relating to Oplink Intellectual Property are in full force and effect
("Oplink Material IP Agreements"). Except as set forth in Section 2.8(i) of the
Oplink Disclosure Letter, to the Knowledge of Oplink, the consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension of such
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Oplink Material IP Agreements, nor will the consummation of the transactions
contemplated by this Agreement result in the release from any escrow of any
Oplink Intellectual Property. Oplink and each of its subsidiaries is in material
compliance with, and has not materially breached any term of any such Oplink
Material IP Agreements, and, to the Knowledge of Oplink, all other parties to
such Oplink Material IP Agreements are in compliance with, and have not
materially breached any term of, such Oplink Material IP Agreements. To the
Knowledge of Oplink, no event has occurred, and no circumstance or condition
exists that has resulted in, or could reasonably be expected to result in, the
release from any escrow of any Oplink Intellectual Property that is owned by
Oplink or its subsidiaries. Following the Closing Date, the Surviving
Corporation will be permitted to exercise all of Oplink's and each of its
subsidiaries' rights under such Oplink Material IP Agreements (i) to the same
extent Oplink and its subsidiaries would have been able to had the transactions
contemplated by this Agreement not occurred, and (ii) without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Oplink or its subsidiaries would otherwise be required to pay.
Under the terms of the Oplink Contracts and other obligations of Oplink, neither
this Agreement nor the transactions contemplated by this Agreement will result
in (x) any of Avanex or its subsidiaries, including Merger Sub, granting to any
third party any right to or with respect to any material Intellectual Property
right owned by, or licensed to, any of them, (y) any of Avanex or its
subsidiaries, including Merger Sub, being bound by, or subject to, any
non-compete or other material restriction on the operation or scope of their
respective businesses, or (z) any of Avanex or its subsidiaries, including
Merger Sub, being obligated to pay any royalties or other material amounts to
any third party in excess of those payable by Avanex or any of its subsidiaries,
including Merger Sub, respectively, before the Closing.
(j) To the Knowledge of Oplink, the products, services and the
operation of the business of Oplink and its subsidiaries as such business
currently is conducted, including Oplink's and its subsidiaries' design,
development, manufacture, marketing and sale of the products or services of
Oplink and its subsidiaries (including products currently under development) has
not and does not infringe or misappropriate the Intellectual Property of any
third party or, to the Knowledge of Oplink, constitute unfair competition or
trade practices under the laws of any jurisdiction.
(k) Except as set forth in Section 2.8(k) of the Oplink Disclosure
Letter, neither Oplink nor any of its subsidiaries has received notice from any
third party that the operation of the business of Oplink or any of its
subsidiaries or any act, product or service of Oplink or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction in a manner that would reasonably be expected to have a
Material Adverse Effect.
(l) Oplink and each of its subsidiaries has taken reasonable steps to
protect Oplink's and its subsidiaries' rights in Oplink's and its subsidiaries'
confidential information and trade secrets (except to the extent intentionally
not protected because such confidential information or trade secrets are no
longer used by or intended to be used by Oplink or its subsidiaries) or any
trade secrets or confidential information of third parties provided to Oplink or
any of its subsidiaries (to the extent subject to confidentiality restrictions).
Without limiting the foregoing, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect, each of
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Oplink and its subsidiaries (x) has and enforces a policy requiring each
employee to execute a proprietary information/confidentiality and invention
assignment agreement substantially in the forms provided to Avanex and all
current and former employees of Oplink and any of its subsidiaries have executed
such an agreement; and (y) has and enforces a policy requiring each contractor
or third party that receives Oplink's or its subsidiaries' confidential
information and/or trade secrets from Oplink or its subsidiaries to execute a
proprietary information/confidentiality agreement substantially in the forms
provided to Avanex and all current and former contractors and third parties that
have received Oplink's or its subsidiaries' confidential information and/or
trade secrets have executed such an agreement. All Intellectual Property used in
or necessary to the conduct of Oplink's and each of its subsidiaries' businesses
as presently conducted or currently contemplated to be conducted by Oplink and
its subsidiaries, was written and created solely by either (i) employees of
Oplink or its subsidiaries acting within the scope of their employment and is
owned by Oplink, or (ii) by third parties who have either validly and
irrevocably assigned all of their rights, including applicable Intellectual
Property rights therein, to Oplink or its subsidiaries, or granted Oplink a
license to all such rights, including applicable Intellectual Property rights
therein, sufficient for the conduct of Oplink's business as currently conducted
and as presently proposed to be conducted, except where the failure to assign or
grant such rights would not reasonably be expected to have a Material Adverse
Effect, and no third party owns or, and has any rights to any of Oplink
Intellectual Property except where it would not reasonably be expected to have a
Material Adverse Effect.
2.9 Compliance; Permits; Restrictions.
---------------------------------
(a) Neither Oplink nor any of its subsidiaries nor the conduct of
their respective businesses is, in any material respect, in conflict with, or in
default or violation of, (i) any Legal Requirement applicable to Oplink or any
of its subsidiaries or by which its or any of their respective businesses or
properties is bound or affected, or (ii) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Oplink or any of its subsidiaries is a party
or by which Oplink or any of its subsidiaries or its or any of their respective
businesses or properties is bound or affected. No investigation or review by any
Governmental Entity is pending or, to the Knowledge of Oplink, threatened
against Oplink or its subsidiaries, nor has any Governmental Entity indicated to
Oplink an intention to conduct the same. There is no agreement, judgment,
injunction, order or decree binding upon Oplink or any of its subsidiaries which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Oplink or any of its subsidiaries,
any acquisition of material property by Oplink or any of its subsidiaries or the
conduct of business by Oplink as currently conducted or presently proposed to be
conducted.
(b) Oplink and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities that are material
to the operation of the business of Oplink, including, without limitation such
permits, licenses, approvals, consents and other authorizations issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
(collectively, the "Oplink Permits"). Oplink and its subsidiaries are in
compliance in all material respects with the terms of the Oplink Permits.
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2.10 Litigation. There is no suit, action, judgment, proceeding, claim,
----------
arbitration or investigation (each an "Action") pending or, to the Knowledge of
Oplink, threatened, against or affecting Oplink or any subsidiary of Oplink or
any property or asset of Oplink or any subsidiary of Oplink which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on Oplink, or which in any manner seeks to prevent, enjoin, alter or
delay any of the transactions contemplated by this Agreement.
2.11 Brokers' and Finders' Fees. Except for fees payable to Credit Suisse
--------------------------
First Boston Corporation ("CSFB") pursuant to an engagement letter dated
December 20, 2001, Oplink has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.12 Employee Benefit Plans.
----------------------
(a) The employee compensation, severance, termination pay, deferred
compensation, stock or stock-related awards, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document and including, without limitation, all "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) covering any active employee, former
employee, director or consultant of Oplink, any subsidiary of Oplink or any
trade or business (whether or not incorporated) that is a member of a controlled
group or that is under common control with Oplink within the meaning of Section
414 of the Code (for purposes of Section 2.12 and Section 3.12, an "Affiliate"),
or with respect to which Oplink has or may in the future have liability, are
referred to herein as the "Oplink Plans." Oplink Disclosure Letter 2.12(a)
contains a complete and accurate list of each of the Oplink Plans. Oplink has
provided to Avanex: (i) correct and complete copies of all documents embodying
each Oplink Plan including (without limitation) all amendments thereto, all
related trust documents, and all material written agreements and contracts
relating to each such Oplink Plan; (ii) the three (3) most recent annual reports
(Form Series 5500 and all schedules and financial statements attached thereto),
if any, required under ERISA or the Code in connection with each Oplink Plan;
(iii) the most recent summary plan description together with the summary(ies) of
material modifications thereto, if any, required under ERISA with respect to
each Oplink Plan; (iv) all IRS determination, opinion, notification and advisory
letters relating to any Oplink Plan; (v) all material correspondence to or from
any governmental agency relating to any Oplink Plan; (vi) all COBRA forms and
related notices; (vii) all discrimination tests for each Oplink Plan, if
applicable, for the most recent three (3) plan years; and (viii) if the Oplink
Plan is funded, the most recent periodic accounting of the Oplink Plan assets.
(b) Each Oplink Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign or
domestic), including ERISA and the Code, that are applicable to such Oplink
Plans. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Oplink Plan activities) has been brought, or
to the Knowledge of Oplink is threatened, against or with respect to any such
Oplink Plan. There are no audits, inquiries
-17-
or proceedings pending or, to the Knowledge of Oplink, threatened by the
Internal Revenue Service (the "IRS") or Department of Labor (the "DOL") with
respect to any Oplink Plans. All contributions, reserves or premium payments
required to be made or accrued as of the date hereof to the Oplink Plans have
been timely made or accrued. Section 2.12(b) of the Oplink Disclosure Letter
includes a listing of the accrued vacation liability of Oplink as of February
22, 2002. Any Oplink Plan intended to be qualified under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code (i) has
either applied for or obtained a favorable determination, notification, advisory
and/or opinion letter, as applicable, as to its qualified status from the IRS or
still has a remaining period of time under applicable Treasury Regulations or
IRS pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination, and (ii) incorporates or has been
amended to incorporate all provisions required to comply with the Tax Reform Act
of 1986 and subsequent legislation, unless the Oplink Plan still has a remaining
period of time under applicable Treasury Regulations or IRS pronouncements in
which to conform to such legislation. Oplink does not have any plan or
commitment to establish any new Oplink Plan, to modify any Oplink Plan (except
to the extent required by law or to conform any such Oplink Plan to the
requirements of any applicable law, in each case as previously disclosed to
Avanex in writing, or as required by this Agreement), or to enter into any new
Oplink Plan. Each Oplink Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Avanex, Oplink or any of its Affiliates (other than ordinary
administration expenses or the issuance of Oplink Common Stock upon exercise of
previously granted Oplink Options).
(c) Neither Oplink, any of its subsidiaries, nor any of their
Affiliates has at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or Section 412 of
the Code and at no time has Oplink contributed to or been requested to
contribute to any "multiemployer plan," as such term is defined in Section
3(37)A of ERISA. Neither Oplink nor any Affiliate has at any time ever
maintained, established, sponsored, participated in or contributed to any
multiple employer plan, or to any plan described in Section 413 of the Code.
Neither Oplink, any of its subsidiaries, nor any officer or director of Oplink
or any of its subsidiaries is subject to any liability or penalty under Section
4975 through 4980B of the Code or Title I of ERISA. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 4975 of the Code or Section 408 of ERISA,
has occurred with respect to any Oplink Plan.
(d) Neither Oplink, any of its subsidiaries, nor any of their
Affiliates has, before the Effective Time and in any material respect, violated
any of the health continuation requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and as codified in Section 4980B of the
Code and Sections 601 through 608 of ERISA, the requirements of the Family
Medical Leave Act of 1993, as amended, the Health Insurance Portability and
Accountability Act of 1996, as amended, or any similar provisions of state law
applicable to Oplink employees. None of the Oplink Plans promises or provides
retiree medical or other retiree welfare benefits to any person except as
required by applicable law, and neither Oplink nor any of its subsidiaries has
represented, promised or contracted (whether in oral or written form) to provide
such retiree benefits to any employee, former employee, director, consultant or
other person, except to the extent required by
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statute. Except as specifically set forth in Section 2.12(d) of the Oplink
Disclosure Letter, no Oplink Plan provides health benefits that are not fully
insured through an insurance contract.
(e) Neither Oplink nor any of its subsidiaries is bound by or subject
to (and none of its respective assets or properties is bound by or subject to)
any arrangement with any labor union. No employee of Oplink or any of its
subsidiaries is represented by any labor union or covered by any collective
bargaining agreement and, to the Knowledge of Oplink, no campaign to establish
such representation is in progress. There is no pending or, to the Knowledge of
Oplink, threatened labor dispute involving Oplink or any of its subsidiaries and
any group of its employees nor has Oplink or any of its subsidiaries experienced
any labor interruptions over the past three (3) years, and Oplink and its
subsidiaries consider their relationships with their employees to be good.
Oplink (i) is in compliance in all respects with all applicable foreign,
federal, state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours, in
each case, with respect to its current or former employees; (ii) has withheld
and reported all amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to its current or
former employees; (iii) is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for its
current and former employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending, threatened or reasonably anticipated claims or actions against Oplink
under any worker's compensation policy or long-term disability policy.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or upon
the occurrence of any additional or subsequent events) (i) result in any payment
(including severance, unemployment compensation, golden parachute, forgiveness
of indebtedness, bonus or otherwise) becoming due to any stockholder, director
or employee of Oplink or any of its subsidiaries under any Oplink Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Oplink Plan, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits.
(g) No payment or benefit which will or may be made by Oplink or its
Affiliates with respect to any employee or any other "disqualified individual"
(as defined in Code Section 280G and the regulations thereunder) will be
characterized as a "parachute payment," within the meaning of Code Section
280G(B)(2). In the event that the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby (either alone or upon
the occurrence of any additional or subsequent events) results in any payment or
benefit which will be characterized as a "parachute payment," within the meaning
of Code Section 280G(B)(2), Section 2.12(g) of the Oplink Disclosure Letter
shall list all persons who Oplink reasonably believes are, with respect to
Oplink or any of its subsidiaries, "disqualified individuals" (within the
meaning of Section 280G of the Code and the regulations promulgated thereunder)
as determined as of the date hereof. Within a reasonable period of time after
the last business day of each month after the date hereof and on or about the
date which is five (5) business days prior to the expected date of the
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Closing, Oplink shall, as and to the extent necessary, deliver to Avanex a
revised Schedule 2.12(g) which sets forth any additional information which
Oplink reasonably believes would affect the determination of the persons who
are, with respect to Oplink or any of its subsidiaries, deemed to be
"disqualified individuals" (within the meaning of Section 280G of the Code and
the regulations promulgated thereunder) as of the date of each such revised
Schedule 2.12(g).
(h) Each Oplink Plan that has been adopted or maintained by Oplink or
its affiliates, whether informally or formally, for the benefit of employees
located outside the United States is specifically set forth in Section 2.12(h)
of the Oplink Disclosure Letter.
2.13 Absence of Liens and Encumbrances. Oplink and each of its subsidiaries
---------------------------------
has good and valid title to, or, in the case of leased properties, valid
leasehold interests in, all of its tangible properties and assets, real,
personal and mixed, used in its business, free and clear of any liens or
encumbrances except as reflected in the Oplink Financials and except for liens
for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which would not be material to Oplink.
2.14 Environmental Matters.
---------------------
(a) Hazardous Material. Except as reasonably would not be likely to
------------------
result in a material liability to Oplink (in any individual case or in the
aggregate), no underground storage tanks and no amount of any substance that has
been designated by any Governmental Entity or by applicable federal, state or
local law to be radioactive, toxic, hazardous or otherwise a danger to health or
the environment, including without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
(a "Hazardous Material"), are present, as a result of the actions of Oplink, or
its subsidiaries or any affiliate of Oplink, or, to the Knowledge of Oplink, as
a result of any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that Oplink or any of its subsidiaries has at any time owned,
operated, occupied or leased.
(b) Hazardous Materials Activities. Except as reasonably would not be
------------------------------
likely to result in a material liability to Oplink (in any individual case or in
the aggregate), (i) neither Oplink nor any of its subsidiaries has transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, and (ii) neither Oplink nor any of its subsidiaries has disposed
of, transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively,
"Hazardous Materials Activities") in violation of any law, rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect on or prior
to the Closing Date to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity or in a manner that would be likely to result in
material liability to Oplink.
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(c) Permits. Oplink and its subsidiaries currently hold all
-------
environmental approvals, permits, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of Oplink's and its
subsidiaries' Hazardous Material Activities and other businesses of Oplink and
its subsidiaries as such activities and businesses are currently being
conducted, except where the failure to hold such Environmental Permits could not
be reasonably expected to result in a material liability to Oplink.
