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EXHIBIT 10.12.2
AVANEX CORPORATION
SECOND AMENDED AND RESTATED
SHAREHOLDER RIGHTS AGREEMENT
This Second Amended and Restated Shareholder Rights Agreement (this
"Agreement") is made as of this 14th day of September, 1999, by and among Avanex
Corporation, a California corporation (the "Company"), the purchasers of the
Company's Series A Preferred Stock (the "Series A Preferred"), Series B
Preferred Stock (the "Series B Preferred") and Series C Preferred Stock (the
"Series C Preferred") pursuant to that certain Amended and Restated Series A
Preferred, Series B Preferred and Series C Preferred Stock Purchase Agreement
dated February 19, 1999 between the Company and such purchasers (the "Prior
Purchasers"), and the purchasers of the Company's Series D Preferred Stock (the
"Series D Preferred") pursuant to that certain Series D Preferred Stock Purchase
Agreement of even date herewith (the "SERIES D AGREEMENT") between the Company
and such purchasers (including purchasers in subsequent closings under the
Series D Agreement who execute a counterpart signature page to this Agreement)
(the "Series D Purchasers") (the Series A Preferred, Series B Preferred, Series
C Preferred and Series D Preferred are collectively referred to herein as the
"Preferred Stock") (the Prior Purchasers and the Series D Purchasers being
collectively referred to herein as the "Purchasers").
WHEREAS, the Company and Series D Purchasers entered into the Series D
Preferred Purchase Agreement pursuant to which the Company agreed to grant to
Series D Purchasers registration rights upon the terms hereinafter set forth;
WHEREAS, the Company, the Prior Purchasers have entered into that
certain First Amended Shareholders' Rights Agreement dated February 19, 1999
(the "PRIOR AGREEMENT");
WHEREAS, pursuant to Section 24 of the Prior Agreement, the Prior
Agreement may be amended as set forth herein with the Company's prior written
consent and the holders of a majority of the outstanding Registrable Securities
under such Prior Agreement;
WHEREAS, the parties hereto consisting of the Company, the Founders, the
Prior Purchasers and the Series D Purchasers desire to amend, restate and
supersede in their entirety the Prior Agreement as set forth herein to modify
certain provisions thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
Agreement
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any successor agency.
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"Registrable Securities" shall mean (i) shares of the Company's
Common Stock issued or issuable upon the conversion of the Series A Preferred,
Series B Preferred, or Series C Preferred or Series D Preferred; (ii) any Common
Stock of the Company or other securities issued or issuable in respect of shares
of the Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred; and (iii) shares of the Company's Common Stock or other securities
issued or issuable with respect to, or in exchange for or in replacement of
shares of the Company's Common Stock issued or issuable upon conversion of the
Series A Preferred, Series B Preferred, Series C Preferred or Series D Preferred
or other securities convertible into or exercisable for the Series A Preferred,
Series B Preferred, Series C Preferred or Series D Preferred upon any stock
split, stock dividend, recapitalization, or similar event; provided, however,
that any shares described in clauses (i)-(iii) above which have been resold to
the public or can be sold pursuant to Rule 144 of the Securities Act (as defined
below) shall cease to be Registrable Securities.
"Holder" shall mean each Purchaser and any transferee of
Registrable Securities who, pursuant to Section 15 below, is entitled to
registration rights hereunder.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 3 hereof (or any similar
legend).
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (as defined below), and the declaration or
ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 5, 6 and 9 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, accounting fees of the Company, and the expense of any special
audits incident to or required by any such registration.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
2. Restrictions on Transferability. The Restricted Securities shall not
be transferable except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. Each Holder of Restricted Securities will cause any proposed
transferee of the Restricted Securities held by such Holder to agree to take and
hold such Restricted Securities subject to the provisions and upon the
conditions specified in this Agreement.
