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EXHIBIT 10.8.3
AVANEX CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of August 4, 1999, by and between Avanex
Corporation, a California corporation (the "COMPANY"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"PURCHASER").
The parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase an aggregate of 550,000 shares of the
Company's Common Stock, no par value (the "SHARES") at a price of $0.15 per
share for an aggregate purchase price of $82,500.00.
2. Payment of Purchase Price. The payment of the purchase price shall be by
by delivery of a promissory note in the form attached hereto as EXHIBIT C,
secured by the shares so purchased pursuant to a Pledge Agreement in the form
attached hereto as EXHIBIT D.
3. Repurchase Option. In the event of any voluntary or involuntary
termination of the Purchaser's employment by, or services to, the Company for
any or no reason (including death or disability) before all of the Shares are
released from the Company's Repurchase Option (as defined below in Section 4),
the Company shall, upon the date of such termination (as reasonably fixed and
determined by the Company), have an irrevocable, exclusive option, but not the
obligation, for a period of 90 days from such date to repurchase all or any
portion of the Unreleased Shares (as defined below in Section 4) at such time at
the original purchase price per share (the "REPURCHASE PRICE"). The Repurchase
Option shall be exercisable by the Company by written notice to the Purchaser or
the Purchaser's executor (with a copy to the Escrow Agent, as defined below in
Section 6) and shall be exercisable, at the Company's option, (i) by delivery to
the Purchaser or the Purchaser's executor with such notice of a check in the
amount of the purchase price for the Shares being repurchased, or (ii) by
cancellation by the Company of an amount of the Purchaser's indebtedness, if
any, to the Company equal to the purchase price for the Shares being
repurchased, or (iii) by a combination of (i) and (ii) so that the combined
payment and cancellation of indebtedness equals the Repurchase Price times the
number of shares to be repurchased (the "AGGREGATE REPURCHASE PRICE"). Upon
delivery of such notice and the payment of the Aggregate Repurchase Price in any
of the ways described above, the Company shall become the legal and beneficial
owner of the Shares being repurchased and all rights and interests therein or
relating thereto, and the Company shall have the right to retain and transfer to
its own name the number of Shares being repurchased by the Company. The
Repurchase Option set forth in this Section may be assigned by the Company in
whole or in part in its sole and unfettered discretion.
4. Release of Shares From Repurchase Option.
(a) The Shares shall vest to Purchaser and be released from the
Company's repurchase option as follows: Provided that Purchaser maintains a
continuous status as a Service Provider of the Company, 25% of the Shares shall
be released from the Company's Repurchase Option on the one year anniversary of
the Vesting Commencement Date and an additional 1/48th of the Shares shall be
released from the Company's Repurchase Option on the last day of each full
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calendar month thereafter. Notwithstanding the foregoing, upon any Change of
Control (as herein defined) that number of Unreleased Shares, if any, which,
when aggregated with any Shares previously released from the Repurchase Option,
are required to equal fifty percent (50%) of the Shares shall be released from
the Repurchase Option on the date the event constituting a Change of Control is
consummated. The balance of the Shares subject to the Repurchase Option shall
continue to be released from the Repurchase Option on the same schedule as
existed prior to the Change of Control. For example, if a Change of Control
occurs on a date where 25% of Purchaser's Shares have been released from the
Company's Purchase Option, then an additional 25% of the Shares shall be
released from the Purchase Option pursuant hereto. If a Change of Control occurs
on a date where more than 50% of Purchaser's Shares have already been released
from the Company's Purchase Option, then no additional Shares shall be released
from the Purchase Option.
(b) "Change of Control" shall mean any of the following: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company, (ii) a merger or consolidation of the
Company with any other corporation which results in the voting securities of the
Company outstanding immediately prior thereto representing (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or its parent) less than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity (or
its parent) outstanding immediately after such merger or consolidation, or (iii)
the approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
(c) Any of the Shares which have not yet been released from the
Company's repurchase option are referred to herein as "Unreleased Shares."
(d) The Shares which have been released from the Company's Repurchase
Option shall be delivered to the Purchaser at the Purchaser's request (see
Section 3).
(e) Acceleration Upon Termination of Employment. In addition to the
Shares released from the Company's Repurchase Option pursuant to Section 4(d)
above, in the event the Purchaser's employment terminates as a result of an
Involuntary Termination other than for Cause upon or within 12 months after a
Change of Control, all Unreleased Shares shall be released from the Company's
Repurchase Option upon the date of such termination.