(d) Environmental Liabilities. No action, proceeding, revocation
-------------------------
proceeding, amendment procedure, writ, injunction or claim is pending, or to
Oplink's Knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of Oplink or any of its
subsidiaries.
2.15 Agreements, Contracts and Commitments. The following agreements,
-------------------------------------
contracts or commitments with respect to which Oplink or one of its subsidiaries
is a party or is bound are referred to herein as the "Oplink Contracts":
(a) any employment or consulting agreement, contract or commitment
with any officer or director or higher level employee or member of Oplink's
Board of Directors, other than those that are terminable by Oplink or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to Oplink;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or license
of software products in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Oplink or any of its subsidiaries to engage
in any line of business or to compete with any person or granting any exclusive
distribution rights;
(e) any agreement, contract or commitment currently in force relating
to the disposition or acquisition by Oplink or any of its subsidiaries after the
date of this Agreement of assets in excess of $250,000 not in the ordinary
course of business or pursuant to which Oplink has any material ownership
interest in any corporation, partnership, joint venture or other business
enterprise other than Oplink's subsidiaries;
(f) any dealer, distributor, joint marketing, alliance, development or
other agreement currently in force under which Oplink or any of its subsidiaries
have continuing material obligations to jointly market any product, technology
or service, or any material agreement pursuant
-21-
to which Oplink or any of its subsidiaries have continuing material obligations
to jointly develop any intellectual property that will not be owned, in whole or
in part, by Oplink or any of its subsidiaries;
(g) any material agreement, contract or commitment currently in force
to license any third party to manufacture or reproduce any Oplink product,
service or technology or any material agreement, contract or commitment
currently in force to sell or distribute any Oplink products or service except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Avanex;
(h) any agreement, contract or commitment currently in force to
provide source code to any third party, including any escrow agent, for any
product or technology that is material to Oplink and its subsidiaries taken as a
whole;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit;
(j) any settlement agreement entered into within five (5) years prior
to the date of this Agreement; or
(k) any other agreement, contract or commitment (i) in connection with
or pursuant to which Oplink and its subsidiaries will spend or receive (or are
expected to spend or receive), in the aggregate, more than $250,000 during the
current fiscal year or during the next fiscal year, or (ii) that is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC rules).
Neither Oplink nor any of its subsidiaries, nor to Oplink's Knowledge any
other party to a Oplink Contract, is in material breach, violation or default
under, and neither Oplink nor any of its subsidiaries has received written
notice that it has breached, violated or defaulted under, any of the material
terms or conditions of any Oplink Contract in such a manner as would permit any
other party to cancel or terminate any such Oplink Contract, or would permit any
other party to seek material damages or other remedies (for any or all of such
breaches, violations or defaults, in the aggregate).
2.16 Oplink Properties. Neither Oplink nor any of its subsidiaries owns any
-----------------
real property. Oplink and each of its subsidiaries have good and defensible
title to, or in the case of leased properties and assets, valid leasehold
interests in, all of their material properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and payable
and such liens or other imperfections of title, if any, as do not materially
detract from the value of or materially interfere with the present use of the
property affected thereby; and all leases pursuant to which Oplink or any of its
subsidiaries lease from others material real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not, under any such leases, any existing material default or event of
default of Oplink or any of its subsidiaries or, to Oplink's Knowledge, any
other party (or any event which with notice or lapse of time, or both,
-22-
would constitute a material default and in respect of which Oplink or its
subsidiary has not taken steps to prevent such default from occurring). All the
plants, structures, facilities, properties, leased premises and equipment of
Oplink and its subsidiaries, except such as may be under construction as set
forth in Section 2.16. of the Oplink Disclosure Letter, are in good operating
condition and repair, in all material respects.
2.17 Statements; Joint Proxy Statement/Prospectus. None of the information
--------------------------------------------
supplied or to be supplied by Oplink for inclusion or incorporation by reference
in (i) the Registration Statement (as defined in Section 2.4(b)) will at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading and
(ii) the joint proxy statement/prospectus to be sent to the stockholders of
Oplink and stockholders of Avanex in connection with the meeting of Oplink's
stockholders to consider the approval and adoption of this Agreement and
approval of the Merger (the "Oplink Stockholders' Meeting") and in connection
with the meeting of Avanex's stockholders to consider the approval of the Share
Issuance pursuant to the terms of the Merger (the "Avanex Stockholders'
Meeting") (such proxy statement/prospectus as amended or supplemented is
referred to herein as the "Joint Proxy Statement/Prospectus") shall not, on the
date the Joint Proxy Statement/Prospectus is first mailed to Oplink's
stockholders and Avanex's stockholders, at the time of the Oplink Stockholders'
Meeting or the Avanex Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Oplink
Stockholders' Meeting or the Avanex Stockholders' Meeting which has become false
or misleading. The Joint Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. If at any time before the Effective Time, any event
relating to Oplink or any of its affiliates, officers or directors should be
discovered by Oplink which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement/Prospectus,
Oplink shall promptly inform Avanex. Notwithstanding the foregoing, Oplink makes
no representation or warranty with respect to any information supplied or to be
supplied by Avanex or Merger Sub that is, will be, or is required to be,
contained in any of the foregoing documents.
2.18 Board Approval. The Board of Directors of Oplink (i) has determined
--------------
that the Merger is advisable and fair to, and in the best interests of, Oplink
and its stockholders, (ii) has approved this Agreement, the Option Agreements,
the Merger and the other transactions contemplated by this Agreement and the
Option Agreements and has deemed this Agreement and the Option Agreements
advisable and (iii) has approved and determined to recommend the approval and
adoption of this Agreement and the approval of the Merger by the stockholders of
Oplink (collectively, the "Oplink Board Recommendation").
2.19 Opinion of Financial Advisors. The Board of Directors of Oplink has
-----------------------------
received an opinion from CSFB, dated the date of this Agreement, to the effect
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to Oplink's stockholders (other than Avanex,
-23-
if a stockholder), a signed copy of which opinion will be delivered to Avanex
solely for informational purposes as promptly as practicable after receipt
thereof by Oplink.
2.20 Vote Required. The affirmative vote of a majority of the votes that
-------------
holders of the outstanding shares of Oplink Common Stock are entitled to vote
with respect to the Merger is the only vote of the holders of any class or
series of Oplink's capital stock necessary to approve and adopt this Agreement
and approve the transactions contemplated hereby.
2.21 State Takeover Statutes. The Board of Directors of Oplink has approved
-----------------------
this Agreement, the Oplink Voting Agreements, the Oplink Option Agreement and
the Merger and the other transactions contemplated hereby and thereby, and such
approval is sufficient to render inapplicable to the Merger, and the other
transactions contemplated hereby and thereby, the restrictions contained in
Section 203 of the Delaware Law to the extent, if any, such restrictions would
otherwise be applicable to the Merger, this Agreement, the Oplink Voting
Agreements, the Oplink Option Agreement and the other transactions contemplated
by this Agreement, the Oplink Voting Agreements and the Oplink Option Agreement.
No other state takeover statute or similar statute or regulation applies to or
purports to apply to the Merger, this Agreement, the Oplink Voting Agreements,
the Oplink Option Agreement or the transactions contemplated hereby and thereby.
2.22 Oplink Rights Agreement. None of Avanex or any of its affiliates shall
-----------------------
become an "Acquiring Person" and no "Distribution Date" or "Shares Acquisition
Date" (as such terms are defined in the Oplink Rights Agreement) will occur
under the terms of the Rights Agreement entered into as of the date hereof
between Oplink and The Bank of New York, as rights agent, (the "Oplink Rights
Agreement") as a result of the approval, execution or delivery of this
Agreement, the Oplink Option Agreement, the Oplink Voting Agreements or the
consummation of the transactions contemplated hereby and thereby.
2.23 Repatriation of Dividends and Other Distributions. All dividends and
-------------------------------------------------
other distributions declared and payable on the equity or other interests in
each of the PRC Subsidiaries may, under the laws and regulations of the PRC as
presently enacted or promulgated, be paid to Oplink and may be converted into
foreign currency that may be freely transferred out of the PRC, and all such
dividends and distributions will not be subject to withholding or other taxes
under the laws and regulations of the PRC as presently enacted or promulgated
and are otherwise free and clear of any other tax, withholding or deduction in
the PRC.
2.24 PRC Taxes. No stamp or other issuance or transfer taxes or duties and
---------
no capital gains, income, withholding or other taxes are payable by or on behalf
of Avanex to the PRC or any political subdivision or taxing authority thereof or
therein in connection with the execution, delivery and performance of this
Agreement.
2.25 Foreign Corrupt Practices Act. To Oplink's Knowledge, and to the
-----------------------------
actual knowledge of the executive officers of each of the PRC Subsidiaries,
neither Oplink nor any of its subsidiaries, nor any officer, director, employee
or agent thereof or any stockholder thereof acting on behalf of Oplink or any of
its subsidiaries, has done any act or authorized, directed or participated in
any act,
-24-
in violation of any provision of the United States Foreign Corrupt Practices Act
of 1977, as amended, applied to such entity or person.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
AVANEX AND MERGER SUB
Avanex and Merger Sub represent and warrant to Oplink, subject to such
exceptions as are disclosed in writing in the disclosure letter supplied by
Avanex to Oplink, dated as of the date hereof and certified by a duly authorized
officer of Avanex (the "Avanex Disclosure Letter"), which disclosure shall
provide an exception to or otherwise qualify the representations and warranties
of Avanex and Merger Sub contained in the section of this Agreement
corresponding by number to such disclosure and the other representations and
warranties herein to the extent such disclosure is readily apparent on its face
to be applicable to such other representations or warranties, as follows:
3.1 Organization of Avanex.
----------------------
(a) Avanex and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the failure to be so qualified, individually or in the aggregate, would
have a Material Adverse Effect (as defined in Section 8.3) on Avanex.
(b) Avanex has delivered to Oplink a true and complete list of all of
Avanex's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and Avanex's equity interest therein.
(c) Avanex has delivered or made available to Oplink a true and
correct copy of the Certificate of Incorporation and Bylaws of Avanex and
similar governing instruments of each of its material subsidiaries, each as
amended to date, and each such instrument is in full force and effect. Neither
Avanex nor any of its subsidiaries is in violation of any of the provisions of
its Certificate of Incorporation or Bylaws or equivalent governing instruments.
3.2 Avanex Capital Structure. The authorized capital stock of Avanex
------------------------
consists of (i) 300,000,000 shares of Avanex Common Stock, par value $0.001 per
share, and (ii) 10,000,000 shares of Preferred Stock, par value $0.001 per
share. As of the close of business on March 15, 2002, 69,467,362 shares of
Avanex Common Stock were issued and outstanding. As of the date hereof, no
shares of Avanex Preferred Stock were issued or outstanding. As of March 15,
2002, Avanex had reserved an aggregate of 37,164,909 shares of Avanex Common
Stock for issuance pursuant to Avanex's 1998 Stock Plan, 1999 Director Option
Plan, Holographix Inc. 1996 Stock Option Plan, Holographix Inc. 2000 Stock
Option Plan and LambdaFlex, Inc. 2000 Stock Plan (the
-25-
"Avanex Stock Option Plans"), under which options to purchase 13,846,472 shares
were outstanding, and 1,651,623 shares of Avanex Common Stock were available for
issuance pursuant to the Avanex 1999 Employee Stock Purchase Plan. Except as set
forth in the immediately preceding sentence, no shares of capital stock or other
equity securities of Avanex are issued, reserved for issuance or outstanding
except as set forth in the Avanex Financials and except for rights issuable
pursuant to the Avanex Rights Agreement (as defined in Section 3.22) or any
other right issued in substitution thereof (the "Avanex Rights"). Under the
Avanex Rights Agreement, until the distribution date, (i) the Avanex Rights will
be evidenced by the certificates for Avanex Common Stock registered in the names
of the holders of thereof (which certificates shall also be deemed to be
certificates for Avanex Rights (the "Avanex Rights Certificates") and not by
separate Avanex Rights Certificates and (ii) the right to receive Avanex Rights
Certificates will be transferable only in connection with the transfer of Avanex
Common Stock. All of the outstanding shares of Avanex's capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. All
shares of Avanex Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable.
Section 3.2 of the Avanex Disclosure Letter sets forth for each outstanding
option to purchase shares of Avanex Common Stock (each an "Avanex Option") as of
the date hereof, (i) the name and location of the holder of such Avanex Option,
(ii) the Avanex Stock Option Plan pursuant to which such option was issued,
(iii) the number of shares of Avanex Common Stock issuable upon the exercise of
such Avanex Option, (v) the exercise price of such Avanex Option, (vi) the date
on which such Avanex Option was granted, (vii) the applicable vesting schedule
for such Avanex Option, and (viii) the date on which such Avanex Option expires.
3.3 Obligations With Respect to Capital Stock. As of the date hereof,
-----------------------------------------
except as set forth in Section 3.2, there are no equity securities, partnership
interests or similar ownership interests of any class of Avanex, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests issued,
reserved for issuance or outstanding. As of the date hereof, except for
securities Avanex owns, directly or indirectly through one or more subsidiaries,
there are no equity securities, partnership interests or similar ownership
interests of any class of any subsidiary of Avanex, or any security exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests issued, reserved for issuance or
outstanding. As of the date hereof, except as set forth in Section 3.2, and
other than the rights to purchase shares of Avanex Company Stock pursuant to
offer letters for prospective employees of Avanex in the ordinary course of
business and consistent with past practice set forth in Section 3.3 of the
Avanex Disclosure Letter, there are no options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Avanex
or any of its subsidiaries is a party or by which it is bound obligating Avanex
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock of Avanex
or any of its subsidiaries or obligating Avanex or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, partnership interest or similar
-26-
ownership interest, call, right, commitment or agreement. Except for the Avanex
Voting Agreements and Avanex Stock Option Agreement, there are no registration
rights and, to the Knowledge of Avanex there are no voting trusts, proxies or
other agreements or understandings with respect to the registration or voting of
any equity security of any class of Avanex or with respect to the registration
or voting of any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
3.4 Authority.
---------
(a) Avanex has all requisite corporate power and authority to enter
into this Agreement and the Option Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Option Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Avanex, subject only to the approval of the Share Issuance by
Avanex's stockholders and the filing and recordation of the Certificate of
Merger pursuant to Delaware Law. This Agreement and the Option Agreements have
been duly executed and delivered by Avanex and, assuming the due authorization,
execution and delivery by Oplink and Merger Sub, constitute the valid and
binding obligations of Avanex, enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement and
the Option Agreements by Avanex do not, and the performance of this Agreement
and the Option Agreements by Avanex will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Avanex or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to obtaining
the approval of the Share Issuance by Avanex's stockholders as contemplated in
Section 5.2 (the "Avanex Stockholder Approval") and compliance with the
requirements set forth in Section 3.4(b) below, conflict with or violate any
Legal Requirement 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 rights or
alter the rights or obligations of Avanex or 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,
including any leased real property, or assets of Avanex or any of its
subsidiaries pursuant to, any Avanex Contract (as defined in Section 3.15). The
Avanex Disclosure Letter lists all consents, waivers and approvals under any of
Avanex's or any of its subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby, which, if not obtained, would have a Material Adverse
Effect on Avanex or the Surviving Corporation or have a material adverse effect
on the ability of the parties to consummate the Merger.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Avanex in connection with the execution and delivery of this
Agreement and the Option Agreements or the consummation of the transactions
contemplated hereby and thereby, except for (i) the Necessary Consents and (ii)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made,
-27-
would not be material to Avanex or Oplink or have a material adverse effect on
the ability of the parties to consummate the Merger.
