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EXHIBIT 10.11
THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT TO SUCH EFFECT.
CIENA CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for the sum of $150.00, the receipt of which
is hereby acknowledged, Xxxxxxx X. Xxxxxxxx & Co., Incorporated or its
registered assigns pursuant to Paragraph 10(b) hereof ("Holder") is entitled to
subscribe for and purchase up to 15,000 shares (subject to adjustment as
described herein) of fully paid and nonassessable Common Stock of CIENA
Corporation, a Delaware corporation (the "Company"), upon exercise of this
Warrant and subject to the provisions and upon the terms and conditions
hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's
presently authorized Common Stock and any securities into which such Common
Stock may hereafter be exchanged.
1. TERM.
This Warrant is exercisable, in whole or in part, at any time
beginning August 22, 1997 until 5:00 P.M. New York City time on August 21, 2001,
provided, however, that if at any time Holder or any of Holder's affiliates
(including without limitation, Xxxxxxx X. Xxxxxxxx, III) brings a claim or
claims of any kind, whether in arbitration, litigation or any other forum,
including specifically claims brought after conclusion of an IPO by the Company
for breach of the Settlement Agreement and Mutual Release dated as of August 21,
1996 between Holder and the Company (the "Settlement"), against the Company,
Xxxxx Xxxxx or any of the entities identified in paragraph 10 of the Settlement,
this Warrant, to the extent unexercised, shall be null and void. Notwithstanding
anything herein to the contrary, the Company shall use reasonable efforts to
mail to the original Holder, by certified mail, return receipt requested, notice
of the expiration date of this Warrant, no later than 15 days prior to the
expiration date, but the failure of the Company to send or the Holder to receive
such notice shall not affect the expiration hereof.
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2. WARRANT PRICE.
The purchase price payable for each share of Common Stock
deliverable upon exercise of this Warrant (the "Warrant Price") is $20.00 per
share, subject to adjustment as described in Section 5 hereof.
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) Subject to Paragraph 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in
whole or in part, by the surrender of this Warrant (with the Notice of Exercise
form attached hereto as Exhibit 1 duly executed) at the principal office of the
Company and by the payment to the Company of an amount equal to the then
applicable Warrant Price per share multiplied by the number of shares then
being purchased. The Warrant Price shall be paid in cash, by wire transfer or
by check.
(b) In lieu of delivering the Warrant Price as set forth
in subparagraph (a), the Holder may exercise this Warrant by conversion, in
whole or in part, into shares of Common Stock, by instructing the Company in
writing ("Notice of Conversion") to deliver to the Holder (without payment by
the Holder of any Warrant Price or of any other cash or consideration) that
number of shares of Common Stock equal to the quotient obtained by dividing:
(i) the value of this Warrant at the time the
conversion right is exercised (determined by subtracting
the aggregate Warrant Price in effect immediately prior to
the exercise of the conversion right from the aggregate
current market price (as determined in accordance with
Paragraph 5(f) hereof) of the shares of Common Stock
issuable upon exercise of this Warrant immediately prior
to the exercise of the conversion right) by
(ii) the current market price (as determined in
accordance with Paragraph 5(e) hereof) of one share of
Common Stock immediately prior to the exercise of the
conversion right,
and multiplying the quotient so obtained by a fraction equal to the portion of
this Warrant which the Holder desires to exercise.
The Notice of Conversion may be given by circling the appropriate
option in the Notice of Exercise attached to this Warrant.
(c) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the business day on which
this Warrant shall have been surrendered to the Company, and at such time, the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock (or other securities) shall be issuable upon such
exercise, shall be deemed to have become the holder or holders of record
thereof.