For the purposes of this Section 4(e), the following terms referred to in
this Agreement shall have the following meanings:
(i) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Purchaser in connection with his responsibilities as an employee
and intended to result in substantial personal enrichment of the Purchaser, (ii)
conviction of a felony that is injurious to the Company, and (iii) a willful act
by the Purchaser which constitutes gross misconduct and which is injurious to
the Company.
(ii) Disability. "Disability" shall mean that the Purchaser has
been unable to substantially perform his duties as the result of his incapacity
due to physical or mental illness,
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and such inability, at least 26 weeks after its commencement, is determined to
be total and permanent by a physician selected by the Company or its insurers
and acceptable to the Purchaser or the Purchaser's legal representative (such
agreement as to acceptability not to be unreasonably withheld).
(iii) Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Purchaser's express written consent, the significant
reduction of the Purchaser's duties or responsibilities relative to the
Purchaser's duties or responsibilities in effect immediately prior to such
reduction; provided, however, that a reduction in duties or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, when the Chief Financial Officer of Company remains as such
following a Change of Control and is not made the Chief Financial Officer of the
acquiring corporation) shall not constitute an "Involuntary Termination"; (ii)
without the Purchaser's express written consent, a substantial reduction,
without good business reasons, of the facilities and perquisites (including
office space and location) available to the Purchaser immediately prior to such
reduction; (iii) without the Purchaser's express written consent, a material
reduction by the Company in the base compensation of the Purchaser as in effect
immediately prior to such reduction, or the ineligibility of the Purchaser to
continue to participate in any long-term incentive plan of the Company; (iv) a
material reduction by the Company in the kind or level of employee benefits to
which the Purchaser is entitled immediately prior to such reduction with the
result that the Purchaser's overall benefits package is significantly reduced;
(v) the relocation of the Purchaser to a facility or a location more than 50
miles from the Purchaser's then present location, without the Purchaser's
express written consent; (vi) any purported termination of the Purchaser by the
Company which is not effected for death or Disability or for Cause, or any
purported termination for which the grounds relied upon are not valid; or (vii)
the failure of the Company to obtain the assumption of this agreement by any
successors contemplated in Section 4(f) below.
(f) Successors.
(i) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Section 4 and agree expressly to
perform the obligations under this Section 4 in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Section 4, the term
"COMPANY" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
4(f)(i) or which becomes bound by the terms of this Agreement by operation of
law.
(ii) Purchaser's Successors. The terms of this Section 4 and all
rights of the Purchaser hereunder shall inure to the benefit of, and be
enforceable by, the Purchaser's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
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5. Restriction on Transfer.
(a) Except for the escrow described below in ▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of the
Shares or any beneficial interest therein shall be transferred, encumbered or
otherwise disposed of in any manner until the release of such Shares from the
Repurchase Option in accordance with the provisions of this Agreement.
(b) Before any Shares may be sold or transferred (including transfer
by operation of law), such Shares shall first be offered to the Company (the
"RIGHT OF FIRST REFUSAL").
(i) Notice. In the event the Purchaser wishes to sell the
Shares, Purchaser shall deliver a notice ("Notice") to the Company stating (A)
his bona fide intention to sell or transfer such Shares, (B) the number of such
Shares to be sold or transferred, (C) the price for which he proposes to sell or
transfer such Shares, and (D) the name of the proposed purchaser or transferee.
(ii) Election to Purchase. Within thirty (30) days after receipt
of the Notice, the Company or its assignee may elect to purchase all or none of
the Shares to which the Notice refers, at the price per share specified in the
Notice. The purchase of the Shares in either such event shall occur at a closing
held at the Company's principal office at a mutually agreed upon time which in
no event shall be more than thirty (30) days following the end of the time
period in which the Company had to elect to purchase such Shares.
(iii) Sale of Shares by Purchaser. If all of the Shares to which
the Notice refers are not elected to be purchased, as provided in this Section
5(b), Purchaser may sell the Shares to any person named in the Notice at the
price specified in the Notice or at a higher price, provided that such sale or
transfer is consummated within sixty (60) days of the date of said Notice to the
Company, and provided, further, that any such sale is in accordance with all the
terms and conditions hereof.
(iv) Termination of Restrictions. Notwithstanding the provisions
of Section 5(a) above, the Company's Right of First Refusal shall terminate
immediately as to all Shares upon the occurrence of the first to occur of the
following events:
(A) the acquisition of the Company by another entity by
means of the merger or consolidation of the Company with or into another
corporation in which the stock-holders of the Company immediately prior to such
merger or consolidation own less than 50% of the voting securities of the
surviving entity,
(B) the sale of all or substantially all of the assets of
the Company, or
(C) the date upon which a public market exists for the
Company's capital stock (or any other stock issued to purchasers in exchange for
the Shares purchased under this Agreement). For the purpose of this Agreement, a
"Public Market" shall be deemed to exist if (1) such stock is listed on a
national securities exchange (as that term is used in the Securities Exchange
Act of 1934), or (2) such stock is traded on the over-the-counter market and
prices are published daily on business days in a recognized financial journal.