3. Restrictive Legend. Each certificate representing (i) the Series A
Preferred, Series B Preferred, Series C Preferred or Series D Preferred, (ii)
shares of the Company's Common Stock issued upon conversion of the Series A
Preferred, Series B Preferred, Series C Preferred or Series D Preferred, and
(iii) any other securities issued in respect of the Series A Preferred, Series B
Preferred, Series C Preferred or Series D Preferred and Common Stock issued upon
conversion of the Series A Preferred, Series B Preferred, Series C Preferred or
Series D Preferred upon any stock
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split, stock dividend, recapitalization, merger, consolidation or similar event,
shall (unless otherwise permitted by the provisions of Section 4 below) be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION
AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
4. Notice of Proposed Transfers. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed transfer
of any Restricted Securities (other than (i) a transfer not involving a change
in beneficial ownership, or (ii) in transactions involving the distribution
without consideration of Restricted Securities by a Purchaser to any of its
partners, or retired partners, or to the estate of any of its partners or
retired partners, (iii) a transfer to an affiliated fund or partnership, (iv)
transfers in compliance with Rule 144, so long as the Company is furnished with
satisfactory evidence of compliance with such Rule), unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
the Holder thereof shall give written notice to the Company of such Holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail, and shall, if
the Company so requests, be accompanied (except in transactions in compliance
with Rule 144) by either (i) an unqualified written opinion of legal counsel who
shall be reasonably satisfactory to the Company, addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, or (ii) a "no action" letter from
the Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear the appropriate restrictive legend set forth in
Section 3 above, except that such certificate shall not bear such restrictive
legend if in the opinion of counsel for the Company such legend is not required
in order to establish compliance with any provisions of the Securities Act.
5. Requested Registration.
(a) Request for Registration. If at any time after the earlier
of (i) five years from September 14, 1999 or (ii) six months after the closing
date of the first registration statement filed by the Company covering an
underwritten offering of any of its securities to the general public, the
Company shall receive from any Holder or group of Holders holding at least a
majority of the Registrable Securities (the "Initiating Holders") a written
request that the Company effect any
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registration, qualification or compliance with respect to at least thirty
percent (30%) of the shares of Registrable Securities, or such lesser number of
shares of Registrable Securities if the reasonably anticipated aggregate
proceeds of such offering exceed $15,000,000, the Company will:
(x) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders holding
Registrable Securities; and
(y) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 20 days after receipt of such written notice from the
Company;
Provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification or compliance
pursuant to this Section 5:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) After the Company has effected two such
registrations pursuant to this Section 5(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold; or
(C) Within six months following the effective date
of a registration statement previously filed by the Company.
Subject to the foregoing clauses (A), (B) and (C), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders. If, however, the Company shall furnish to the
Initiating Holders a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
such filing for a period of not more than 120 days after receipt of the request
of the Initiating Holder, provided, however, that the Company may not utilize
this right more than once in any twelve-month period.
(b) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 5(a) and the Company shall include such information in the
written notice referred to in Section 5(a)(x). The right of any Holder to
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registration pursuant to Section 5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent requested (unless
otherwise mutually agreed by a majority in interest of the Holders) and to the
extent provided herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders. Notwithstanding any other
provision of this Section 5, if the managing underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then, subject to the provisions of Section 5(a), the
Company shall so advise all Holders and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders requesting inclusion in the registration in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason of
the managing underwriter's marketing limitation shall be included in such
registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the other Holders. The Registrable
Securities and/or other securities so withdrawn shall also be withdrawn from
registration; provided, however, that if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company may offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 5(b). If the registration does not become
effective due to the withdrawal of Registrable Securities, then either (1) the
Holders requesting registration shall reimburse the Company for expenses
incurred in complying with the request or (2) the aborted registration shall be
treated as effected for purposes of Section 5(a)(B).
6. Company Registration.
(a) Notice of Registration. If the Company shall determine to
register any of its securities, either for its own account or the account of a
security holder or holders exercising their respective requested registration
rights, other than (i) a registration relating solely to employee benefit plans,
(ii) a registration relating solely to a transaction pursuant to Rule 145 of the
Securities Act, or (iii) a registration on Form S-3 solely for the purpose of
registering shares issued in a non-underwritten offering in connection with a
merger, combination or acquisition, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such written notice from the
Company, by any Holder or Holders.