3.5 SEC Filings; Avanex Financial Statements.
----------------------------------------
(a) Avanex has filed all forms, reports and documents required to be
filed by Avanex with the SEC since February 4, 2000, and has made available to
Oplink such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Avanex may file
subsequent to the date hereof) are referred to herein as the "Avanex SEC
Reports." As of their respective dates, the Avanex SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Avanex SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing before the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Avanex's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Avanex SEC Reports (the
"Avanex Financials"), including any Avanex SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of Avanex and its subsidiaries at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not, or
are not expected to be, material in amount. The balance sheet of Avanex
contained in the Avanex SEC Reports as of December 31, 2001 is hereinafter
referred to as the "Avanex Balance Sheet." Except as disclosed in the Avanex
Financials, neither Avanex nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Avanex and its subsidiaries taken as a whole, except liabilities
incurred since the date of the Avanex Balance Sheet in the ordinary course of
business consistent with past practices.
(c) Avanex has heretofore furnished to Oplink a complete and correct
copy of any amendments or modifications that have not yet been filed with the
SEC but that are required to be filed, to agreements, documents or other
instruments that previously had been filed by Avanex with the SEC pursuant to
the Securities Act or the Exchange Act.
3.6 Absence of Certain Changes or Events. Since the date of the Avanex
------------------------------------
Balance Sheet, there has not been: (i) any Material Adverse Effect on Avanex,
(ii) any change by Avanex in its
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accounting methods, principles or practices, except as required by concurrent
changes in GAAP or the rules and regulations promulgated by the SEC, (iii) any
revaluation by Avanex of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable other than in the ordinary course of business, or (iv) any split,
combination or reclassification of any of Avanex's or any of its subsidiaries'
capital stock.
3.7 Taxes.
-----
(a) Avanex and each of its subsidiaries have timely filed all material
Returns relating to Taxes required to be filed by Avanex and each of its
subsidiaries with any Tax authority. Such Returns are true and correct in all
material respects and have been completed in accordance with applicable law.
Avanex and each of its subsidiaries have paid all Taxes shown to be due on such
Returns.
(b) Avanex and each of its subsidiaries as of the Effective Time will
have withheld with respect to its employees (and timely paid over to the
appropriate Taxing authority) all federal and state income taxes, Taxes pursuant
to the FICA and FUTA, and other Taxes required to be withheld, except such Taxes
that are not material to Avanex.
(c) Neither Avanex nor any of its subsidiaries has been delinquent in
the payment of any material Tax nor is there any material Tax deficiency or
adjustment outstanding, proposed or assessed against Avanex or any of its
subsidiaries, nor has Avanex or any of its subsidiaries executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any material Tax.
(d) No audit or other examination of any material Return of Avanex or
any of its subsidiaries by any Tax authority is presently in progress, nor has
Avanex or any of its subsidiaries been notified in writing of any request for
such an audit or other examination.
(e) Neither Avanex nor any of its subsidiaries had, as of December 31,
2001, any liability for any material unpaid Taxes that has not been accrued for
or reserved against on the Avanex Balance Sheet in accordance with GAAP, whether
asserted or unasserted, contingent or otherwise. Since December 31, 2001,
neither Avanex nor any of its subsidiaries has incurred any liability for any
material Taxes other than in the ordinary course of business.
(f) There is no contract, agreement, plan or arrangement to which
Avanex or any of its subsidiaries is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of Avanex or any of its subsidiaries that,
individually or collectively, would reasonably be expected to give rise to the
payment of any amount in excess of $250,000 that would not be deductible
pursuant to Sections 404 or 162(m) of the Code. There is no contract, agreement,
plan or arrangement to which Avanex is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of the
Code.
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(g) Neither Avanex nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Avanex or any of its subsidiaries.
(h) Neither Avanex nor any of its subsidiaries (a) is party to or has
any obligation under any Tax sharing, indemnity or allocation agreement or
arrangement (b) has ever been a member of an affiliated group (within the
meaning of Code ss.1504(a)) filing a consolidated federal income Tax Return
(other than a group the common parent of which was Avanex) or (c) has any
liability for the Taxes of any person (other than Avanex or any of its
subsidiaries) under Treas. Reg. ss. 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise.
(i) Neither Avanex nor any of its subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" in a distribution of
stock intended to qualify for tax-free treatment under Section 355 of the Code
(x) in the two years prior to the date of this Agreement or (y) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
3.8 Avanex Intellectual Property. For the purposes of this Agreement, the
----------------------------
following terms have the following definitions:
"Avanex Intellectual Property" shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Avanex or any of its subsidiaries.
"Avanex Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Avanex or any of its
subsidiaries.
(a) Except with respect to Avanex Registered Intellectual Property
that Avanex intentionally abandoned and/or is no longer used by or intended to
be used by Avanex, Section 3.8(a) of the Avanex Disclosure Letter lists all
Registered Intellectual Property owned by, filed in the name of, or applied for
by Avanex or any of its subsidiaries, and lists any proceedings or actions
before any court, tribunal (including the United States Patent and Trademark
Office or equivalent authority anywhere in the world) related to Avanex
Registered Intellectual Property.
(b) To the Knowledge of Avanex, no Avanex Intellectual Property or
product or service of Avanex or any of its subsidiaries is subject to any
proceeding or outstanding decree, order, judgment, contract, license, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by Avanex or any of its subsidiaries in a manner that would reasonably be
expected to have a Material Adverse Effect, or that may affect the validity, use
or enforceability of such Avanex Intellectual Property in a manner that would
reasonably be expected to have a Material Adverse Effect.
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(c) Except with respect to Avanex Registered Intellectual Property
that Avanex intentionally abandoned and/or is no longer used by or intended to
be used by Avanex as set forth in Section 3.8(c) of the Avanex Disclosure
Letter, each material item of Avanex Registered Intellectual Property is valid
and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Avanex Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Avanex Registered Intellectual Property have been filed
with the relevant Patent, Copyright, Trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Avanex Registered Intellectual Property. Except as set forth in
Section 3.8(a) of the Avanex Disclosure Letter, there are no actions that must
be taken by Avanex within ninety (90) days of the Closing Date, including the
payment of any registration, renewal or maintenance fees or the filing of any
responses to PTO office actions, documents, applications or certificates for the
purpose of obtaining, maintaining, perfecting, preserving or renewing any Avanex
Registered Intellectual Property Rights.
(d) Other than inbound "shrink-wrap" and similar publicly available
commercial binary code end-user licenses, Section 3.8(d) of the Avanex
Disclosure Letter lists all material contracts, licenses and agreements to which
Avanex and any of its subsidiaries is a party (i) with respect to any Avanex
Intellectual Property licensed or transferred to any third party, or placed into
escrow with any third party; or (ii) pursuant to which a third party has
licensed or transferred any material Intellectual Property to Avanex or any of
its subsidiaries.
(e) Avanex owns and has good and exclusive title to, or has licensed
(sufficient for the conduct of its business as currently conducted and as
presently proposed to be conducted), each material item of Avanex Intellectual
Property or other Intellectual Property used by Avanex free and clear of any
lien or encumbrance (excluding licenses and related restrictions and any lien
for current taxes not yet due and payable; provided, however, that claims of
infringement or misappropriation of Avanex Intellectual Property shall not be
deemed liens or encumbrances for the purpose of this Section 3.8(e)); and Avanex
is the owner of all Trademarks listed in Section 3.8(a) of the Avanex Disclosure
Letter used in connection with the operation or conduct of the business of
Avanex and its subsidiaries, including the sale of any products or the provision
of any services by Avanex and its subsidiaries.
(f) Avanex owns exclusively, and has good title to, all copyrighted
works that are Avanex products or that Avanex or any of its subsidiaries
otherwise expressly purports to own, including and documentation related to such
products.
(g) To the extent that any material Avanex Intellectual Property has
been developed or created by a third party for Avanex or any of its
subsidiaries, Avanex has a written agreement with such third party with respect
thereto and pursuant to which Avanex either (i) has obtained ownership of, and
is the exclusive owner of all of that third party's rights in such Intellectual
Property, or (ii) has obtained a license (sufficient for the conduct of its
business as currently conducted and as proposed to be conducted) to all such
third party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment.
-31-
(h) Neither Avanex nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Avanex Intellectual Property owned by Avanex or
any of its subsidiaries, to any third party or has permitted rights in material
Avanex Intellectual Property owned by Avanex to lapse or enter the public domain
(except to the extent that Avanex intentionally permitted such rights to lapse
or become public and/or is no longer used by or intended to be used by Avanex or
its subsidiaries).
(i) To the Knowledge of Avanex, all material contracts, licenses and
agreements relating to Avanex Intellectual Property are in full force and effect
("Avanex Material IP Agreements"). Except as set forth in Section 3.8(i) of the
Avanex Disclosure Letter, to the Knowledge of Avanex, the consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension of such Avanex
Material IP Agreements, nor will the consummation of the transactions
contemplated by this Agreement result in the release from any escrow of any
Avanex Intellectual Property. Avanex and each of its subsidiaries is in material
compliance with, and has not materially breached any term of any such Avanex
Material IP Agreements and, to the Knowledge of Avanex, all other parties to
such Avanex Material IP Agreements are in compliance with, and have not
materially breached any term of, such Avanex Material IP Agreements. To the
Knowledge of Avanex, no event has occurred, and no circumstance or condition
exists that has resulted in, or could reasonably be expected to result in, the
release from any escrow of any Avanex Intellectual Property that is owned by
Avanex or its subsidiaries. Following the Closing Date, the Surviving
Corporation will be permitted to exercise all of Avanex's and each of its
subsidiaries' rights under such Avanex Material IP Agreements (i) to the same
extent Avanex and its subsidiaries would have been able to had the transactions
contemplated by this Agreement not occurred, and (ii) without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Avanex or its subsidiaries would otherwise be required to pay.
Under the terms of the Avanex Contracts and other obligations of Avanex, neither
this Agreement nor the transactions contemplated by this Agreement will result
in (x) any of Avanex or its subsidiaries, including Merger Sub, granting to any
third party any right to or with respect to any material Intellectual Property
right owned by, or licensed to, either of them, (y) any of Avanex or its
subsidiaries, including Merger Sub, being bound by, or subject to, any
non-compete or other material restriction on the operation or scope of their
respective businesses, or (z) any of Avanex or its subsidiaries, including
Merger Sub, being obligated to pay any royalties or other material amounts to
any third party in excess of those payable by Avanex or any of its subsidiaries,
including Merger Sub, respectively, before the Closing.
(j) To the Knowledge of Avanex, the products, services and the
operation of the business of Avanex and its subsidiaries as such business
currently is conducted, including Avanex's and its subsidiaries' design,
development, manufacture, marketing and sale of the products or services of
Avanex and its subsidiaries (including products currently under development) has
not and does not infringe or misappropriate the Intellectual Property of any
third party or, to the Knowledge of Avanex, constitute unfair competition or
trade practices under the laws of any jurisdiction.
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(k) Except as set forth in Section 3.8(k) of the Avanex Disclosure
Letter, neither Avanex nor any of its subsidiaries has received notice from any
third party that the operation of the business of Avanex or any of its
subsidiaries or any act, product or service of Avanex or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction in a manner that would reasonably be expected to have a
Material Adverse Effect.
(l) Avanex and each of its subsidiaries has taken reasonable steps to
protect Avanex's and its subsidiaries' rights in Avanex's and its subsidiaries'
confidential information and trade secrets (except to the extent intentionally
not protected because such confidential information or trade secrets are no
longer used by or intended to be used by Avanex or its subsidiaries) or any
trade secrets or confidential information of third parties provided to Avanex or
any of its subsidiaries (to the extent subject to confidentiality restrictions).
Without limiting the foregoing, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect, each of Avanex and its
subsidiaries (x) has and enforces a policy requiring each employee to execute a
proprietary information/confidentiality and invention assignment agreement
substantially in the forms provided to Oplink and all current and former
employees of Avanex and any of its subsidiaries have executed such an agreement;
and (y) has and enforces a policy requiring each contractor or third party that
receives Avanex's or its subsidiaries' confidential information and/or trade
secrets from Avanex or its subsidiaries, to execute a proprietary
information/confidentiality agreement substantially in the forms provided to
Oplink and all current and former contractors and third parties that have
received Avanex's or its subsidiaries' confidential information and/or trade
secrets have executed such an agreement. All Intellectual Property used in or
necessary to the conduct of Avanex's and each of its subsidiaries' businesses as
presently conducted or currently contemplated to be conducted by Avanex and its
subsidiaries, was written and created solely by either (i) employees of Avanex
or its subsidiaries acting within the scope of their employment and is owned by
Avanex, or (ii) by third parties who have either validly and irrevocably
assigned all of their rights, including applicable Intellectual Property rights
therein, to Avanex or its subsidiaries, or granted Avanex a license to all such
rights, including applicable Intellectual Property rights therein, sufficient
for the conduct of Avanex's business as currently conducted and as presently
proposed to be conducted except where the failure to assign or grant such rights
would not reasonably be expected to have a Material Adverse Effect, and no third
party owns or, and has any rights to any of Avanex Intellectual Property except
where it would not reasonably be expected to have a Material Adverse Effect.
3.9 Compliance; Permits; Restrictions.
---------------------------------
(a) Neither Avanex nor any of its subsidiaries nor the conduct of
their respective businesses is, in any material respect, in conflict with, or in
default or violation of, (i) any Legal Requirement applicable to Avanex or any
of its subsidiaries or by which its or any of their respective businesses or
properties is bound or affected, or (ii) 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
businesses or properties is bound or affected. No investigation or review by
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any Governmental Entity is pending or, to the Knowledge of Avanex, threatened
against Avanex or its subsidiaries, nor has any Governmental Entity indicated to
Avanex an intention to conduct the same. There is no agreement, judgment,
injunction, order or decree binding upon Avanex or any of its subsidiaries which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Avanex or any of its subsidiaries,
any acquisition of material property by Avanex or any of its subsidiaries or the
conduct of business by Avanex as currently conducted or presently proposed to be
conducted.
(b) Avanex and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities that are material
to the operation of the business of Avanex, including, without limitation such
permits, licenses, approvals, consents and other authorizations issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
(collectively, the "Avanex Permits"). Avanex and its subsidiaries are in
compliance in all material respects with the terms of the Avanex Permits.
3.10 Litigation. There is no suit, action, judgment, proceeding, claim,
----------
arbitration or investigation (each an "Action") pending or, to the Knowledge of
Avanex, threatened, against or affecting Avanex or any subsidiary of Avanex or
any property or asset of Avanex or any subsidiary of Avanex which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on Avanex, or which in any manner seeks to prevent, enjoin, alter or
delay any of the transactions contemplated by this Agreement.
3.11 Brokers' and Finders' Fees. Except for fees payable to UBS Warburg,
--------------------------
LLC pursuant to an engagement letter dated January 8, 2002, Avanex has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
3.12 Employee Benefit Plans.
----------------------
(a) The employee compensation, severance, termination pay, deferred
compensation, stock or stock-related awards, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document and including, without limitation, all "employee benefit
plans" within the meaning of Section 3(3) of ERISA) covering any active
employee, former employee, director or consultant of Avanex, any subsidiary of
Avanex or any trade or business (whether or not incorporated) that is an
Affiliate, or with respect to which Avanex has or may in the future have
liability, are referred to herein as the "Avanex Plans." Avanex Disclosure
Letter 3.12(a) contains a complete and accurate list of each of the Avanex
Plans. Avanex has provided to Oplink: (i) correct and complete copies of all
documents embodying each Avanex Plan including (without limitation) all
amendments thereto, all related trust documents, and all material written
agreements and contracts relating to each such Avanex Plan; (ii) the three (3)
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Avanex Plan; (iii) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Avanex Plan; (iv) all IRS
determination, opinion, notification and advisory letters relating to any Avanex
Plan; (v) all material
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correspondence to or from any governmental agency relating to any Avanex Plan;
(vi) all COBRA forms and related notices; (vii) all discrimination tests for
each Avanex Plan, if applicable, for the most recent three (3) plan years; and
(viii) if the Avanex Plan is funded, the most recent periodic accounting of the
Avanex Plan assets.