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(v) Assignment. Whenever the Company shall have the right to
purchase Shares under this Section 5, the Company may designate and assign one
or more employees, officers, directors or shareholders of the Company or other
persons or organizations to exercise all of the Company's purchase rights under
this Agreement and purchase all of such Shares; provided that if the fair market
value of the Shares to be purchased on the date of such designation or
assignment (the "Repurchase FMV") exceeds the purchase price of the Shares
(determined as described hereinabove) to be purchased, then each such designee
or assignee shall pay the Company cash equal to the difference between the
Repurchase FMV and the purchase price of the Shares which such designee or
assignee shall have the right to purchase.
(vi) Exempt Transfers. The provisions of this Section 5 shall not
apply to a transfer of any Shares by Purchaser, either during his lifetime or on
death by will or intestacy to his ancestors, descendants or spouse, or any
custodian or trustee for the account of Purchaser or Purchaser's ancestors,
descendants or spouse; provided, in each such case that the transferee shall
receive and hold such Shares subject to all of the provisions of this Section 5
and there shall be no further transfer of such Shares except in accordance
herewith.
6. Escrow of Shares. Pursuant to the terms of the Joint Escrow Instructions
attached hereto as EXHIBIT B, the Shares issued under this Agreement shall be
held by the Escrow Agent (as defined in such Joint Escrow Instructions) along
with a stock assignment executed by the Purchaser in blank in the form attached
hereto as EXHIBIT A.
7. Investment Representations. In connection with the purchase of the
Shares, the Purchaser represents to the Company the following:
(a) The Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. The
Purchaser is purchasing the Shares for investment for the Purchaser's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "SECURITIES ACT").
(b) The Purchaser understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission (the "COMMISSION"), the statutory basis for such exemption may not be
present if the Purchaser's representations meant that the Purchaser's present
intention was to hold the Shares for a minimum capital gains period under
applicable tax statutes, for a deferred sale, for a market rise, for a sale if
the market does not rise, or for a year or any other fixed period in the future.
(c) The Purchaser further acknowledges and understands that the Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. The
Purchaser further acknowledges and understands that the Company is under no
obligation to register the Shares. The Purchaser understands that the
certificate evidencing the Shares will be imprinted with a legend which
prohibits the transfer of the
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Shares unless they are registered or such registration is not required in the
opinion of counsel satisfactory to the Company.
8. Stock Certificate Legends. The share certificate evidencing the Shares
issued hereunder shall be endorsed with the following legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(c) Any legend required by any applicable state securities laws.
9. Market Stand-Off Agreement. The Purchaser hereby agrees, if so
requested by the managing underwriters or the Company in connection with the
initial public offering of the Company's Common Stock, that, without the prior
written consent of such managing underwriters, the Purchaser will not offer,
sell, contract to sell, grant any option to purchase, make any short sale or
otherwise dispose of, assign any legal or beneficial interest in or make a
distribution of any capital stock of the Company held by or on behalf of the
Purchaser or beneficially owned by the Purchaser in accordance with the rules
and regulations of the Securities and Exchange Commission for a period of up to
180 days after the date of the final prospectus relating to the Company's
initial public offering.
10. Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, reverse stock split or stock dividend or
other similar change in the Shares which may be made by the Company after the
date of this Agreement.
11. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the Purchaser
(and not the Company) shall be responsible for the Purchaser's own tax liability
that may arise as a result of this investment or the transactions contemplated
by this Agreement. The Purchaser understands that Section 83 of the Internal
Revenue Code of 1986, as amended (the "CODE"), taxes as ordinary income both (i)
the difference between the fair market value of the Shares
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when the Company granted the Purchaser the right to purchase the Shares and the
fair market value of the Shares on the date of this Agreement, and (ii) the
difference between the amount paid for the Shares and the fair market value of
the Shares as of the date any restrictions on the Shares lapse. In this context,
"restriction" includes the right of the Company to buy back the Shares pursuant
to its repurchase option. In the event the Company has registered under the
Exchange Act, "restriction" with respect to officers, directors and 10%
shareholders also means the period after the purchase of the Shares during which
such officers, directors and 10% shareholders could be subject to suit under
Section 16(b) of the Exchange Act. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Company's repurchase option or 16(b) period expires by filing an election
under Section 83(b) of the Code with the I.R.S. within 30 days from the date of
purchase.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE RESPONSIBILITY
AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b), EVEN IF
THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE PURCHASER'S BEHALF.