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(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 6 shall be conditioned upon such Holder's
participation in such underwriting to the extent provided herein. The Company
shall (together with all Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 6, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities and other securities to be distributed through such underwriting,
provided that the Company may limit, to the extent so advised by the
underwriters, the amount of Registrable Securities to be included in the
registration by the Holders to an amount not less than 30% of the total number
of securities included in the offering, unless such offering is the initial
public offering of the Company's securities, in which case all Registrable
Securities may be excluded from such offering. No Registrable Securities
excluded from the underwriting by reason of the managing underwriter's marketing
limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the other Holders. The Registrable
Securities and/or other securities so withdrawn shall also be withdrawn from
registration; provided, however, that if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company may offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 6(b).
(c) In all registered public offerings, whether underwritten
or not, the amount of Registrable Securities of Holders which are included in
such registration, in accordance with the limitations set forth in Section
6(a)(ii) above, shall be allocated to the Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities which would be
held by each of such Holders assuming conversion of all outstanding Series A
Preferred, Series B Preferred and Series C Preferred as of the date of the
notice given pursuant to this Section 6.
7. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 5(a), Section 6 and Section 9 shall be borne by the Company. All Selling
Expenses relating to securities registered by the Holders shall be borne by the
Holders of such securities pro rata on the basis of the number of shares so
registered.
8. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least 120 days or
until the distribution described in the registration statement has been
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completed; provided, however, that such one 120-day period shall be extended for
a period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities;
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(g) Cause such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed; and
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
9. Registration on Form S-3. In addition to the rights set forth in
Section 5, if the Holders holding at least 30% of the Registrable Securities
request in writing that the Company file a registration statement on Form S-3
(or any successor thereto) for a public offering of shares of Registrable
Securities the reasonably anticipated aggregate price to the public of which
would exceed $1,000,000, and the Company is a registrant entitled to use Form
S-3 to register securities for such an offering, the Company shall use its best
efforts to cause such shares to be registered for the offering on such form (or
any successor thereto). The Company will promptly give written notice of
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the request for the proposed registration to all other Holders and include all
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within 30 days after
receipt of such written notice from the Company. The substantive provisions of
Section 5(b) shall be applicable to each registration initiated under this
Section 9. A Holder or group of Holders is entitled to an unlimited number of
Form S-3 registrations; provided, however, that the Company shall be required to
file no more than one (1) such registration statement during any 12-month
period.
10. Termination of Registration Rights. The registration rights granted
pursuant to this Agreement shall terminate (i) as to all Holders on the fifth
anniversary of the closing of the Company's initial public offering and (ii) as
to any Holder, at such time after the Company's initial public offering as the
Registrable Securities held by such Holder represents 1% or less of the
outstanding Common Stock of the Company and such Holder is able to sell such
Registrable Securities under Rule 144 or such Holder is able to sell all
Registrable Securities held by it pursuant to Rule 144(k) promulgated under the
Securities Act.
11. Lockup Agreement. In consideration for the Company agreeing to its
obligations under this Agreement each Holder of Registrable Securities and each
transferee pursuant to Section 15 hereof agrees, in connection with the first
registration of the Company's securities, upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities or other securities of the
Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) from the effective date of such
registration as the Company or the underwriters may specify; provided, however
that all executive officers and directors of the Company must enter into similar
Lock-Up Agreements as well. Each Holder agrees that the Company may instruct its
transfer agent to place stop transfer notations in its records to enforce the
provisions of this Section 11.
12. Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors and partners and such Holder's legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each such Holder, each of its officers, directors and
partners and
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such Holder's legal counsel and independent accountants, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holders,
such directors, officers, legal counsel, independent accountants, underwriters
or control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of such Holders hereunder shall be limited to an amount equal to the
gross proceeds before expenses and commissions to each such Holder of
Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section
12 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnified Party (together with
all other Indemnified Parties that may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding; and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement, except to the extent, but only to the extent,
that the
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Indemnifying Party's ability to defend against such claim or litigation is
impaired as a result of such failure to give notice. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
13. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
14. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;
(b) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements); and
(c) Furnish to Holders of Registrable Securities forthwith
upon request, a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after 90 days after the
effective date of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the Securities Act and
the Securities Exchange Act of 1934 (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as a
Holder of Registrable Securities may reasonably request in availing itself of
any rule or regulation of the Commission allowing such Holder to sell any such
securities without registration.