(b) Each Avanex Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign or
domestic), including ERISA and the Code, that are applicable to such Avanex
Plans. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Avanex Plan activities) has been brought, or
to the Knowledge of Avanex is threatened, against or with respect to any such
Avanex Plan. There are no audits, inquiries or proceedings pending or, to the
Knowledge of Avanex, threatened by the IRS or the DOL with respect to any Avanex
Plans. All contributions, reserves or premium payments required to be made or
accrued as of the date hereof to the Avanex Plans have been timely made or
accrued. Section 3.12(b) of the Avanex Disclosure Letter includes a listing of
the accrued vacation liability of Avanex as of February 22, 2002. Any Avanex
Plan intended to be qualified under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code (i) has either applied for
or obtained a favorable determination, notification, advisory and/or opinion
letter, as applicable, as to its qualified status from the IRS or still has a
remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination, and (ii) incorporates or has been
amended to incorporate all provisions required to comply with the Tax Reform Act
of 1986 and subsequent legislation, unless the Avanex Plan still has a remaining
period of time under applicable Treasury Regulations or IRS pronouncements in
which to conform to such legislation. Avanex does not have any plan or
commitment to establish any new Avanex Plan, to modify any Avanex Plan (except
to the extent required by law or to conform any such Avanex Plan to the
requirements of any applicable law, in each case as previously disclosed to
Oplink in writing, or as required by this Agreement), or to enter into any new
Avanex Plan. Each Avanex Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Oplink, Avanex or any of its Affiliates (other than ordinary
administration expenses or the issuance of Avanex Common Stock upon exercise of
previously granted Avanex Options).
(c) Neither Avanex, any of its subsidiaries, nor any of their
Affiliates has at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or Section 412 of
the Code and at no time has Avanex contributed to or been requested to
contribute to any "multiemployer plan," as such term is defined in Section
3(37)(A) of ERISA. Neither Avanex nor any Affiliate has at any time ever
maintained, established, sponsored, participated in or contributed to any
multiple employer plan, or to any plan described in Section 413 of the Code.
Neither Avanex, any of its subsidiaries, nor any officer or director of Avanex
or any of its subsidiaries is subject to any liability or penalty under Section
4975 through 4980B of the Code or Title I of ERISA. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 4975 of the Code or Section 408 of ERISA,
has occurred with respect to any Avanex Plan.
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(d) Neither Avanex, any of its subsidiaries, nor any of their
Affiliates has, before the Effective Time and in any material respect, violated
any of the health continuation requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and as codified in Section 4980B of the
Code and Sections 601 through 608 of ERISA, the requirements of the Family
Medical Leave Act of 1993, as amended, the Health Insurance Portability and
Accountability Act of 1996, as amended, or any similar provisions of state law
applicable to Avanex employees. None of the Avanex Plans promises or provides
retiree medical or other retiree welfare benefits to any person except as
required by applicable law, and neither Avanex nor any of its subsidiaries has
represented, promised or contracted (whether in oral or written form) to provide
such retiree benefits to any employee, former employee, director, consultant or
other person, except to the extent required by statute. Except as specifically
set forth in Section 3.12(d) of the Avanex Disclosure Letter, no Avanex Plan
provides health benefits that are not fully insured through an insurance
contract.
(e) Neither Avanex nor any of its subsidiaries is bound by or subject
to (and none of its respective assets or properties is bound by or subject to)
any arrangement with any labor union. No employee of Avanex or any of its
subsidiaries is represented by any labor union or covered by any collective
bargaining agreement and, to the Knowledge of Avanex, no campaign to establish
such representation is in progress. There is no pending or, to the Knowledge of
Avanex, threatened labor dispute involving Avanex or any of its subsidiaries and
any group of its employees nor has Avanex or any of its subsidiaries experienced
any labor interruptions over the past three (3) years, and Avanex and its
subsidiaries consider their relationships with their employees to be good.
Avanex (i) is in compliance in all respects with all applicable foreign,
federal, state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours, in
each case, with respect to its current or former employees; (ii) has withheld
and reported all amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to its current or
former employees; (iii) is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for its
current and former employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending, threatened or reasonably anticipated claims or actions against Avanex
under any worker's compensation policy or long-term disability policy.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or upon
the occurrence of any additional or subsequent events) (i) result in any payment
(including severance, unemployment compensation, golden parachute, forgiveness
of indebtedness, bonus or otherwise) becoming due to any stockholder, director
or employee of Avanex or any of its subsidiaries under any Avanex Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Avanex Plan, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits.
(g) No payment or benefit which will or may be made by Avanex or its
Affiliates with respect to any employee or any other "disqualified individual"
(as defined in Code
-36-
Section 280G and the regulations thereunder) will be characterized as a
"parachute payment," within the meaning of Code Section 280G(B)(2). In the event
that the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby (either alone or upon the occurrence of any
additional or subsequent events) results in any payment or benefit which will be
characterized as a "parachute payment," within the meaning of Code Section
280G(B)(2), Section 3.12(g) of the Avanex Disclosure Letter shall list all
persons who Avanex reasonably believes are, with respect to Avanex or any of its
subsidiaries, "disqualified individuals" (within the meaning of Section 280G of
the Code and the regulations promulgated thereunder) as determined as of the
date hereof. Within a reasonable period of time after the last business day of
each month after the date hereof and on or about the date which is five (5)
business days prior to the expected date of the Closing, Avanex shall, as and to
the extent necessary, deliver to Oplink a revised Schedule 3.12(g) which sets
forth any additional information which Oplink reasonably believes would affect
the determination of the persons who are, with respect to Avanex or any of its
subsidiaries, deemed to be "disqualified individuals" (within the meaning of
Section 280G of the Code and the regulations promulgated thereunder) as of the
date of each such revised Schedule 3.12(g).
(h) Each Avanex Plan that has been adopted or maintained by Avanex or
its affiliates, whether informally or formally, for the benefit of employees
located outside the United States is specifically set forth in Section 3.12(h)
of the Avanex Disclosure Letter.
3.13 Absence of Liens and Encumbrances. Avanex and each of its subsidiaries
---------------------------------
has good and valid title to, or, in the case of leased properties, valid
leasehold interests in, all of its tangible properties and assets, real,
personal and mixed, used in its business, free and clear of any liens or
encumbrances except as reflected in the Avanex Financials and except for liens
for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which would not be material to Avanex.
3.14 Environmental Matters.
---------------------
(a) Hazardous Material. Except as reasonably would not be likely to
------------------
result in a material liability to Avanex (in any individual case or in the
aggregate), no underground storage tanks and no Hazardous Materials are present
as a result of the actions of Avanex, of its subsidiaries or any affiliate of
Avanex, or to the Knowledge of Avanex, as a result of any actions of any third
party, or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Avanex or any of its
subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as reasonably would not be
------------------------------
likely to result in a material liability to Avanex (in any individual case or in
the aggregate), (i) neither Avanex nor any of its subsidiaries has transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, and (ii) neither Avanex nor any of its subsidiaries has engaged in
Hazardous Materials Activities in violation of any law, rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect on or prior to the
Closing Date to prohibit, regulate or control
-37-
Hazardous Materials or any Hazardous Material Activity or in a manner that would
be likely to result in material liability to Avanex.
(c) Permits. Avanex and its subsidiaries currently hold all
-------
Environmental Permits necessary for the conduct of Avanex's and its
subsidiaries' Hazardous Material Activities and other businesses of Avanex and
its subsidiaries as such activities and businesses are currently being
conducted, except where the failure to hold such Environmental Permits could not
be reasonably expected to result in a material liability to Avanex.
(d) Environmental Liabilities. No action, proceeding, revocation
-------------------------
proceeding, amendment procedure, writ, injunction or claim is pending, or to
Avanex's Knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of Avanex or any of its
subsidiaries.
3.15 Agreements, Contracts and Commitments. The following agreements,
-------------------------------------
contracts or commitments with respect to which Avanex or one of its subsidiaries
is a party or is bound are referred to herein as the "Avanex Contracts":
(a) any employment or consulting agreement, contract or commitment
with any officer or director or higher level employee or member of Avanex's
Board of Directors, other than those that are terminable by Avanex or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to Avanex;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or license
of software products in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Avanex or any of its subsidiaries to engage
in any line of business or to compete with any person or granting any exclusive
distribution rights;
(e) any agreement, contract or commitment currently in force relating
to the disposition or acquisition by Avanex or any of its subsidiaries after the
date of this Agreement of assets in excess of $250,000 not in the ordinary
course of business or pursuant to which Avanex has any material ownership
interest in any corporation, partnership, joint venture or other business
enterprise other than Avanex's subsidiaries;
(f) any dealer, distributor, joint marketing, alliance, development or
other agreement currently in force under which Avanex or any of its subsidiaries
have continuing material
-38-
obligations to jointly market any product, technology or service, or any
material agreement pursuant to which Avanex or any of its subsidiaries have
continuing material obligations to jointly develop any intellectual property
that will not be owned, in whole or in part, by Avanex or any of its
subsidiaries; .
(g) any material agreement, contract or commitment currently in force
to license any third party to manufacture or reproduce any Avanex product,
service or technology or any material agreement, contract or commitment
currently in force to sell or distribute any Avanex products or service, except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Oplink;
(h) any agreement, contract or commitment currently in force to
provide source code to any third party, including any escrow agent, for any
product or technology that is material to Avanex and its subsidiaries taken as a
whole;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit;
(j) any settlement agreement entered into within five (5) years prior
to the date of this Agreement; or
(k) any other agreement, contract or commitment (i) in connection with
or pursuant to which Avanex and its subsidiaries will spend or receive (or are
expected to spend or receive), in the aggregate, more than $250,000 during the
current fiscal year or during the next fiscal year, or (ii) that is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC rules).
Neither Avanex nor any of its subsidiaries, nor to Avanex's Knowledge any
other party to a Avanex Contract is in material breach, violation or default
under, and neither Avanex nor any of its subsidiaries has received written
notice that it has breached, violated or defaulted under, any of the material
terms or conditions of any Avanex Contract in such a manner as would permit any
other party to cancel or terminate any such Avanex Contract, or would permit any
other party to seek material damages or other remedies (for any or all of such
breaches, violations or defaults, in the aggregate).
3.16 Avanex Properties. Neither Avanex nor any of its subsidiaries owns any
-----------------
real property. Avanex and each of its subsidiaries have good and defensible
title to, or in the case of leased properties and assets, valid leasehold
interests in, all of their material properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and payable
and such liens or other imperfections of title, if any, as do not materially
detract from the value of or materially interfere with the present use of the
property affected thereby; and all leases pursuant to which Avanex or any of its
subsidiaries lease from others material real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not, under
-39-
any such leases, any existing material default or event of default of Avanex or
any of its subsidiaries or, to Avanex's Knowledge, any other party (or any event
which with notice or lapse of time, or both, would constitute a material default
and in respect of which Avanex or its subsidiary has not taken steps to prevent
such default from occurring). All the plants, structures, facilities,
properties, leased premises and equipment of Avanex and its subsidiaries, except
such as may be under construction as set forth in Section 3.16. of the Avanex
Disclosure Letter, are in good operating condition and repair, in all material
respects.
3.17 Statements; Joint Proxy Statement/Prospectus. None of the information
--------------------------------------------
supplied or to be supplied by Avanex for inclusion or incorporation by reference
in (i) the Registration Statement will at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading and (ii) the Joint Proxy
Statement/Prospectus shall not, on the date the Joint Proxy Statement/Prospectus
is first mailed to Avanex's stockholders and Oplink's stockholders, at the time
of the Avanex Stockholders' Meeting or the Oplink Stockholders' Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Avanex Stockholders' Meeting or the Oplink Stockholders' Meeting
which has become false or misleading. The Joint Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. If at any time before the
Effective Time, any event relating to Avanex or any of its affiliates, officers
or directors should be discovered by Avanex which should be set forth in an
amendment to the Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, Avanex shall promptly inform Oplink. Notwithstanding the
foregoing, Avanex makes no representation or warranty with respect to any
information supplied or to be supplied by Oplink that is, will be, or is
required to be contained in any of the foregoing documents.
3.18 Board Approval. The Board of Directors of Avanex (i) has determined
--------------
that the Merger is fair to, and in the best interests of, Avanex and its
stockholders, (ii) has approved this Agreement, the Option Agreements, the
Merger and the other transactions contemplated by this Agreement and the Option
Agreements and (iii) has approved and determined to recommend that the
stockholders of Avanex vote to approve the Share Issuance (collectively, the
"Avanex Board Recommendation," and each of the Avanex Board Recommendation and
the Oplink Board Recommendation are hereinafter referred to, as applicable, a
"Board Recommendation").
3.19 Opinion of Financial Advisor. The Board of Directors of Avanex has
----------------------------
received an opinion from UBS Warburg, LLC dated the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair, from a financial
point of view to Avanex, a signed copy of which opinion will be delivered to
Oplink solely for informational purposes as promptly as practicable after
receipt thereof by Avanex.
-40-
3.20 Vote Required. The affirmative vote of the holders of a majority of
-------------
the shares of Avanex Common Stock entitled to vote, present in person or proxy,
on the Share Issuance is the only vote of the holders of any class or series of
Avanex's capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
3.21 State Takeover Statutes. The Board of Directors of Avanex has approved
-----------------------
this Agreement, the Avanex Voting Agreements, the Avanex Option Agreement and
the Merger and the other transactions contemplated hereby and thereby, and such
approval is sufficient to render inapplicable to the Merger and the other
transactions contemplated hereby and thereby the restrictions contained in
Section 203 of the Delaware Law, to the extent, if any, such restrictions would
otherwise be applicable to the Merger, this Agreement, the Avanex Voting
Agreements and the Avanex Option Agreement and the other transactions
contemplated by this Agreement, the Avanex Voting Agreements and the Avanex
Option Agreement. No other state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement, the
Avanex Voting Agreements, the Avanex Option Agreement or the transactions
contemplated hereby and thereby.
3.22 Avanex Rights Agreement. The Board of Directors of Avanex has amended
-----------------------
(substantially in the form provided to Oplink) the Preferred Stock Rights
Agreement entered into as of July 26, 2001 between Avanex and EquiServe Trust
Company, N.A. (the "Avanex Rights Agreement") to the effect that none of Oplink
or any of its affiliates shall become an "Acquiring Person" and that no
"Distribution Date" or "Triggering Event" (as such terms are defined in the
Avanex Rights Agreement) will occur as a result of the approval, execution or
delivery of this Agreement, the Avanex Option Agreement the Avanex Voting
Agreements or the consummation of the transactions contemplated hereby and
thereby.
3.23 Foreign Corrupt Practices Act. Neither Avanex nor any of its
-----------------------------
subsidiaries, nor any officer, director, employee or agent thereof or any
stockholder thereof acting on behalf of Avanex or any of its subsidiaries, has
done any act or authorized, directed or participated in any act, in violation of
any provision of the United States Foreign Corrupt Practices Act of 1977, as
amended, applied to such entity or person.