12. California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
13. General Provisions.
(a) This Agreement shall be governed by the laws of the State of
California. This Agreement represents the entire agreement between the parties
with respect to the purchase of Common Stock by the Purchaser and may only be
modified or amended in writing signed by both parties.
(b) Any notice, demand or request required or permitted to be given by
either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
(c) The rights and benefits of the Company under this Agreement shall
be transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company and any purported transfer otherwise shall be null and void.
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(d) Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party's right
to assert all other legal remedies available to it under the circumstances.
(e) The Purchaser agrees upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or intent of
this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE LAPSING OF THE
REPURCHASE OPTION PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING
SERVICE AS AN "AT WILL" EMPLOYEE OF THE COMPANY (AND NOT THROUGH THE ACT OF
BEING HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
REPURCHASE OPTION SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR SUCH PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE COMPANY'S RIGHT TO TERMINATE
PURCHASER'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.
(g) Purchaser has reviewed this Agreement in its entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understands all provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first set forth above.
PURCHASER: AVANEX CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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PAGE>
CONSENT OF SPOUSE
I, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, spouse of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, have read and approve the
foregoing Agreement. In consideration of granting of the right to my spouse to
purchase shares of Avanex Corporation as set forth in the Agreement, I hereby
appoint my spouse as my attorney-in-fact in respect to the exercise of any
rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws of the State of
California or similar laws relating to marital property in effect in the state
of our residence as of the date of the signing of the foregoing Agreement.
Dated: 8-4-99
/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, ▇▇▇▇▇ ▇▇▇▇▇▇▇, hereby sell, assign and transfer unto
__________________________________________ (550,000) shares of the Common Stock
of Avanex Corporation standing in my name on the books of said corporation
represented by Certificate No. 3 and Certificate Number _____ herewith and do
hereby irrevocably constitute and appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
attorney, to transfer the said stock on the books of the within named
corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Stock
Purchase Agreement between Avanex Corporation and the undersigned dated August
4, 1999.
Dated: 8-4-99
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
INSTRUCTIONS: Please do not fill in the blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"Repurchase Option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
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EXHIBIT B
JOINT ESCROW INSTRUCTIONS
August 4, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Ladies and Gentlemen:
As escrow agent (the "Escrow Agent") for both Avanex Corporation, a
California corporation (the "Company"), and the undersigned purchaser of stock
of the Company (the "Purchaser"), you are hereby authorized and directed to hold
the documents delivered to you pursuant to the terms of that certain Stock
Purchase Agreement ("Agreement") between the Company and the undersigned (the
"Escrow"), in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") exercises the Company's
Repurchase Option (as defined in the Agreement), the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, cancellation of indebtedness or some combination thereof) for the
number of shares of stock being purchased pursuant to the exercise of the
Company's repurchase option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this Escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state
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blue sky authority of any required applications for consent to, or notice of
transfer of, the securities. Subject to the provisions of the Agreement and of
this Escrow Agreement, Purchaser shall exercise all rights and privileges of a
shareholder of the Company while the stock is held by you.
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 90 days after cessation of Purchaser's continuous employment by the
Company, or any parent or subsidiary of the Company, you will deliver to
Purchaser a certificate or certificates representing the aggregate number of
shares held or issued pursuant to the Agreement and not purchased by the Company
or its assignees pursuant to exercise of the Company's repurchase option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts as
you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
-2-
14
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: AVANEX CORPORATION
PURCHASER: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
ESCROW AGENT: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.
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15
Very truly yours,
AVANEX CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------
PURCHASER:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
ESCROW AGENT:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-4-
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ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal
Tax Code, to include in taxpayer's gross income for the current taxable year,
the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME: TAXPAYER: ▇▇▇▇▇ ▇▇▇▇▇▇▇ SPOUSE:
ADDRESS:
IDENTIFICATION NO.: SPOUSE:
TAXABLE YEAR: 1999
2. The property with respect to which the election is made is described as
follows: _______________ shares (the "Shares") of the Common Stock of
Avanex Corporation (the "Company").
3. The date on which the property was transferred is: __________, 1999.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, on certain
events. This right lapses with regard to a portion of the Shares over time.
5. The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms
will never lapse, of such property is approximately: $0.04 per share.