15. Transfer of Registration Rights. The right to cause the Company to
register securities granted hereunder may be assigned to a transferee or
assignee who acquires at least 500,000 shares of Series A Preferred, Series B
Preferred, Series C Preferred or Series D Preferred (or Common Stock issued on
conversion thereof) (as adjusted for stock splits, reverse stock splits or
similar events after the date hereof), provided that the Company is given
written notice of such assignment prior to such assignment. In addition, rights
to cause the Company to register securities may be freely assigned (a) to any
constituent partner or retired partner of a Holder, where such Holder is a
partnership, (b) to any affiliate (as that term is defined in Rule 405
promulgated by the Commission under the Securities Act), (c) to any officer,
director or principal shareholder thereof, where such Holder is a corporation or
(d) to the spouse, children, grandchildren or spouse of such children or
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grandchildren of any Holder or to trusts for the benefit of any Holder or such
persons where the Holder is a natural person.
16. Subsequent Grant of Registration Rights. The Company shall not grant
rights to have securities other than the Registrable Securities registered under
the Securities Act that are pari passu or superior to the registration rights
granted herein without the written consent of the holders of a majority of the
shares of Series A Preferred, Series B Preferred, Series C Preferred and Series
D Preferred (or Common Stock issued upon conversion thereof) (voting together as
a single class on an as converted basis).
17. Company Covenants. The Company hereby covenants and agrees as
follows:
17.1 Annual Financial Information. The Company will furnish to
each Purchaser for so long as such Purchaser is a holder of any shares of Series
A Preferred, Series B Preferred, Series C Preferred or Series D Preferred
purchased by such person pursuant to the Agreement (or Common Stock issued upon
conversion of the Series A Preferred, Series B Preferred, Series C Preferred or
Series D Preferred), as soon as practicable after the end of each fiscal year,
and in any event within 90 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of cash flows of
the Company and its subsidiaries, if any, for such year, prepared in accordance
with generally accepted accounting principles consistently applied and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and certified by independent public accountants of
national standing selected by the Company.
17.2 Quarterly Financial Information and Financial Plan. The
Company will furnish the following reports to each Purchaser for so long as such
Purchaser is a holder of at least 500,000 shares of Series A Preferred, Series B
Preferred, Series C Preferred or Series D Preferred (or Common Stock issued upon
conversion of Series A Preferred, Series B Preferred, Series C Preferred or
Series D Preferred or a combination of such Series A Preferred, Series B
Preferred, Series C Preferred and Common Stock) (adjusted for stock splits,
reverse stock splits or similar events after the date hereof).
(a) As soon as practicable after the end of each fiscal
quarter (except for the fiscal quarter ending December 31 of each year), and in
any event with 45 days thereafter, consolidated balance sheets of the Company
and its subsidiaries, if any, as of the end of such quarter, and cash flow
statements and consolidated statements of income for each quarter and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles consistently applied, all in reasonable detail and signed,
subject to changes resulting from year-end audit adjustments, by the principal
financial or accounting officer of the Company, together with a comparison of
such statements to the Company's operating plan then in effect and approved by
its Board of Directors.
(b) As soon as available (but in any event within 10 days
after the commencement of its fiscal year), a summary of the financial plan of
the Company for each fiscal year, including (but not limited to) a cash flow
projection and operating budget, calculated monthly, as contained in its
operating plan approved by the Company's Board of Directors.
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17.3 Assignment of Rights to Financial Information. The rights to
receive information pursuant to Section 17.1 may be assigned or otherwise
conveyed by any Purchaser or subsequent transferee to any transferee of shares
of Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred (or Common Stock issued upon conversion thereof). The rights specified
in Section 17.2 may be assigned or otherwise conveyed by a Purchaser or
subsequent transferee only to a transferee who acquires at least 500,000 shares
of Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred (or Common Stock issued upon conversion thereof) (adjusted for stock
splits, reverse stock splits or similar events after the date hereof).