Article IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Oplink. During the period from the date of this
-----------------------------
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Oplink (which for the purposes of
this Article IV shall include Oplink and each of its subsidiaries) agrees,
except (i) as specifically provided in this Agreement or Article IV of the
Oplink Disclosure Letter or (ii) to the extent that Avanex shall otherwise
consent in writing (the provision of a response to any request for such consent
not to be unreasonably delayed), to carry on its business in the ordinary
course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, to pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other material obligations when due, subject to good faith disputes over
such obligations, and use its commercially reasonable efforts
-41-
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others with which it has business
dealings. Without limiting the generality of the foregoing, Oplink agrees to
take the actions described on Schedule 4.1(a) hereto. In addition, except (x) as
specifically provided in this Agreement or Article IV of the Oplink Disclosure
Letter or (y) to the extent that Avanex shall otherwise consent in writing (the
provision of a response to any request for such consent not to be unreasonably
delayed), Oplink shall not do any of the following and shall prevent its
subsidiaries from doing any of the following:
(a) Except as required by law or pursuant to the terms of Oplink Stock
Option Plans or written agreements outstanding on the date hereof and disclosed
to Avanex in Section 4.1(a) of the Oplink Disclosure Letter, accelerate, amend,
modify or waive any stock repurchase rights; accelerate, amend or modify the
period of exercisability or other material terms of options, warrants or
restricted stock; reprice or exchange options or warrants granted under any
employee, consultant or director stock plans or otherwise; or authorize cash
payments in exchange for any options, warrants or restricted stock granted under
any of such plans or otherwise;
(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Grant any severance or termination pay (cash, equity or otherwise)
to any officer or employee except pursuant to written agreements outstanding, or
policies existing, on the date hereof and as disclosed in Section 4.1(c) of the
Oplink Disclosure Letter or otherwise immaterial in amount (not to exceed
$15,000 individually and $250,000 in the aggregate), or adopt any new severance
plan or amend or modify or alter in any manner any severance plan, agreement or
arrangement existing on the date hereof;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Oplink Intellectual
Property, or enter into any agreements or make other commitments or arrangements
to grant, transfer or license to any person future patent rights, other than
non-exclusive licenses granted to customers, resellers and end users in the
ordinary course of business consistent with past practices;
(e) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(f) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Oplink or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
-42-
(g) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than (i) the issuance,
delivery and/or sale of shares of Oplink Common Stock pursuant to the exercise
of stock options therefor outstanding as of the date of this Agreement, (ii) the
granting of options to purchase shares of Oplink Common Stock to be granted at
fair market value in the ordinary course of business, consistent with past
practice and in accordance with existing stock option plans in an amount not to
exceed options to purchase 50,000 shares for any one person, but in any event
not to exceed 1,000,000 shares in the aggregate, (iii) shares of Oplink Common
Stock issuable upon the exercise of the options referred to in clause (ii)
above, and (iv) shares of Oplink Common Stock issuable to participants in
Oplink's 2000 Employee Stock Purchase Plan (the "Oplink Purchase Plan")
consistent with the terms thereof.
(h) Cause, permit or propose any amendments to the Certificate of
Incorporation or Bylaws of Oplink (or similar governing instruments of any
subsidiaries);
(i) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets that are material, individually or in the aggregate,
to the business of Oplink;
(j) Sell, lease, license, encumber, convey, assign, sublicense or
otherwise dispose of or transfer, in whole or in part, any properties or assets
or any interest therein (other than those transfers or licenses permitted by
Section 4.1(d)) except for sales, leases, licenses, encumbrances, conveyances,
assignments, sublicenses, dispositions or other transfers (i) in the ordinary
course of business consistent with past practice or (ii) of property or assets
that are not material, individually or in the aggregate, to the business of
Oplink;
(k) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Oplink, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than (i) in connection with the financing of ordinary course
trade payables consistent with past practice or (ii) pursuant to existing credit
facilities in the ordinary course of business;
(l) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration (cash, equity or otherwise) to any director, employee or
consultant, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants except payment of bonuses or
-43-
increases in salaries or wage rates or fringe benefits to non-officer employees
or consultants in the ordinary course of business consistent with past practice;
(m) Make any individual or series of related payments outside of the
ordinary course of business in excess of $250,000;
(n) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to which
Oplink or any of its subsidiaries is a party, or waive, delay the exercise of,
release or assign any material rights or material claims thereunder;
(o) Enter into, or materially modify, any material contract, agreement
or obligation relating to the distribution, sale, license or marketing by third
parties of Oplink's products or products licensed by Oplink, other than
nonexclusive contracts, agreements or obligations entered into in the ordinary
course of business that can be terminated or cancelled by Oplink without
material penalty or further material payment and without more than ninety (90)
days' notice;
(p) Revalue any of its assets or, except as required by GAAP, adopt or
change any accounting methods, principles or practices;
(q) Enter into any closing agreement in respect of material Taxes,
settle any claim or assessment in respect of any material Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of any material Taxes;
(r) Incur or enter into any agreement or commitment in excess of
$500,000 individually;
(s) Hire any employee or consultant with an annual compensation level
in excess of $125,000 or who is entitled to or is paid a bonus in excess of
$75,000;
(t) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of non-material amounts in the ordinary
course of business;
(u) Make any grant of exclusive rights to any third party;
(v) Modify or amend in any manner that is materially adverse to
Oplink, or terminate, any material agreement or any confidentiality agreement
entered into by Oplink or any subsidiary in the ordinary course of business, or
release or waive any material rights for claims, or modify or amend in any
manner materially adverse to Oplink, any confidentiality, standstill or similar
agreements to which Oplink or any of its subsidiaries is a party;
(w) Make or change any material Tax election, change any method of
accounting resulting in a material amount of additional Tax or file any material
amended Tax Return;
-44-
(x) Engage in any action with the intent to, directly or indirectly,
adversely impact or materially delay the consummation of the Merger or any of
the other transactions contemplated by this Agreement; or
(y) Agree in writing or otherwise to take any of the actions described
in Section 4.1(a) through (x) above.
4.2 Conduct of Business by Avanex. During the period from the date of this
-----------------------------
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Avanex (which for the purposes of
this Article IV shall include Avanex and each of its subsidiaries) agrees,
except (i) as specifically provided in this Agreement or Article IV of the
Avanex Disclosure Letter or (ii) to the extent that Oplink shall otherwise
consent in writing (the provision of a response to any request for such consent
not to be unreasonably delayed), to carry on its business in the ordinary
course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, to pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other material obligations when due, subject to good faith disputes over
such obligations and use its commercially reasonable efforts consistent with
past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers, distributors,
licensors, licensees and others with which it has business dealings. In
addition, except (x) as specifically provided in this Agreement or Article IV of
the Avanex Disclosure Letter or (y) to the extent that Oplink shall otherwise
consent in writing (the provision of a response to any request for such consent
not to be unreasonably delayed), Avanex shall not do any of the following and
shall prevent its subsidiaries from doing any of the following:
(a) Except as required by law or pursuant to the terms of Avanex Stock
Option Plans or written agreements outstanding on the date hereof and disclosed
to Avanex in Section 4.2(a) of the Avanex Disclosure Letter, accelerate, amend,
modify or waive any stock repurchase rights; accelerate, amend or modify the
period of exercisability or other material terms of options, warrants or
restricted stock; reprice or exchange options or warrants granted under any
employee, consultant or director stock plans or otherwise; or authorize cash
payments in exchange for any options, warrants or restricted stock granted under
any of such plans or otherwise;
(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Grant any severance or termination pay (cash, equity or otherwise)
to any officer or employee except pursuant to written agreements outstanding, or
policies existing, on the date hereof and as disclosed in Section 4.2(c) of the
Avanex Disclosure Letter or otherwise immaterial in amount (not to exceed
$15,000 individually and $250,000 in the aggregate), or adopt any new severance
plan or amend or modify or alter in any manner any severance plan, agreement or
arrangement existing on the date hereof;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Avanex Intellectual
Property, or enter into any
-45-
agreements or make other commitments or arrangements to grant, transfer or
license to any person future patent rights, other than non-exclusive licenses
granted to customers, resellers and end users in the ordinary course of business
consistent with past practices;
(e) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(f) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Avanex or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(g) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than (i) the issuance,
delivery and/or sale of shares of Avanex Common Stock pursuant to the exercise
of stock options therefor outstanding as of the date of this Agreement, (ii) the
granting of options to purchase shares of Avanex Common Stock to be granted at
fair market value in the ordinary course of business, consistent with past
practice and in accordance with existing stock option plans in an amount not to
exceed options to purchase 50,000 shares for any one person, but in any event
not to exceed 1,000,000 shares in the aggregate, (iii) shares of Avanex Common
Stock issuable upon the exercise of the options referred to in clause (ii)
above, and (iv) shares of Avanex Common Stock issuable to participants in
Avanex's 1999 Employee Stock Purchase Plan (the "Avanex Purchase Plan")
consistent with the terms thereof.
(h) Cause, permit or propose any amendments to the Certificate of
Incorporation or Bylaws of Avanex (or similar governing instruments of any
subsidiaries);
(i) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets that are material, individually or in the aggregate,
to the business of Avanex;
(j) Sell, lease, license, encumber, convey, assign, sublicense or
otherwise dispose of or transfer, in whole or in part, any properties or assets
or any interest therein (other than those transfers or licenses permitted by
Section 4.2(d)) except for sales, leases, licenses, encumbrances, conveyances,
assignments, sublicenses, dispositions or other transfers (i) in the ordinary
course of business consistent with past practice or (ii) of property or assets
that are not material, individually or in the aggregate, to the business of
Avanex;
-46-
(k) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Avanex, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than (i) in connection with the financing of ordinary course
trade payables consistent with past practice or (ii) pursuant to existing credit
facilities in the ordinary course of business;
(l) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration (cash, equity or otherwise) to any director, employee or
consultant, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants except payment of bonuses or increases in salaries or wage rates or
fringe benefits to non-officer employees or consultants in the ordinary course
of business consistent with past practice ;
(m) Make any individual or series of related payments outside of the
ordinary course of business in excess of $250,000;
(n) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to which
Avanex or any of its subsidiaries is a party or waive, delay the exercise of,
release or assign any material rights or material claims thereunder;
(o) Enter into, or materially modify, any material contract, agreement
or obligation relating to the distribution, sale, license or marketing by third
parties of Avanex's products or products licensed by Avanex, other than
nonexclusive contracts, agreements or obligations entered into in the ordinary
course of business that can be terminated or cancelled by Avanex without
material penalty or further material payment and without more than ninety (90)
days' notice;
(p) Revalue any of its assets or, except as required by GAAP, adopt or
change any accounting methods, principles or practices;
(q) Enter into any closing agreement in respect of material Taxes,
settle any claim or assessment in respect of any material Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of any material Taxes;
(r) Incur or enter into any agreement or commitment in excess of
$500,000 individually;
(s) Hire any employee or consultant with an annual compensation level
in excess of $125,000 or who is entitled to or is paid a bonus in excess of
$75,000;
-47-
(t) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in non-material amounts in the ordinary
course of business;
(u) Make any grant of exclusive rights to any third party;
(v) Modify or amend in any manner that is materially adverse to
Avanex, or terminate, any material agreement or any confidentiality agreement
entered into by Avanex or any subsidiary in the ordinary course of business, or
release or waive any material rights for claims, or modify or amend in any
manner materially adverse to Avanex, any confidentiality, standstill or similar
agreements to which Avanex or any of its subsidiaries is a party;
(w) Make or change any material Tax election, change any method of
accounting resulting in a material amount of additional Tax or file any material
amended Tax Return;
(x) Engage in any action with the intent to, directly or indirectly,
adversely impact or materially delay the consummation of the Merger or any of
the other transactions contemplated by this Agreement; or
(y) Agree in writing or otherwise to take any of the actions described
in Section 4.2(a) through (x) above.
Article V
ADDITIONAL AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement. As promptly
--------------------------------------------------------
as practicable after the execution of this Agreement, Avanex and Oplink will
prepare and file with the SEC the Joint Proxy Statement/Prospectus, and Avanex
will prepare and file with the SEC the Registration Statement in which the Joint
Proxy Statement/Prospectus is to be included as a prospectus. Avanex and Oplink
will provide each other with any information with respect to it which may be
required or appropriate for inclusion in the Joint Proxy Statement/Prospectus
and the Registration Statement, or in any amendments or supplements thereto, and
cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation and filing of the Joint Proxy Statement/Prospectus
and the Registration Statement pursuant to this Section 5.1. Each of Avanex and
Oplink will respond to any comments from the SEC, will use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as practicable after such filing and to
keep the Registration Statement effective as long as is necessary to consummate
the Merger and the transactions contemplated hereby. Each of Avanex and Oplink
will notify the other promptly upon the receipt of any comments from the SEC or
its staff in connection with the filing of, or amendments or supplements to, the
Registration Statement and/or the Joint Proxy Statement/Prospectus. Whenever any
event occurs which is required to be set forth in an amendment or supplement to
the Joint Proxy Statement/Prospectus, the Registration Statement, Avanex or
Oplink, as the case may be, will promptly inform the other of such occurrence
and cooperate in filing with the SEC or its staff, and/or mailing to
stockholders of Avanex and/or Oplink, such amendment or supplement. Each of
Avanex and Oplink shall cooperate
-48-
and provide the other with a reasonable opportunity to review and comment on any
amendment or supplement to the Registration Statement and Joint Proxy
Statement/Prospectus prior to filing such with the SEC, and will provide each
other with a copy of all such filings made with the SEC. Each of Avanex and
Oplink will cause the Joint Proxy Statement/Prospectus to be mailed to its
respective stockholders at the earliest practicable time after the Registration
Statement is declared effective by the SEC. Each of the parties hereto shall
cause the Joint Proxy Statement/Prospectus and the Registration Statement to
comply as to form and substance as to such party in all material respects with
the applicable requirements of (i) the Exchange Act, (ii) the Securities Act,
and (iii) the rules and regulations of Nasdaq. Without in any way limiting or
affecting the requirements of Section 5.2(b) hereof, nothing in this Agreement
shall preclude either Avanex or Oplink from including in the Joint Proxy
Statement/Prospectus or any amendment or supplement thereto any information that
it reasonably determines is required to be disclosed pursuant to applicable
securities laws.
5.2 Meetings of Stockholders; Board Recommendation.
----------------------------------------------
(a) Meeting of Stockholders. Promptly after the date hereof, each of
-----------------------
Avanex and Oplink will take all action necessary or advisable in accordance with
Delaware Law and its respective Certificate of Incorporation and Bylaws to call,
hold and convene the Oplink Stockholders' Meeting and the Avanex Stockholders'
Meeting to consider, in the case of Avanex, the Share Issuance, and in the case
of Oplink, approval and adoption of this Agreement and approval of the Merger,
respectively (each, a "Stockholders' Meeting"), to be held as promptly as
practicable. Subject to Section 5.3(d), each of Avanex and Oplink will use its
commercially reasonable efforts to solicit from its respective stockholders
proxies in favor of, in the case of Avanex, the Share Issuance, and, in the case
of Oplink, the approval and adoption of this Agreement and approval of the
Merger, and will take all other action necessary or advisable to secure the vote
or consent of their respective stockholders required by the rules of Nasdaq or
Delaware Law to obtain such approvals, including, without limitation, engaging
one or more nationally recognized proxy solicitation firms and information
agents to assist in such solicitation. Notwithstanding anything to the contrary
contained in this Agreement, Avanex or Oplink, as the case may be, may adjourn
or postpone its Stockholders' Meeting to the extent necessary to facilitate the
provision of any necessary supplement or amendment to the Joint Proxy
Statement/Prospectus is provided to its respective stockholders in advance of
the vote to be taken at such meeting or, if as of the time for which the
Stockholders' Meeting is originally scheduled (as set forth in the Joint Proxy
Statement/Prospectus) there are insufficient shares of Common Stock of Avanex or
Oplink, as the case may be, represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of such Stockholders'
Meeting. Each of Avanex and Oplink shall ensure that its respective
Stockholders' Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited by it in connection with the Stockholders' Meeting are
solicited in compliance with Delaware Law, its Certificate of Incorporation and
Bylaws, the rules of Nasdaq and all other applicable Legal Requirements. The
obligation of Avanex or Oplink, as the case may be, to call, give notice of,
convene and hold its Stockholders' Meeting in accordance with this Section
5.2(a) shall not be limited to or otherwise affected by the commencement,
disclosure, announcement or submission to it of any Acquisition Proposal (as
defined in Section 5.3(g)) with respect to it, or by
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any withdrawal, amendment or modification of the recommendation of its Board of
Directors with respect to the Merger, this Agreement and/or the Share Issuance.
(b) Board Recommendation. Except as provided by Section 5.3(d): (i)
--------------------
the Board of Directors of each of Avanex and Oplink shall make the applicable
Board Recommendation to their stockholders, (ii) the Joint Proxy
Statement/Prospectus shall include a statement to the effect that the Board of
Directors of each of Avanex and Oplink has made the applicable Board
Recommendation and (iii) neither the Board of Directors of Avanex or Oplink nor
any committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to the other party, the applicable
Board Recommendation.