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(d) In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the Holder hereof (or the transferee designated in the Notice of
Exercise) within a reasonable time (but not later than three (3) business days
after the date of such exercise) and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of the shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the Holder hereof within such reasonable time.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Common Stock which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of the issue upon exercise of this Warrant, a
sufficient number of shares of its Common Stock to provide for the exercise of
this Warrant in full.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
The kind of securities purchasable upon the exercise of
this Warrant and the Warrant Price shall be subject to adjustment from time to
time upon the occurrence of certain events as follows:
(a) Reclassification, Consolidation or Merger. In case of any
reclassification or change of outstanding securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case of
any consolidation or merger of the Company with or into another corporation,
(other than a merger (i) with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant or (ii)
a merger in which the Company is not the surviving corporation and holders of
equity securities of the Company as a result of such merger receive more than
50% of the equity securities of the surviving corporation), or in case of any
sale of all or substantially all of the assets of the Company, or in case of a
share exchange in which 80% or more of the outstanding capital stock of the
Company is exchanged for capital stock of another corporation, any of which
transactions shall be referred to hereinafter as a "Corporate Transaction," the
Company or such successor or purchasing company or entity, as the case may be,
shall execute with the Holder of this Warrant an agreement pursuant to which
the Holder of the Warrant shall have the right thereafter to purchase upon
exercise of the Warrant the kind and amount of shares, and/or other securities
and property that the Holder of the Warrant would have owned or have been
entitled to receive after the happening of such Corporate Transaction had the
Warrant been exercised immediately prior to such action. The agreement referred
to in this subparagraph (a) shall provide for adjustments which shall be as
nearly equivalent as
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may be practicable to the adjustments provided for in this Paragraph 5. The
provisions of this subparagraph (a) shall similarly apply to successive
Corporate Transactions.
(b) Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be proportionately decreased
in the case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in, or make any other distribution with respect to Common Stock
(except any distribution provided for in the foregoing subparagraph (a) or (b)),
of Common Stock, then the Warrant Price shall be adjusted, from and after the
date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (a) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution and (b) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price, the number of shares of Common Stock purchasable hereunder shall
be adjusted, to the nearest whole share, to the product obtained by multiplying
the number of shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.
(e) Current Market Price. For the purpose of any computation
under this Warrant, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily Closing Prices of the shares
of Common Stock for the thirty (30) consecutive Trading Days preceding the
applicable date. The "Closing Price" for each day shall be (i) the last reported
sale price regular way or, in case no such sale takes place on such date, the
average of the closing bid and asked quotations regular way, in either case on
the New York Stock Exchange, or, if the Common Stock is not listed or admitted
to trading on such exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading; or (ii) if the Common
Stock is not listed or admitted to trading on any national securities exchange,
the last reported sale price regular way or, in case no such sale takes place on
such day, the average of the closing bid and asked quotations regular way, in
either case on the National Market System of the National Association of
Securities Dealers, Inc. ("NASD"); or (iii) if not authorized for trading or
quotation on such system, the average of the highest reported bid and lowest
reported asked quotations as furnished by the NASD or similar organization if
the NASD is no longer reporting such information; or (iv) if no such prices or
quotations are available, the fair market value of the Common Stock as
determined by good faith action of the Board of
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Directors of the Company (whose determination shall be conclusive). A "Trading
Day" shall be any day that the principal national securities exchange on which
the Common Stock listed or admitted to trading is open for the transaction of
business or, if not so listed or admitted, that the New York Stock Exchange is
open for the transaction of business.
(f) Adjustment for De Minimis Change. No adjustment in the
Warrant Price shall be required unless such adjustment would require an increase
or decrease of at least $0.05 in such price; provided, however, that any
adjustments which by reason of this subparagraph (f) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment
required to be made hereunder.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to
Paragraph 5 hereof, the Company shall make a certificate signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price or Prices after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (by
registered mail, return receipt requested, postage prepaid) to the Holder of
this Warrant at the address specified in Paragraph 10(d) hereof or at any
address provided to the Company in writing by the Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment upon the basis of the Warrant Price then
in effect and the fair market value of a full share as determined for this
purpose by the Company's Board of Directors.
8. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF SHARES OF
COMMON STOCK.
The Holder of this Warrant, by acceptance hereof, agrees that
this Warrant and the shares of Common Stock to be issued upon exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of Common Stock to be issued upon exercise
hereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act") and will provide to the Company
upon its request an opinion of counsel satisfactory to the Company as to the
exemption from the Act and applicable state securities laws applicable to such
offer, sale or disposition. Upon exercise of this Warrant, the Holder hereof
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the shares of Common Stock so purchased are being acquired
for investment and not with a view toward distribution or resale. This
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Warrant and all shares of Common Stock issued upon exercise of this Warrant
(unless registered under the Act) shall be stamped or imprinted with a legend
substantially in the following form as well as any additional legends required
by applicable securities laws or stockholders' agreements and similar agreements
encumbering such shares:
"THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED, SOLD,
OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE AND THE COMPANY RECEIVES
AN OPINION OF COUNSEL SATISFACTORY TO IT TO SUCH EFFECT."