17.4 Inspection. The Company shall permit each Purchaser for so
long as such Purchaser is eligible to receive reports under Section 17.2 at such
Purchaser's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Purchaser; provided, however, that the Company shall not be obligated
pursuant to this Section 17.4 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
17.5 Employment, Confidential Information and Invention
Assignment Agreement. The Company will require each person employed by the
Company, whether at present or in the future, to execute an Employment,
Confidential Information and Invention Assignment Agreement in a form approved
by the Company's Board of Directors as a condition of such employment.
17.6 Vesting of Employee Stock. All stock and options to acquire
stock of the Company granted to employees of the Company pursuant to a stock
grant, option plan or purchase plan or other employee stock incentive program
approved by the Board of Directors will be subject to four year vesting, except
as otherwise approved by the Company's Board of Directors.
17.7 Confidentiality Agreement. Each Purchaser and any successor
or assign of such Purchaser, who receives from the Company or its agents,
directly or indirectly, any information which the Company has not made generally
available to the public, pursuant to the preparation and execution of this
Agreement or disclosure in connection therewith or pursuant to the provisions of
this Section 17, acknowledges and agrees that such information is confidential
and for its use only in connection with evaluating its investment in the
Company, and further agrees that it will not disseminate such information to any
person other than its accountant, investment advisor or attorney and that such
dissemination shall be only for purposes of evaluating its investment.
17.8 Termination of Covenants. Notwithstanding anything to the
contrary set forth herein, the covenants set forth in this Section 17 shall
terminate and be of no further force or effect after the date upon which the
first registration statement filed by the Company under the Securities Act in
connection with an underwritten public offering of its securities first becomes
effective ("IPO").
18. Rights of First Refusal. The Company hereby grants to each Purchaser
who holds at least 600,000 shares of Registrable Securities the right of first
refusal to purchase its pro rata share of "New Securities" (as defined in this
Section 18) that the Company may, from time to time propose to sell and issue.
Such pro rata share, for purposes of this right of first refusal, is the ratio
of (X) the number of shares of Common Stock immediately prior to the issuances
of New Securities then
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owned by such Purchaser or issuable upon the conversion of the Series A
Preferred, Series B Preferred, Series C Preferred or Series D Preferred then
owned by such Purchaser (including shares issuable upon exercise of options or
warrants held by such Purchaser), to (Y) the total number of shares of Common
Stock immediately prior to the issuances of New Securities then outstanding,
after giving effect to the conversion of all outstanding convertible securities
(including the Series A Preferred Stock, Series B Preferred, Series C Preferred
and Series D Preferred) and the exercise of all outstanding options. This right
of first refusal shall be subject to the following provisions:
(a) "New Securities" shall mean any Common Stock and Preferred
Stock of the Company whether or not authorized on the date hereof, and rights,
options, or warrants to purchase Common Stock or Preferred Stock and securities
of any type whatsoever that are, or may become, convertible into Common Stock or
Preferred Stock; provided, however, that "New Securities" does not include the
following:
(i) the Series A Preferred, the Series B Preferred, the
Series C Preferred or any agreement or commitment to issue any of the foregoing;
(ii) shares of Common Stock, or options to purchase shares
of Common Stock (including all options granted by the Company prior to the date
of this Agreement), issued or granted to officers, directors and employees of,
or consultants to, the Company pursuant to a stock grant, employee restricted
stock purchase agreement, option plan or purchase plan or other stock incentive
program (collectively, the "Plans");
(iii) shares of Common Stock issuable upon conversion of
the Series A Preferred, Series B Preferred and Series C Preferred;
(iv) securities of the Company offered to the public
pursuant to a firm commitment underwritten public offering pursuant to a
registration statement filed under the Securities Act;
(v) securities of the Company issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization whereby the Company
owns more than fifty percent (50%) of the voting power of such other
corporation;
(vi) securities of the Company issued in connection with
equipment lease financing transactions, real estate leases or bank financing
transactions the principal purpose of which is not to raise equity funding;
(vii) securities issued to corporate partners or in
connection with other strategic alliances if the Board of Directors agrees that
such transaction should be excluded from operation of this Section 18; and
(viii) shares of Common Stock or Preferred Stock issued in
connection with any stock split, stock dividend, or recapitalization by the
Company.