5.3 Acquisition Proposals.
---------------------
(a) No Solicitation. Subject to Section 5.3(c), each of Avanex and
---------------
Oplink agrees that neither it nor any of its subsidiaries shall, nor shall it or
any of its subsidiaries authorize or permit any of the officers, directors and
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) of it or its subsidiaries to, and
that it shall use commercially reasonable efforts to cause its and its
subsidiaries' non-officer employees and other agents not to (and shall not
authorize any of them to) directly or indirectly: (i) solicit, initiate,
knowingly encourage, knowingly facilitate or knowingly induce any inquiry with
respect to, or the making, submission or announcement of, any Acquisition
Proposal with respect to itself, (ii) participate in any negotiations regarding,
or furnish to any Person any nonpublic information with respect to, or knowingly
take any other action to facilitate any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to, any Acquisition
Proposal with respect to itself, (iii) engage in discussions with any Person
with respect to any Acquisition Proposal with respect to itself, except as to
the existence of the terms contained in this Section 5.3(a), (iv) release or
permit the release of any Person from, or waive or permit the waiver of any
provision of, any confidentiality, "standstill" or similar agreement (other than
as required pursuant to the terms thereof as in effect on the date hereof) under
which it or any of its subsidiaries has any rights, or fail to use commercially
reasonable efforts to enforce or cause to be enforced in all material respects
each such agreement at the request of Avanex (in the case of an agreement under
which Oplink has any rights) or Oplink (in the case of an agreement under which
Avanex has any rights), (v) approve, endorse or recommend any Acquisition
Proposal with respect to itself (except to the extent specifically permitted
pursuant to Section 5.3(d)), (vi) amend or grant any waiver or release or
approve any transaction or redeem rights under the Avanex Rights Agreement, in
the case of Avanex (except as provided for under Section 3.22), or the Oplink
Rights Agreement, in the case of Oplink (except as provided for under Section
2.22), (vii) approve any transaction under Section 203 of the DGCL, (viii)
approve of any person's becoming an "interested stockholder" under Section 203
of the DGCL or (ix) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Proposal or transaction contemplated thereby with respect to itself.
Each of Avanex and Oplink agrees that it and its subsidiaries shall, and it
shall cause its and its subsidiaries' officers, directors and representatives
(including any investment banker, attorney or accountant retained by it or any
of its subsidiaries) to, and it shall use commercially reasonable efforts to
cause its and its subsidiaries' non-officer
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employees and other agents to: immediately cease any and all existing
activities, discussions or negotiations with any third parties conducted
heretofore with respect to any Acquisition Proposal with respect to itself. Each
of Avanex and Oplink agrees that it will promptly request each Person that has
entered into a confidentiality agreement with Avanex or Oplink in connection
with its consideration of an Acquisition Proposal or equity investment to return
all confidential information heretofore furnished to such Person by or on behalf
of Avanex or Oplink or any of their subsidiaries, as the case may be.
(b) Notification of Unsolicited Acquisition Proposals.
-------------------------------------------------
(i) As promptly as practicable (but in any event within one
business day) after any of Avanex or Oplink's respective officers, directors or
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) receives or becomes aware of the
receipt of any Acquisition Proposal by Avanex or Oplink, as the case may be, or
any request for nonpublic information or inquiry which Avanex or Oplink, as the
case may be, reasonably believes could lead to an Acquisition Proposal, Avanex
or Oplink, as the case may be, shall provide the other party hereto with written
notice of the material terms and conditions of such Acquisition Proposal,
request or inquiry, and the identity of the Person or group making any such
Acquisition Proposal, request or inquiry and a copy of all written materials
provided in connection with such Acquisition Proposal, request or inquiry. The
recipient of the Acquisition Proposal, request or inquiry shall keep the other
party hereto informed as promptly as practicable (but in any event within one
(1) business day) in all material respects of the status and details (including
all amendments or proposed amendments) of any such Acquisition Proposal, request
or inquiry and shall promptly (but in any event within one (1) business day)
provide to the other party hereto a copy of all written and electronic materials
subsequently provided in connection with such Acquisition Proposal, request or
inquiry.
(ii) Avanex or Oplink, as the case may be, shall provide the
other party hereto with forty-eight (48) hours prior notice (or such lesser
prior notice as is provided to the members of its Board of Directors) of any
meeting of its Board of Directors at which its Board of Directors is reasonably
expected to consider any Acquisition Proposal.
(c) Superior Offers. Notwithstanding anything to the contrary
---------------
contained in Section 5.3(a), in the event that Avanex or Oplink, as the case may
be, receives a Superior Offer (as defined in Section 5.3(g) with respect to
itself), it may then take the following actions (but only if (i) such party has
not breached Section 5.3(a) in connection with (i) the Superior Offer or
otherwise breached in any material respect Section 5.3(a) and (ii) to the extent
that its Board of Directors believes in good faith, following consultation with
its outside legal counsel, that failure to take any such action is reasonably
likely to result in a breach of its fiduciary obligations under applicable law):
(i) Furnish nonpublic information to the third party making such
Superior Offer, provided that (i) (A) at least one (1) business day prior to
--------
furnishing any such nonpublic information to such party, its gives the other
party hereto written notice of its intention to furnish nonpublic information
and (B) it receives from the third party an executed confidentiality agreement,
-51-
the terms of which are at least as restrictive as the terms contained in the
Confidentiality Agreement (as defined in Section 5.4), and (ii)
contemporaneously with furnishing any such nonpublic information to such third
party, it furnishes such nonpublic information to the other party hereto (to the
extent such nonpublic information has not been previously so furnished); and
(ii) Engage in discussions or negotiations with the third party
with respect to the Superior Offer, provided that at least forty-eight (48)
--------
hours prior to entering into negotiations with such third party, it gives the
other party hereto written notice of its intention to enter into negotiations
with such third party.
(d) Changes of Recommendation. Notwithstanding the provisions of
-------------------------
Section 5.2(b), in response to the receipt of a Superior Offer, the Board of
Directors of Avanex or Oplink, as the case may be, may withhold, withdraw, amend
or modify its Board Recommendation in favor of the Merger, and, in the case of a
Superior Offer that is a tender or exchange offer made directly to its
stockholders, may recommend that its stockholders accept the tender or exchange
offer (any of the foregoing actions in response to the receipt of a Superior
Offer, whether by a Board of Directors or a committee thereof, a "Change of
Recommendation"), if all of the following conditions in clauses (i) through (v)
are met:
(i) Such a Superior Offer with respect to it has been made and
has not been withdrawn;
(ii) Its Stockholders' Meeting has not occurred or the requisite
vote of its stockholders to (A) approve and adopt this Agreement and approve the
Merger or (B) to approve the Share Issuance, as the case may be, has not been
obtained;
(iii) It shall have (A) at least three (3) calendar days prior to
a Change of Recommendation, provided to the other party hereto written notice
which shall state expressly (1) that it has received such Superior Offer, (2)
the material terms and conditions of such Superior Offer and the identity of the
Person or group making the Superior Offer, (3) that it intends to effect a
Change of Recommendation and the manner in which it intends to do so, (B)
provided to the other party hereto a copy of all written and electronic
materials delivered to the Person or group making the Superior Offer it has
received, and (C) made available to the other party hereto all materials and
information made available to the Person or group making the Superior Offer it
has received;
(iv) Its Board of Directors believes in good faith, after
consultation with its outside legal counsel, that, in light of such Superior
Offer, failure to make the Change of Recommendation is reasonably likely to
result in a breach of the Board of Directors' fiduciary obligations to its
stockholders under applicable law; and
(v) It shall not have breached any of the provisions set forth in
Section 5.2 or this Section 5.3 in connection with such Superior Offer.
(e) Continuing Obligation to Call, Hold and Convene Stockholders'
-------------------------------------------------------------
Meeting; No Other Vote. Notwithstanding anything to the contrary contained in
----------------------
this Agreement, the obligation of
-52-
Avanex or Oplink, as the case may be, to call, give notice of, convene and hold
its Stockholders' Meeting shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission to it of any Acquisition
Proposal with respect to it, or by any Change of Recommendation. Neither Avanex
nor Oplink shall submit to the vote of its respective stockholders any
Acquisition Proposal or publicly propose to do so.
(f) Compliance with Tender Offer Rules. Nothing contained in this
----------------------------------
Agreement shall prohibit either party or its respective Board of Directors from
taking and disclosing to its stockholders a position contemplated by Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act; provided that the content of
any such disclosure thereunder shall be subject to the terms of Section 5.3 of
this Agreement. Without limiting the foregoing proviso, neither party shall
effect a Change of Recommendation unless specifically permitted pursuant to the
terms of Section 5.3(d).
(g) Certain Definitions. For purposes of this Agreement, the following
-------------------
terms shall have the following meanings:
(i) "Acquisition Proposal," with respect to a party, shall mean
any offer or proposal, relating to any transaction or series of related
transactions involving: (A) any purchase from such party or acquisition by any
Person or "group" (as defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) of more than a fifteen percent (15%) interest
in the total outstanding voting securities of such party or any of its
subsidiaries or any tender offer or exchange offer that if consummated would
result in any Person or "group" beneficially owning fifteen percent (15%) or
more of the total outstanding voting securities of such party or any of its
subsidiaries or any merger, consolidation, business combination or similar
transaction in which the stockholders of such party immediately preceding such
transaction hold, directly or indirectly, less than eighty-five percent (85%) of
the equity interests in the surviving or resulting entity of such transaction or
in any parent entity immediately following such transaction, (B) any sale, lease
(other than in the ordinary course of business), acquisition or disposition of
more than fifteen percent (15%) of the assets of such party (including its
subsidiaries taken as a whole), or (C) any liquidation or dissolution of such
party (provided, however, that the transactions contemplated hereby shall not be
--------- --------
deemed an Acquisition Proposal in any case); and
(ii) "Superior Offer," with respect to a party, shall mean an
unsolicited, bona fide written Acquisition Proposal made by a third party on
terms that the Board of Directors of such party believes in good faith (after
consultation with its outside legal counsel and a financial advisor of
nationally recognized reputation), taking into account, among other things, all
legal, financial, regulatory and other aspects of the Acquisition Proposal and
the Person making the offer and the strategic and other benefits of the Merger,
(i) is reasonably capable of being consummated on the terms proposed, and (ii)
if consummated on such terms would result in a transaction more favorable, from
a financial point of view, to such party's stockholders (in their capacities as
stockholders) than the terms of the Merger, it being understood and agreed that
the inclusion of a due diligence condition in an Acquisition Proposal shall
preclude such Acquisition Proposal from being a Superior Offer for the purposes
of Section 5.3(d) hereof. For the purposes of this definition, the
-53-
term "Acquisition Proposal" shall have the meaning assigned to such term in
Section 5.3(g)(i), except that references to "15%" therein shall be deemed to be
references to "100%".
5.4 Confidentiality; Access to Information; No Modification of
----------------------------------------------------------
Representations, Warranties or Covenants.
-----------------------------------------
(a) Confidentiality. The parties acknowledge that Oplink and Avanex
---------------
have previously executed a confidentiality agreement dated January 3, 2002 (the
"Confidentiality Agreement"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Access to Information. Each of Oplink and Avanex will afford the
---------------------
other and the other's accountants, counsel and other representatives reasonable
access during normal business hours to its properties, books, records and
personnel during the period prior to the Effective Time to obtain all
information concerning its business, including the status of product development
efforts, properties, results of operations and personnel, as such other party
may reasonably request; provided, however, that any party may restrict the
foregoing access to the extent that any law, treaty, rule or regulation of any
Governmental Entity applicable to such party requires such party or its
subsidiaries to restrict or prohibit access to any such properties or
information. Any information provided pursuant to this Section 5.4(b) shall be
subject to the Confidentiality Agreement.
(c) No Modification of Representations and Warranties or Covenants. No
--------------------------------------------------------------
information or knowledge obtained in any investigation or notification pursuant
to this Section 5.4, Section 5.6 or Section 5.7 shall affect or be deemed to
modify any representation or warranty contained herein, the covenants or
agreements of the parties hereto or the conditions to the obligations of the
parties hereto under this Agreement.
5.5 Public Disclosure. Without limiting any other provision of this
-----------------
Agreement, Avanex and Oplink will consult with each other and agree, before
issuing any press release or otherwise making any public statement with respect
to the Merger, this Agreement or any Acquisition Proposal and will not issue any
such press release or make any such public statement prior to such consultation
and agreement, except as may be required by law or any listing agreement with
the Nasdaq or any other applicable national securities exchange (in which case
Avanex and Oplink will first consult with the other party to the extent
reasonably practicable). The parties have agreed to the text of the joint press
release announcing the signing of this Agreement. Notwithstanding the provisions
of this Section 5.5, in the event that there has been a Change of Recommendation
pursuant to Section 5.3(d) hereof, neither Avanex nor Oplink will have any
further obligation to consult with each other, and agree, before issuing any
press release or otherwise making any public statement with respect to the
Merger, this Agreement or any Acquisition Proposal.
5.6 Regulatory Filings; Reasonable Efforts.
--------------------------------------
(a) Regulatory Filings. Each of Avanex and Oplink shall coordinate and
------------------
cooperate with one another and shall each use all commercially reasonable
efforts to comply with,
-54-
and shall each refrain from taking any action that would impede compliance with,
all Legal Requirements with respect to the Merger and the transactions
contemplated hereunder, and as promptly as practicable after the date hereof,
each of Avanex and Oplink shall make all filings reasonably determined by the
parties to be required by any Governmental Entity in connection with the Merger
and the transactions contemplated hereby, including, without limitation, (i)
Notification and Report Forms with the United States Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice ("DOJ") as required by the HSR Act, (ii) any other comparable filing
that will materially impair the ability of the parties to close, (iii) other
comparable pre-merger filings pursuant to the merger notification or control
laws of any applicable jurisdiction, as agreed by the parties hereto and (iv)
any filings required under the Securities Act, the Exchange Act, any applicable
state or securities or "blue sky" laws and the securities laws of any foreign
country, or any other Legal Requirement relating to the Merger. Each of Avanex
and Oplink will cause all documents that it is responsible for filing with any
Governmental Entity under this Section 5.6(a) to comply in all material respects
with all applicable Legal Requirements.
(b) Exchange of Information. Avanex and Oplink each shall promptly
-----------------------
supply the other with any information that may be required in order to
effectuate any filings or application pursuant to Section 5.6(a). Except where
prohibited by applicable Legal Requirements, and subject to the Confidentiality
Agreement, each of Oplink and Avanex shall consult with the other prior to
taking a position with respect to any such filing, shall consider in good faith
the views of one another in connection with any analyses, appearances,
presentations, memoranda, briefs, white papers, arguments, opinions and
proposals before making or submitting any of the foregoing to any Governmental
Entity by or on behalf of any party hereto in connection with any investigations
or proceedings in connection with this Agreement or the transactions
contemplated hereby (including under any antitrust or fair trade Legal
Requirement), coordinate with the other in preparing and exchanging such
information and promptly provide the other with copies of all filings,
presentations or submissions (and a summary of any oral presentations) made by
such party with any Governmental Entity in connection with this Agreement or the
transactions contemplated hereby, provided that with respect to any such filing,
presentation or submission, each of Avanex and Oplink need not supply the other
with copies (or in case of oral presentations, a summary) to the extent that any
law, treaty, rule or regulation of any Governmental Entity applicable to such
party requires such party or its subsidiaries to restrict or prohibit access to
any such properties or information.
(c) Notification. Each of Avanex and Oplink will notify the other
------------
promptly upon the receipt of (i) any comments from any officials of any
Governmental Entity in connection with any filings made pursuant hereto and (ii)
any request by any officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to, or information provided to comply
in all material respects with, any Legal Requirements. Whenever any event occurs
that is required to be set forth in an amendment or supplement to any filing
made pursuant to Section 5.6(a), Avanex or Oplink, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
applicable Governmental Entity such amendment or supplement.