The Holder represents and warrants to the Company that it is an
"accredited investor" as defined in Securities and Exchange Commission Rule 501
promulgated under the Act.
9. PIGGY-BACK REGISTRATION RIGHTS.
(a) Piggy Back Registrations. If at any time after an initial
public offering by the Company of its securities, the Company proposes to make a
registered public offering of any of its securities under the Securities Act of
1933 (whether to be sold by the Company or by one or more third parties), the
Company agrees on the first such occasion, to give written notice of the
proposed registration to Holder, not less than 15 days prior to the proposed
filing date of the registration statement, and at the written request of Holder
delivered in writing to the Company within 15 days after the receipt of said
notice; the Company agrees, subject to the provisions of this Section 9, to
include in the registration statement and offering, and in any underwriting of
the offering; all shares of Common Stock as may have been designated in the
Holder's request.
(b) Underwriter Discretion. If a registration in which the Holder
has the right to participate pursuant to this Section 9 is an underwritten
registration on behalf of the Company, and the managing underwriters advise the
Company, that in their opinion, the number of securities requested to be
included in the registration exceeds the number which can be sold in the
offering, the Company shall allocate the number of shares to be included in the
registration statement as follows: (i) first, all of the securities of the
Company proposed to be sold by the Company, (ii) second, stockholders with
piggy-back registration rights in existence as of the date hereof; and (iii)
third, the Common Stock requested to be sold by Holder and all other requesting
stockholders reduced, pro rata, in accordance with the percentage interests in
the Company held by each of them.
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(c) Information Required. The Company shall have no obligation to
include shares of Common Stock owned by Holder in a registration statement
pursuant to this Section 9, unless and until the Holder shall have furnished the
Company with all information and statements about or pertaining to Holder in the
reasonable detail and on a timely basis as is reasonably deemed by the Company
to be necessary or appropriate with respect to the preparation of the
registration statement.
(d) Hold-back. In the event that the Company effects an
underwritten public offering of any security, the Holder agrees, if requested by
the managing underwriters, not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act of 1933, of any
Common Stock (except as part of the underwritten offering) during the 180-day
period commencing with the effective date of the registration statement for the
offering.
(e) Expenses. If, pursuant to Section 9 hereof, shares of Common
Stock owned by any Holder are included in a registration statement, the Holder
shall pay all transfer taxes, if any, relating to the sale of its shares, the
fees and expenses of its own counsel, and its pro rata portion of any
underwriting discounts or commissions or the equivalent thereof. The Company
agrees to pay all expenses incident to the registration including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, underwriting discounts, fees and expenses (other than the
Holder's pro rata portion of any underwriting discounts or commissions or the
equivalent thereof), printing expenses, messenger and delivery expenses, and
fees and expenses of counsel for the Company and all independent certified
public accountants and other persons retained by the Company.