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(b) In the event that Company proposes to undertake an
issuance of New Securities, it shall give each Purchaser written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. Each Purchaser shall
have twenty (20) business days after receipt of such notice to agree to purchase
its pro rata share of such New Securities at the price and upon the terms
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased. If any Purchaser fails
to agree to purchase its full pro rata share within such twenty (20) business
day period, the Company shall give the Purchasers who did so agree (the
"Electing Purchasers") notice of the number of shares which were not subscribed
for. Such notice may be by telephone if followed by written confirmation within
two days. The Electing Purchasers shall have five (5) business days from the
date of such notice to agree to purchase their pro rata share of all of the New
Securities not purchased by such non-purchasing Purchasers.
(c) In the event that Purchasers fail to exercise in full the
right of first refusal within the twenty (20) business day plus five (5)
business day period specified above, the Company shall have one hundred twenty
(120) days thereafter to sell (or enter into an agreement pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within sixty
(60) days from the date of said agreement) the New Securities respecting which
the rights of the Purchasers were not exercised at a price and upon terms no
more favorable to the purchasers thereof than specified in the Company's notice.
In the event the Company has not sold the New Securities within such one hundred
twenty (120) day period (or sold and issued New Securities in accordance with
the foregoing within sixty (60) days from the date of such agreement) the
Company shall not thereafter issue or sell any New Securities, without first
offering such New Securities to the Purchasers and in the manner provided above.
(d) The right of first refusal granted under this Section 18
shall expire upon an IPO.
(e) This right of first refusal is nonassignable except to any
transferee to whom registration rights may be transferred pursuant to Section 15
of this Agreement.
19. Governing Law. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of California with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
20. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding rights to
registration. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto. This
Agreement shall supersede and cancel all prior agreements between the parties
hereto with regard to the subject matter hereof, including, but not limited to,
the Prior Rights Agreement.
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21. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon delivery to the party to be notified in person by facsimile or by courier
service or five days after deposit with the United States mail, by registered or
certified mail, postage prepaid, addressed (a) if to a Purchaser, at such
Purchaser's address set forth in Exhibit A, or at such other address as such
Purchaser shall have furnished to the Company in writing, or (b) if to any other
holder of any Shares, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Shares who has so
furnished an address to the Company, or (c) if to the Company, one copy should
be sent to its address and facsimile number set forth at the end of this
Agreement and addressed to the attention of the Corporate Secretary, or at such
other address as the Company shall have furnished to the Purchasers (with a copy
to Xxxxxx X. X'Xxxxx, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000; facsimile: (000) 000-0000).
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
23. Additional Parties. The parties to this Agreement acknowledge that
the Company's Preferred Stock may be sold in multiple closings pursuant to the
Purchase Agreement, and the parties hereto agree that all of the purchasers of
Preferred Stock pursuant to the Purchase Agreement can be added as parties to
this Agreement and granted all of the rights of Purchasers under this Agreement
without any further action or approval by other parties to this Agreement.
24. Amendment. Any provision of this Agreement may be amended, waived or
modified upon the written consent of the Company and the Holders of a majority
of the Registrable Securities. Any amendment or waiver effected in accordance
with this Section shall be binding upon each Holder of Registrable Securities
and the Company. Any Purchaser may waive any of its rights or the Company's
obligations hereunder without obtaining the consent of any other person.
25. Headings. Headings and the table of contents in this Agreement are
for reference purposes only and shall not be deemed to have an substantive
effect.
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IN WITNESS WHEREOF, the undersigned have executed this Second Amended
and Restated Shareholder Rights Agreement as of the date set forth above.