(d) Commercially Reasonable Efforts. Subject to the express provisions
-------------------------------
of Section 5.2 and Section 5.3 hereof and upon the terms and subject to the
conditions set forth herein,
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each of the parties agrees to use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the causing of the conditions precedent set forth in Article VI
to be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any) and the taking of such reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by any Governmental Entity,
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties, including all Necessary Consents, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, subject to the other terms and conditions hereof, Oplink
and its Board of Directors shall, if any takeover statute or similar Legal
Requirement is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use commercially reasonable efforts
to ensure that the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
Legal Requirement on the Merger, this Agreement and the transactions
contemplated hereby.
(e) Limitation on Divestiture. Notwithstanding anything in this
-------------------------
Agreement to the contrary, nothing contained in this Agreement shall be deemed
to require Avanex or Oplink or any subsidiary or affiliate thereof to agree to
any divestiture by itself or any of its affiliates of shares of capital stock or
of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock. Oplink shall not take
or agree to take any action identified in the immediately preceding sentence
without the prior written consent of Avanex.
5.7 Notification of Certain Matters.
-------------------------------
(a) By Oplink. Oplink shall give prompt notice to Avanex when and if
---------
Oplink becomes aware that any representation or warranty made by it contained in
this Agreement has become untrue or inaccurate, or that it has failed to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied.
(b) By Avanex. Avanex shall give prompt notice to Oplink when and if
---------
Avanex becomes aware that any representation or warranty made by it contained in
this Agreement has become untrue or inaccurate, or that it has failed to comply
with or satisfy any covenant, condition
-56-
or agreement to be complied with or satisfied by it under this Agreement, in
each case, such that the conditions set forth in Section 6.2(a) or 6.2(b) would
not be satisfied.
5.8 Third-Party Consents. As soon as practicable following the date hereof,
--------------------
Avanex and Oplink will each use commercially reasonable efforts to obtain any
material consents, waivers and approvals under any of its or its subsidiaries'
respective Contracts required to be obtained in connection with the consummation
of the transactions contemplated hereby.
5.9 Stock Options and Employee Benefits.
-----------------------------------
(a) Assumption of Stock Options. At the Effective Time, each then
---------------------------
outstanding Oplink Option, whether or not exercisable at the Effective Time and
regardless of the respective exercise prices thereof, will be assumed by Avanex.
Each Oplink Option so assumed by Avanex under this Agreement will continue to
have, and be subject to, the same terms and conditions set forth in the
applicable Oplink Stock Option Plan (and any applicable stock option agreement
for such Oplink Option) immediately prior to the Effective Time (including any
repurchase rights or vesting provisions), except that (i) each Oplink Option
will be exercisable (or will become exercisable in accordance with its terms)
for that number of whole shares of Avanex Common Stock equal to the product of
the number of shares of Oplink Common Stock that were issuable upon exercise of
such Oplink Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Avanex
Common Stock and (ii) the per share exercise price for the shares of Avanex
Common Stock issuable upon exercise of such assumed Oplink Option will be equal
to the quotient determined by dividing the exercise price per share of Oplink
Common Stock at which such Oplink Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
Each assumed Oplink Option shall be vested immediately following the Effective
Time as to the same percentage of the total number of shares subject thereto as
it was vested as to immediately prior to the Effective Time. As soon as
reasonably practicable following the Closing Date, Avanex will issue to each
person who holds an assumed Oplink Option a document evidencing the foregoing
assumption of such Oplink Option by Avanex.
(b) Incentive Stock Options. It is intended that Oplink Options
-----------------------
assumed by Avanex shall qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent Oplink Options
qualified as incentive stock options immediately prior to the Effective Time and
the provisions of this Section 5.9 shall be applied consistent with such intent.
(c) Oplink Purchase Plan. The parties hereto shall take all requisite
--------------------
action so that, as of the Effective Time, the Oplink Purchase Plan shall be
terminated. The rights of participants in the Oplink Purchase Plan with respect
to any offering period then underway under the Oplink Purchase Plan shall be
determined by treating the last business day prior to the Effective Time as the
last day of such offering period and by making such other pro-rata adjustments
as may be necessary to reflect the shortened offering period but otherwise
treating such shortened offering period as a fully effective and completed
offering period for all purposes under the Oplink Purchase Plan. Prior to the
Effective Time, Oplink shall take all actions (including, if appropriate,
amending the terms of
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the Oplink Purchase Plan) that are necessary to give effect to the transactions
contemplated by this Section 5.9(c).
(d) Treatment of Oplink 401(k) Plan. If requested by Avanex by written
-------------------------------
notice, Oplink shall terminate any and all 401(k) plans effective as of the day
immediately preceding the Closing Date. If Avanex provides such written notice
to Oplink, Oplink shall provide Avanex with evidence that such 401(k) plans have
been terminated (effective as of the day immediately preceding the Closing Date)
pursuant to resolutions of Oplink's Board of Directors. The form and substance
of such resolutions shall be subject to review and approval of Avanex. Oplink
also shall take such other actions in furtherance of terminating such 401(k)
plans as Avanex may reasonably require.
(e) Benefits Generally. For a period beginning on the Closing Date and
------------------
ending no earlier than the first anniversary of the Closing Date, Avanex or its
affiliates shall provide to employees of the Oplink and its affiliates who
continue employment with Avanex or any of its affiliates ("Continuing
Employees") (i) benefits that are substantially similar, in the aggregate, to
the benefits provided to the Continuing Employees immediately prior to the
Closing Date, (ii) benefits that are substantially similar, in the aggregate, to
the benefits offered to similarly situated employees of Avanex, or (iii) a
combination of clauses (i) and (ii). To the extent permitted by applicable laws
and applicable tax qualification requirements (and subject to any generally
applicable break in service or similar rule), Avanex shall cause Continuing
Employees to be credited with service with Oplink for purposes of eligibility
and vesting under its 401(k) plan. Nothing in this Section 5.9(e) shall be
construed to entitle any Continuing Employee to continue his or her employment
with Avanex or any of its affiliates. To the extent permitted by the applicable
plans and subject to approval by any applicable insurance carrier, with respect
to any health plans in which employees of Oplink or its affiliates are eligible
to participate after the Effective Time, Avanex or its affiliates shall (i)
waive all limitations as to preexisting conditions exclusions and waiting
periods with respect to participation and coverage requirements applicable to
such employees (to the extent such exclusion was waived under applicable health
plans offered to such employees by Oplink) and (ii) to the extent permitted by
the applicable Avanex insurance carrier, provide each such employee with credit
for any co-payments, deductibles and other such expenses paid during the
applicable period under any welfare plans maintained or contributed to by Oplink
or its affiliates prior to the Effective Time in satisfying any applicable
deductible, out-of-pocket or other such requirements for the corresponding
period under any welfare plans maintained or contributed to by Avanex or its
affiliates.
5.10 Form S-8. Avanex agrees to file a registration statement on Form S-8
--------
for the shares of Avanex Common Stock issuable with respect to assumed Oplink
Options to the extent Form S-8 is available as soon as is reasonably practicable
after the Effective Time (and in any event within five (5) business days and
shall maintain the effectiveness of such registration statement thereafter for
so long as any of such options or other rights remain outstanding.
5.11 Indemnification.
---------------
(a) Indemnity. From and after the Effective Time, Avanex will, and
---------
will cause the Surviving Corporation to, fulfill and honor in all respects the
obligations of Oplink pursuant to
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any indemnification agreements existing immediately prior to the Effective Time
between Oplink and any person who is or was a director or officer of Oplink or
any predecessor corporation (the "Indemnified Parties"), subject to applicable
law. The Certificate of Incorporation and Bylaws of the Surviving Corporation
will contain provisions with respect to exculpation and indemnification that are
at least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of Oplink as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of Oplink, unless
such modification is required by law.
(b) Insurance. For a period of six (6) years after the Effective Time,
---------
the Surviving Corporation will use commercially reasonable efforts to cause to
be maintained in effect directors' and officers' liability insurance maintained
by Oplink covering those persons who are covered by Oplink's directors' and
officers' liability insurance policy as of the date hereof on terms comparable
to those applicable to the current directors and officers of Oplink; provided,
--------
however, that in no event will the Surviving Corporation be required to expend,
-------
with respect to any year, in excess of an amount equal to the greater of (i) one
hundred fifty percent (150%) of the annual premium currently paid by Oplink for
such coverage (and to the extent the amount it would be required to expend would
exceed one hundred fifty percent (150%) of the annual premium currently paid by
Oplink for such coverage, the Surviving Corporation shall use all reasonable
efforts to maintain the maximum amount of coverage as is available for such one
hundred fifty percent (150%) of such annual premium) or (ii) the premium
necessary to obtain the amount of coverage in effect under Avanex's directors'
and officers' liability insurance policy or policies covering Avanex's directors
and officers for such year.
(c) Third-Party Beneficiaries. This Section 5.11 is intended to be for
-------------------------
the benefit of, and shall be enforceable by the Indemnified Parties and their
heirs and personal representatives and shall be binding on the Surviving
Corporation and its successors and assigns. In the event the Surviving
Corporation or its successor or assign (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
in such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each case, proper
provision shall be made so that the successor and assign of the Surviving
Corporation honor the indemnification obligations set forth in this Section
5.11.
5.12 Board of Directors and Executive Officers of Avanex.
---------------------------------------------------
(a) Board of Directors. The Board of Directors of Avanex will take all
------------------
actions necessary such that effective as of the Effective Time, four (4)
directors selected by a majority of the Oplink directors, including Oplink's
current Chief Executive Officer, shall become members of the Board of Directors
of Avanex (the "Oplink Designated Directors") and that four (4) directors of
Avanex selected by a majority of the Avanex directors, including Avanex's
current Chief Executive Officer, shall remain on the Board of Directors of
Avanex (the "Avanex Designated Directors") and that a ninth director acceptable
to both a majority of the Oplink Designated Directors and a
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majority of the Avanex Designated Directors shall become a member of the Board
of Directors of Avanex. The Board of Directors of Avanex will take all actions
necessary to ensure that each of the three classes of directors of the Board of
Directors of Avanex consists of one of the Oplink Designated Directors and one
of the Avanex Designated Directors.
(b) Executive Officers. The Board of Directors of Avanex will take all
------------------
actions necessary such that effective as of the Effective Time, Avanex's Chief
Executive Officer shall be Co-Chairman of the Board, Chief Executive Officer and
President and Oplink's Chairman of the Board shall be Co-Chairman of the Board,
each to hold office from and after the Effective Time until their respective
successors are duly appointed and qualified in the manner provided in the Bylaws
of Avanex or as otherwise provided by law or their earlier resignation or
removal. In addition, the parties hereto acknowledge that it is their current
intention that, as of the Effective Time, Oplink's Chief Financial Officer on
the date hereof shall, assuming that he and Avanex reach agreement on mutually
acceptable terms for his employment, be the Chief Financial Officer of Avanex,
to hold office from and after the Effective Time until his successor is duly
appointed and qualified in the manner provided in the Bylaws of Avanex or as
otherwise provided by law or his earlier resignation or removal.
5.13 Nasdaq Listing. Prior to the Effective Time, Avanex agrees to use
--------------
commercially reasonable efforts to authorize for listing on Nasdaq National
Market the shares of Avanex Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger, subject to official notice
of issuance.
5.14 Oplink Affiliates; Restrictive Legend. Oplink has delivered or caused
-----------------
to be delivered to Avanex, on or prior to the date hereof, from each person who
may reasonably be deemed to be an affiliate of Oplink for purposes of Rule 145
promulgated under the Securities Act (an "Oplink Affiliate") an executed
affiliate agreement in the form attached hereto as Exhibit F (the "Oplink
Affiliate Agreement"), each of which will be in full force and effect as of the
Effective Time. In the event that any other person becomes an Oplink Affiliate
following the date of this Agreement, Oplink will use commercially reasonable
efforts to deliver or cause to be delivered to Avanex an executed Oplink
Affiliate Agreement with respect to such person as soon as possible. Avanex will
be entitled to place appropriate legends on the certificates evidencing any
Avanex Common Stock to be received by a Oplink Affiliate pursuant to the terms
of this Agreement and to issue appropriate stop transfer instructions to the
transfer agent for the Avanex Common Stock, consistent with the terms of the
Oplink Affiliate Agreement.
5.15 Treatment as Reorganization. Neither Avanex nor Oplink will, nor will
---------------------------
they permit any of their respective subsidiaries to, take any action prior to
the Closing that would reasonably be expected to cause the Merger to fail to
qualify as a reorganization with the meaning of Section 368(a) of the Code.
5.16 Section 16 Matters. Prior to the Effective Time, the Board of
------------------
Directors of each of Avanex and Oplink shall adopt a resolution consistent with
the interpretative guidance of the SEC so that (i) the assumption of Oplink
Options held by Oplink Insiders (as defined below) pursuant to this Agreement,
and (ii) the receipt by Oplink Insiders of Avanex Common Stock in exchange for
Oplink
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Common Stock pursuant to the Merger, shall be exempt transactions for purposes
of Section 16 of the Exchange Act by any officer or director of Oplink who may
become a covered person for purposes of Section 16 of the Exchange Act (an
"Oplink Insider").
5.17 Rights Plans.
------------
(a) Avanex shall not redeem the Avanex Rights, or amend, modify or
terminate the Avanex Rights Agreement prior to the Effective Time unless
required to do so by order of a court of competent jurisdiction.
(b) Oplink shall not redeem the Oplink Rights or amend, modify or
terminate the Oplink Rights Agreement prior to the Effective Time unless
required to do so by order of a court of competent jurisdiction.
5.18 Tax Matters. At or prior to the filing of the Registration Statement,
-----------
Avanex and Oplink will execute and deliver to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, and to Xxxxxx Godward LLP tax representation letters
in customary form. Avanex, Merger Sub and Oplink shall each confirm to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, and to Xxxxxx Godward LLP
the accuracy and completeness as of the time the Registration Statement is
declared effective and as of the Effective Time of the tax representation
letters delivered pursuant to the immediately preceding sentence. Following
delivery of the tax representation letters pursuant to the first sentence of
this Section 5.18, Avanex will use its commercially reasonable efforts to cause
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, to deliver to it,
and Oplink will use its commercially reasonable efforts to cause Xxxxxx Godward
LLP to deliver to it, a tax opinion satisfying the requirements of Item 601 of
Regulation S-K promulgated under the Securities Act. In rendering such opinions,
each of such counsel shall be entitled to rely on the tax representation letters
referred to in this Section 5.18.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions, any of which may be waived, in writing, by mutual
agreement of Oplink and Avanex:
(a) Stockholder Approval. Each of the Oplink Stockholder Approval and
--------------------
the Avanex Stockholder Approval shall have been obtained.
(b) No Order. No Governmental Entity of competent jurisdiction shall
--------
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
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(c) Registration Statement Effective; Joint Proxy
---------------------------------------------
Statement/Prospectus. The SEC shall have declared the Registration Statement
--------------------
effective. No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose, and no similar proceeding in respect of the Joint Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC.
(d) HSR Act. The waiting period (and any extension thereof) under the
-------
HSR Act relating to the transactions contemplated hereby will have expired or
terminated early. Satisfaction of all other material foreign antitrust
requirements reasonably determined to apply prior to the Closing in connection
with the transaction contemplated hereby shall have been obtained.
(e) No Governmental Restriction. There shall not be any pending or
---------------------------
overtly threatened suit or action asserted by any Governmental Authority (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement or (ii) seeking to
impose on Avanex or Oplink or any subsidiary or affiliate thereof any
divestiture of shares of capital stock or of any business, assets or property,
or the imposition of any material limitation on the ability of any of them to
conduct their businesses or to own or exercise control of such assets,
properties and stock.