6. The amount (if any) paid for such property is: $
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
------------------------------------ -------------------------------------
Dated: ▇▇▇▇▇ ▇▇▇▇▇▇▇
The undersigned spouse of taxpayer joins in this election.
------------------------------------ -------------------------------------
Dated: Spouse of Taxpayer
17
SECURITY AGREEMENT
This Security Agreement is made as of August 4, 1999 between Avanex
Corporation a ("Pledgee"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Pledgor").
Recitals
A. Pledgor has incurred payment obligations (the "Payment Obligations") to
Pledgee set forth in a Promissory Note of even date herewith.
B. Pledgor desires to provide a security interest in all of the Pledgor's
shares of Common Stock of the Pledgee, all options, and similar rights to
acquire such capital stock or interests, and all rights to receive profits or
surplus or other dividends or distributions from the Pledgee to its
shareholders, in each case whether now owned or existing or hereafter acquired
or arising, wherever located, together with all substitutions, replacements,
(the "Shares") to secure performance by Pledgor of the Payment Obligations, all
as more specifically set forth in this Pledge Agreement.
NOW, THEREFORE, it is agreed as follows:
(1) Creation and Description of Security Interest. In consideration of the
transfer of the Shares to Pledgor under the Stock Purchase Agreement (the
"Agreement), Pledgor, pursuant to the California Commercial Code, hereby pledges
all of such Shares (herein sometimes referred to as the "Collateral")
represented by certificate number __, duly endorsed in blank or with executed
stock powers, and herewith delivers said certificate to the Secretary of Pledgee
("Pledgeholder"), who shall hold said certificate subject to the terms and
conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment for use
in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Agreement, and
the Pledgeholder shall not encumber or dispose of such Shares except in
accordance with the provisions of this Security Agreement.
(2) Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal sum of the
Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
b. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
c. Margin Regulations. In the event that Pledgee's Common Stock is now
or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 207 of
Title 12 of the Code of Federal Regulations
18
("Regulation G"), Pledgor agrees to cooperate with Pledgee in making any
amendments to the Note or providing any additional collateral as may be
necessary to comply with such regulations.
(3) Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
(4) Stock Adjustments. In the event that during the term of the pledge any
stock dividend, reclassification, readjustment or other changes are declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
(5) Options and Rights. In the event that, during the term of this pledge,
subscription Options or other rights or options shall be issued in connection
with the pledged Shares, such rights, Options and options shall be the property
of Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the pledged Shares then held by
Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
(6) Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set forth in the
Agreement or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall have
the right to accelerate payment of the Note upon notice to Pledgor, and Pledgee
shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
(7) Release of Collateral. Subject to any applicable contrary rules under
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder hereunder upon payments of the principal of the
Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
-2-
19
(8) Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
(9) Term. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.
(10) Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
(11) Pledgeholder Liability. In the absence of willful or gross negligence,
Pledgeholder shall not be liable to any party for any of his acts, or omissions
to act, as Pledgeholder.
(12) Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
(13) Successors or Assigns. Pledgor and Pledgee agree that all of the terms
of this Security Agreement shall be binding on their respective successors and
assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall
be deemed to include, for all purposes, the respective designees, successors,
assigns, heirs, executors and administrators.
(14) Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
-3-
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PLEDGOR" By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
"PLEDGEE" Avanex Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
"PLEDGEHOLDER" ----------------------------------------
Stock Option Administrator of
Avanex Corporation
-4-
21
PROMISSORY NOTE
$82,500.00
AUGUST 4, 1999
FOR VALUE RECEIVED, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ promises to pay to Avanex Corporation
(the "Company"), or order, the principal sum of EIGHTY-TWO THOUSAND FIVE HUNDRED
dollars, together with interest on the unpaid principal hereof from the date
hereof at the rate of 5.96% per annum, compounded semiannually.
Principal and interest shall be due and payable on August 4, 2003. Should
the undersigned fail to make full payment of principal or interest for a period
of 10 days or more after the due date thereof, the whole unpaid balance on this
Note of principal and interest shall become immediately due at the option of the
holder of this Note. Payments of principal and interest shall be made in lawful
money of the United States of America.
The undersigned may at any time prepay all or any portion of the principal
or interest owing hereunder.
This Note is subject to the terms of the Stock Purchase Agreement, dated as
of August 4, 1999. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the undersigned,
and shall not be required to proceed against the collateral securing this Note
in the event of default.
In the event the undersigned shall cease to be an employee or consultant of
the Company for any reason, this Note shall, at the option of the Company, be
accelerated, and the whole unpaid balance on this Note of principal and accrued
interest shall be due and payable thirty days after the date of such
termination.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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