"COMPANY"
AVANEX CORPORATION
By: /s/ XXXXXX XXXXXXXXXXXX
--------------------------------------------
Xxxxxx Xxxxxxxxxxxx, Chief Executive Officer
Address: 00000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
[SIGNATURE PAGE SECOND AMENDED AND RESTATED SHAREHOLDERS RIGHTS AGREEMENT]
17
"PURCHASERS"
SEQUOIA CAPITAL FRANCHISE FUND
SEQUOIA CAPITAL FRANCHISE PARTNERS
SEQUOIA CAPITAL VII
a California Limited Partnership
SEQUOIA TECHNOLOGY PARTNERS VII
a California Limited Partnership
SQP 1997
SEQUOIA 1997 LLC
SEQUOIA INTERNATIONAL PARTNERS
By: SC VII-A Management, LLC
A California Limited Liability Company,
its General Partners
By: /s/ XXXXXXX X. XXXXXX
------------------------------------------
Managing Member
[SIGNATURE PAGE SECOND AMENDED AND RESTATED SHAREHOLDERS RIGHTS AGREEMENT]
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CROSSPOINT VENTURE PARTNERS 1997
By: /s/ XXXX XXXXXX
------------------------------------------
Xxxx Xxxxxx
Partner
CROSSPOINT VENTURE PARTNERS LS 1999
By: /s/ XXXX XXXXXX
------------------------------------------
Xxxx Xxxxxx
Partner
[SIGNATURE PAGE SECOND AMENDED AND RESTATED SHAREHOLDERS RIGHTS AGREEMENT]
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WS INVESTMENT 98
By: /s/ XXXXXX X. X'XXXXX
------------------------------------------
Partner
WS INVESTMENT 99B
By: /s/ XXXXXX X. X'XXXXX
------------------------------------------
Partner
XXXXXXXX X. X'XXXXX AND XXXXXX X. X'XXXXX,
TRUSTEES OF THE O'BRIEN FAMILY TRUST
U/D/T DATED 7/1/92
By: /s/ XXXXXX X. X'XXXXX
------------------------------------------
XXXXX XXXXXXXX
/s/ XXXXX XXXXXXXX
---------------------------------------------
XXXXXXXX X. XXXXXXX AND XXXXXXX X. XXXXX
AS COMMUNITY PROPERTY
/s/ XXXXXXXX X. XXXXXXX
---------------------------------------------
XXXXXX X. XXXXXX AND XXXXX X. XXX JTWROS
/s/ XXXXXX X. XXXXXX
---------------------------------------------
---------------------------------------------
XXXXX XXXXX
/s/ XXXXX XXXXX
---------------------------------------------
[SIGNATURE PAGE SECOND AMENDED AND RESTATED SHAREHOLDERS RIGHTS AGREEMENT]
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JAFCO CO., LTD.
By: /s/ XXXXX XXXXXXXXX
------------------------------------------
JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO R-3 INVESTMENT ENTERPRISE PARTNERSHIP
By: /s/ XXXXX XXXXXXXXX
------------------------------------------
JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO JS-3 INVESTMENT ENTERPRISE PARTNERSHIP
By: /s/ XXXXX XXXXXXXXX
------------------------------------------
JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO G6-(A) INVESTMENT ENTERPRISE
PARTNERSHIP
By: /s/ XXXXX XXXXXXXXX
------------------------------------------
JAFCO America Ventures, Inc.
Its Executive Partner
JAFCO G6-(B) INVESTMENT ENTERPRISE
PARTNERSHIP
By: /s/ XXXXX XXXXXXXXX
------------------------------------------
JAFCO America Ventures, Inc.
Its Executive Partner
U.S. INFORMATION TECHNOLOGY NO. 2
INVESTMENT ENTERPRISE PARTNERSHIP
By: /s/ XXXXX XXXXXXXXX
------------------------------------------
JAFCO Co., Ltd.
Its Executive Partner
[SIGNATURE PAGE SECOND AMENDED AND RESTATED SHAREHOLDERS RIGHTS AGREEMENT]
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XXXXXXXX IX
A Delaware Limited Partnership
By: /s/ XXXX XXXXXX
------------------------------------------
Xxxxxxxx IX Management, L.L.C.
Its General Partner
XXXXXXXX ASSOCIATES FUND IV
A Delaware Limited Partnership
By: /s/ XXXX XXXXXX
------------------------------------------
Xxxxxxxx IX Management, L.L.C.
Its General Partner
[SIGNATURE PAGE SECOND AMENDED AND RESTATED SHAREHOLDERS RIGHTS AGREEMENT]
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