(f) Tax Opinions. Avanex and Oplink shall each have received written
------------
opinions from their respective counsel (Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, and Xxxxxx Godward LLP, respectively), in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code and
such opinions shall not have been withdrawn. It is understood that (i) in
rendering such opinions, Xxxxxx Godward LLP and Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, may rely upon the tax representation letters
referred to in Section 5.18, and (ii) if Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, does not render the opinion required by this Section
6.1(f) to Avanex or withdraws or modifies such opinion, such condition will
nonetheless be deemed to be satisfied if Cooley Godward LLP renders such opinion
to Avanex, and if Xxxxxx Godward LLP does not render the opinion required by
this Section 6.1(f) to Oplink or withdraws or modifies such opinion, such
condition will nonetheless be deemed to be satisfied if Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, Professional Corporation, renders such opinion to Oplink.
(g) Nasdaq Listing. The shares of Avanex Common Stock to be issued in
--------------
the Merger shall have been authorized for listing on the Nasdaq, subject to
official notice of issuance.
6.2 Additional Conditions to Obligations of Oplink. The obligation of
----------------------------------------------
Oplink to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Oplink:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Avanex (i) contained in Section 3.2 of this Agreement shall have been true
and correct in all material respects as of the date of this Agreement and shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as if made on the Closing Date and (ii) otherwise
contained in this Agreement shall have been true and correct as of the date of
this
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Agreement and shall be true and correct on and as of the Closing Date with the
same force and effect as if made on the Closing Date except (A) in each case, or
in the aggregate, where the failure to be true and correct would not reasonably
be expected to have a Material Adverse Effect on Avanex, or (B) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct, subject to the
qualifications as set forth in the preceding clause (A), as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, (i) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" contained
in such representations and warranties shall be disregarded and (ii) any update
of or modification to the Avanex Disclosure Letter made or purported to have
been made after the date of this Agreement shall be disregarded). Oplink shall
have received a certificate with respect to the foregoing signed on behalf of
Avanex by the Chief Executive Officer and the Chief Financial Officer of Avanex.
(b) Agreements and Covenants. Avanex shall have performed or complied
------------------------
in all material respects with the agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date, and Oplink shall have received a certificate to such effect signed on
behalf of Avanex by the Chief Executive Officer and the Chief Financial Officer
of Avanex.
6.3 Additional Conditions to the Obligations of Avanex. The obligations of
--------------------------------------------------
Avanex to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Avanex:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Oplink (i) contained in Section 2.2 of this Agreement shall have been true
and correct in all material respects as of the date of this Agreement and shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as if made on the Closing Date and (ii) otherwise
contained in this Agreement shall have been true and correct as of the date of
this Agreement and shall be true and correct on and as of the Closing Date with
the same force and effect as if made on the Closing Date except (A) in each
case, or in the aggregate, where the failure to be true and correct would not
reasonably be expected to have a Material Adverse Effect on Oplink, or (B) for
those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct, subject
to the qualifications as set forth in the preceding clause (A), as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material"
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Oplink Disclosure Letter made or purported
to have been made after the date of this Agreement shall be disregarded). Oplink
shall have received a certificate with respect to the foregoing signed on behalf
of Oplink by the Chief Executive Officer and the Chief Financial Officer of
Oplink.
(b) Agreements and Covenants. Oplink shall have performed or complied
------------------------
in all material respects with the agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Avanex shall have received a certificate to
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such effect signed on behalf of Oplink by the Chief Executive Officer and the
Chief Financial Officer of Oplink.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after the requisite approvals of the stockholders of Oplink or Avanex:
(a) by mutual written consent duly authorized by the Boards of
Directors of Avanex and Oplink;
(b) by either Oplink or Avanex if the Merger shall not have been
consummated by September 30, 2002 (the "End Date"); provided, however, that the
--------- --------
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by either Oplink or Avanex if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action (including the
failure to have taken an action), in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order, decree,
ruling or other action is final and nonappealable;
(d) by either Oplink or Avanex if the required approval of the
stockholders of Avanex contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Avanex stockholders duly convened therefor or at any adjournment or postponement
thereof; provided, however, that the right to terminate this Agreement under
--------- --------
this Section 7.1(d) shall not be available to Avanex where the failure to obtain
Avanex stockholder approval shall have been caused by the action or failure to
act of Avanex and such action or failure to act constitutes a material breach by
Avanex of this Agreement;
(e) by either Oplink or Avanex if the required approval of the
stockholders of Oplink contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
the Oplink stockholders duly convened therefor or at any adjournment or
postponement thereof; provided, however, that the right to terminate this
--------- --------
Agreement under this Section 7.1 (e) shall not be available to Oplink where the
failure to obtain Oplink stockholder approval shall have been caused by the
action or failure to act of Oplink and such action or failure to act constitutes
a material breach by Oplink of this Agreement;
(f) by Avanex at any time prior to the approval and adoption of this
Agreement and approval of the Merger by the required vote of the stockholders of
Oplink if a Triggering Event (as defined below in this Section 7.1) with respect
to Oplink shall have occurred;
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(g) by Oplink at any time prior to the approval of the Share Issuance
by the required vote of the stockholders of Avanex if a Triggering Event with
respect to Avanex shall have occurred;
(h) by Oplink, upon a breach of any representation, warranty, covenant
or agreement on the part of Avanex set forth in this Agreement, or if any
representation or warranty of Avanex shall have become inaccurate, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become inaccurate, provided that if such
--------
inaccuracy in Avanex's representations and warranties or breach by Avanex is
curable by Avanex through the exercise of its commercially reasonable efforts,
then this Agreement shall not terminate pursuant to this Section 7.1(h) as a
result of such particular breach or inaccuracy until the earlier of (i) the
expiration of a thirty (30) day period commencing upon delivery of written
notice from Avanex to Oplink of such breach or inaccuracy and (ii) Oplink
ceasing to exercise commercially reasonable efforts to cure such breach (it
being understood that this Agreement shall not terminate pursuant to this
paragraph 7.1(h) as a result of such particular breach or inaccuracy if such
breach by Avanex is cured prior to such termination becoming effective); and
(i) by Avanex, upon a breach of any representation, warranty, covenant
or agreement on the part of Oplink set forth in this Agreement, or if any
representation or warranty of Oplink shall have become inaccurate, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become inaccurate, provided, that if such
--------
inaccuracy in Oplink's representations and warranties or breach by Oplink is
curable by Oplink through the exercise of its commercially reasonable efforts,
then this Agreement shall not terminate pursuant to this Section 7.1(i) as a
result of such particular breach or inaccuracy until the earlier of (i) the
expiration of a thirty (30) day period commencing upon delivery of written
notice from Oplink to Avanex of such breach or inaccuracy and (ii) Avanex
ceasing to exercise commercially reasonable efforts to cure such breach (it
being understood that this Agreement shall not terminate pursuant to this
paragraph 7.1(i) as a result of such particular breach or inaccuracy if such
breach by Oplink is cured prior to such termination becoming effective).
For the purposes of this Agreement, a "Triggering Event," with respect
to a party hereto, shall be deemed to have occurred if: (i) its Board of
Directors or any committee thereof shall for any reason have withdrawn or shall
have amended or modified in a manner adverse to the other party hereto its
applicable Board Recommendation, or shall have resolved to do any of the same,
(ii) its Board of Directors fails to reaffirm (publicly, if so requested) its
applicable Board Recommendation within ten (10) business days after the other
party hereto requests in writing that such recommendation be reaffirmed after
the public announcement of an Acquisition Proposal, (iii) its Board of Directors
or any committee thereof shall have approved or recommended any Acquisition
Proposal, or shall have resolved to do any of the same, (iv) a tender or
exchange offer relating to its securities shall have been commenced by a Person
unaffiliated with the other party hereto and it shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within ten (10) business days after such tender or exchange offer is first
published, sent or
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given, a statement disclosing that the Board of Directors of such party
recommends rejection of such tender or exchange offer, (v) its Board of
Directors shall have amended or resolved to amend its Rights Agreement in a
manner so as to render it inapplicable to any Acquisition Proposal (other than
the Merger), or (vi) it has materially breached the provisions of Section 5.2(b)
or 5.3 hereof.
7.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (i) as set forth in Section 5.4(a), this Section 7.2,
Section 7.3 and Article VIII, each of which shall survive the termination of
this Agreement and (ii) nothing herein shall relieve any party from liability
for fraud in connection with, or any intentional or willful breach of, this
Agreement. No termination of this Agreement shall affect the obligations of the
parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.
7.3 Fees and Expenses.
-----------------
(a) General. Except as set forth in this Section 7.3, all fees and
-------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Avanex and Oplink
-------- -------
shall share equally (i) all fees and expenses, other than attorneys' and
accountants' fees and expenses, incurred in relation to the printing and filing
(with the SEC) of the Joint Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto and
(ii) the filing fee for the Notification and Report Forms filed with the FTC and
DOJ under the HSR Act or any other filing fee required by a Governmental Entity
pursuant to Section 5.6(a).
(b) Payments.
--------
(i) Payment by Oplink. In the event that this Agreement is
-----------------
terminated by Avanex or Oplink, as applicable, pursuant to Sections 7.1(b), (e)
or (f), Oplink shall promptly, but in no event later than two (2) days after the
date of such termination, pay Avanex a fee equal to twelve million dollars
($12,000,000) in immediately available funds (the "Oplink Termination Fee");
provided, that in the case of termination under Section 7.1(b) or 7.1(e), (A)
such payment shall be made only if following the date hereof and prior to the
termination of this Agreement, there has been public disclosure of an
Acquisition Proposal with respect to Oplink that has not been irrevocably and
publicly withdrawn by the time of such termination and (1) within twelve (12)
months following the termination of this Agreement an Acquisition (as defined in
Section 7.3(b)(iv)) of Oplink is consummated or (2) within twelve (12) months
following the termination of this Agreement Oplink enters into an agreement
providing for an Acquisition of Oplink and such Acquisition of Oplink is
subsequently consummated and (B) such payment shall be made prior to and as a
condition of the consummation of such Acquisition of Oplink.
(ii) Payment by Avanex. In the event that this Agreement is
-----------------
terminated by Avanex or Oplink, as applicable, pursuant to Sections 7.1(b), (d)
or (g), Avanex shall promptly, but in no event later than two (2) days after the
date of such termination, pay Oplink a fee equal to
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twelve million dollars ($12,000,000) in immediately available funds (the "Avanex
Termination Fee"); provided, that in the case of termination under Section
7.1(b) or 7.1(d), (A) such payment shall be made only if following the date
hereof and prior to the termination of this Agreement, there has been public
disclosure of an Acquisition Proposal with respect to Avanex that has not been
irrevocably and publicly withdrawn by the time of such termination and (1)
within twelve (12) months following the termination of this Agreement an
Acquisition of Avanex is consummated or (2) within twelve (12) months following
the termination of this Agreement Avanex enters into an agreement providing for
an Acquisition of Avanex and such Acquisition of Avanex is subsequently
consummated and (B) such payment shall be made prior to and as a condition of
the consummation of such Acquisition of Avanex.
(iii) Interest and Costs; Other Remedies. Each of Avanex and
----------------------------------
Oplink acknowledges that the agreements contained in this Section 7.3(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, the other party hereto would not enter into this
Agreement; accordingly, if Avanex or Oplink, as the case may be, fails to pay in
a timely manner the amounts due pursuant to this Section 7.3(b), and, in order
to obtain such payment, the other party hereto makes a claim that results in a
judgment against the party failing to pay for the amounts set forth in this
Section 7.3(b), the party so failing to pay shall pay to the other party its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 7.3(b) at the prime rate of Citibank, N.A. in effect
on the date such payment was required to be made. Payment of the fees described
in this Section 7.3(b) shall not be in lieu of damages incurred in the event of
breach of this Agreement.
(iv) Certain Definitions. For the purposes of this Section 7.3(b)
-------------------
only, "Acquisition," with respect to a party hereto, shall mean, other than the
transactions contemplated by this Agreement, an Acquisition Proposal, provided,
that for the purpose of this definition, the term "Acquisition Proposal" shall
have the meaning assigned to such term in Section 5.3(g)(i), except that
references to "15%" therein shall be deemed to be references to "40%."
7.4 Amendment. Subject to applicable law, this Agreement may be amended by
---------
the parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Avanex and Oplink, provided,
after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further stockholder approval. This
Agreement may be not amended except by execution of an instrument in writing
signed on behalf of each of Avanex and Oplink.
7.5 Extension; Waiver. At any time prior to the Effective Time either party
-----------------
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the
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part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. Delay in
exercising any right under this Agreement shall not constitute a waiver of such
right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations and
----------------------------------------------
warranties of Oplink and Avanex contained in this Agreement, or any certificate
or instrument delivered pursuant to this Agreement, shall terminate at the
Effective Time, and only the covenants that by their terms survive the Effective
Time and this Article VIII shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed duly given (i) on the date of delivery if delivered
personally, (ii) 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 (iii) 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 as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice:
(a) if to Avanex or Merger Sub, to:
Avanex Corporation
00000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
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(b) if to Oplink, to:
Oplink Communications, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Xxxxxxx Xxxxxxxx Xxxxxx
Fax No.: (000) 000-0000
8.3 Interpretation; Knowledge.
-------------------------
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a section of this Agreement unless otherwise indicated. For purposes of this
Agreement, the words "include," "includes" and "including," when used herein,
shall be deemed in each case to be followed by the words "without limitation."
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "the business of" an entity,
such reference shall be deemed to include the business of all such entity and
its subsidiaries, taken as a whole. An exception or disclosure made in the
Oplink Disclosure Letter with regard to a representation of Oplink, or in the
Avanex Disclosure Letter with regard to a representation of Avanex, shall be
deemed made with respect to any other representation by such party to which the
relevance of such exception or disclosure is reasonably apparent.
(b) For purposes of this Agreement, the term "Knowledge" means, with
respect to a party hereto, with respect to any matter in question, the actual
knowledge of the executive officers of such party.
(c) For purposes of this Agreement, the term "Material Adverse
Effect," when used in connection with an entity, means any fact, change, event,
development, circumstance or effect (any such item, an "Effect"), individually
or when taken together with all other Effects that have occurred prior to the
date of determination of the occurrence of the Material Adverse Effect, that is
or could reasonably be expected to be materially adverse to the business, assets
(including intangible assets), capitalization, condition (financial or
otherwise) or results of operations of such entity taken as a whole with its
subsidiaries; provided, however, that in no event shall any of the following,
-------- -------
alone or in combination, be deemed to constitute a Material Adverse Effect on
any entity: any Effect resulting from (A) general economic conditions or
conditions generally affecting the
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optical networking industry, except in either case to the extent such party is
materially disproportionately affected thereby, (B) the announcement or pendency
of the Merger, (C) a change in the stock price or trading volume of such entity
(or any failure of such entity to meet published revenue or earnings
projections, provided that clause (C) shall not exclude any underlying Effect
--------
which may have caused such change in stock price or trading volume or failure to
meet published revenue or earnings projections, or (D) any adverse Effect
resulting from or relating to any change in accounting requirements or
principles or any change in applicable laws, rules or regulations or the
interpretation thereof.
(d) For purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third-Party Beneficiaries. This Agreement and the
-------------------------------------------
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Oplink Disclosure Letter
and the Avanex Disclosure Letter, (i) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement and (ii) are not
intended to confer upon any other Person any rights or remedies hereunder,
except as specifically provided in Section 5.11 following the Effective Time.
8.6 Severability. In the event that any provision of this Agreement or the
------------
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the greatest extent possible, the economic, business and
other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
------------------------------------
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise
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breached. It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
---------------------
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
----------
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Any purported assignment in violation of this Section 8.10
shall be void. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT
--------------------
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
AVANEX CORPORATION
By: /s/ Xxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
OPLINK COMMUNICATIONS, INC.
By: /s/ Xxxxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
PEARL ACQUISITION CORP.
By: /s/ Xxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxx
---------------------------------------
Title: President
--------------------------------------
****MERGER AGREEMENT****