(f) Indemnification. In the event that any share of Common Stock
owned by a Holder are sold by means of a registration statement pursuant to this
Section 9, the Company agrees to indemnify and hold harmless the Holder, each of
its officers and directors, and each person, if any, who controls or may control
the Holder within the meaning of the Act (the Holder, its officers and
directors., and any other persons being hereinafter referred to individually as
an "Indemnified Person" and collectively as "Indemnified Persons") from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs, and expenses, including, without limitation,
interest, penalties, and reasonable attorneys' fees and disbursements, asserted
against, resulting to, imposed upon or incurred by the Indemnified Person,
directly or indirectly (hereinafter referred to in this Section 9 or, the
singular as a "claim" and in the plural as "claims"), based upon, arising out of
or resulting from any untrue statement of a material fact obtained in the
registration statement or any omission to state therein a material fact
necessary to make the statement made therein, in the light of the circumstances
under which they were made, not misleading, except insofar as the claim is based
upon, rises out of or results from information furnished to the Company in
writing by the Holder for use in connection with the registration statement. The
Holder agrees to indemnify and. hold harmless the Company, its officers and
directors, and each person, if any, who controls or may control the Company
within the meaning of the Act (the Company, it's officers and
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directors, and any other persons also being hereinafter referred to individually
as an "Indemnified Person" and collectively as "Indemnified Persons") from and
against all claims based upon, arising out of or resulting from any untrue
statement of a material fact contained in the registration statement or any
omission to state therein a material fact necessary in order to make the
statement made therein, in the light of the circumstances under which they were
made, not misleading, to the extent that the claim is based upon, arises out of
or results from information furnished to the Company in writing by the Holder
for use in connection with the registration statement. Promptly after actually
receiving definitive notice of any claim in respect of which an Indemnified
Person may seek indemnification under this Section 9, the Indemnified Person
shall submit written notice thereof to either the Company or the Holder, as the
case may be (sometimes being hereinafter referred to as an "Indemnifying
Person"). The omission of the Indemnified Person to so notify the Indemnifying
Person of any claim shall not relieve the Indemnifying Person from any liability
it may have hereunder except to the extent that (a) the liability was caused or
increased by the omission, or (b) the ability of the Indemnifying Person to
reduce the liability was materially adversely affected by the omission. In
addition, the omission of the Indemnified Person so to notify the Indemnifying
Person of any claim shall not relieve the Indemnifying Person from any liability
it may have otherwise than hereunder. The Indemnifying Person shall have the
right to undertake, by counsel or representatives of its own choosing, the
defense, compromise or settlement (without admitting liability of the
Indemnified Person) of and the claim asserted, the defense, compromise or
settlement to be undertaken at the expense and risk of the Indemnifying Person,
and the Indemnified Person shall have the right to engage separate counsel, at
its own expense, whom counsel for the Indemnifying Person shall keep informed
and consult with in a reasonable manner. In the event the Indemnifying Person
shall elect not to undertake the defense by its own representatives, the
Indemnifying Person shall give prompt written notice of the election to the
Indemnified Person, and the Indemnified Person shall undertake the defense,
compromise or settlement (without admitting liability of the Indemnified Person)
thereof on behalf of and for the account and risk of the Indemnifying Person by
counsel or other representatives designated by the Indemnified Person. In the
event that any claim shall arise out of a transaction or cover any period or
periods wherein the Company and the Holder shall each be liable hereunder for
part of the liability or obligation arising therefrom, then the parties shall,
each choosing its own counsel and bearing its own expenses, defend the claim,
and no settlement or compromise of the claim may be made without the joint
consent or approval of the Company and the Holder. Notwithstanding the
foregoing, no Indemnifying Person shall be obligated hereunder with respect to
amounts paid in settlement of any claim if the settlement is effected without
the consent of the Indemnifying Person (which consent shall not be unreasonably
withheld).
10. MISCELLANEOUS.
(a) No Rights as Stockholder. No Holder of the Warrant or
Warrants shall be entitled to vote or receive dividends or be deemed the Holder
of Common Stock or any other securities of the Company which may at any time be
issuable on the
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exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant or Warrants shall have been
exercised and the shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
(b) Exchange, Transfer and Replacement of Warrant. Subject to
Paragraph 8 hereof, the Holder may transfer or assign this Warrant, in whole but
not in part and from time to time. Upon the surrender of the Warrant, properly
endorsed, for registration of transfer or for exchange at the principal office
of the Company, the Company at its expense will execute and deliver to or upon
the order of the Holder thereof a new Warrant of like tenor, in the name of such
Holder or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may direct, calling on the face thereof for the number of shares of
Common Stock called for on the face of the Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of loss, theft or destruction, on
delivery of any indemnity agreement or bond reasonably satisfactory in form and
amount to the Company or, in the case of mutilation, on surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu of this Warrant, a new Warrant of like tenor.
(c) Amendments. Neither the Warrant nor any term hereof may be
changed, waived, discharged or terminated without the prior written consent of
the Holder.
(d) Notice. Any notice given to either party under this Agreement
shall be deemed to be given three (3) days after mailing, postage prepaid,
addressed to such party at the address as such party may provide to the other.
(e) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant.
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(f) Governing Law. This Warrant shall be governed by and
construed under the laws of the State of Maryland.
Date: August 21, 1996
CIENA CORPORATION
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
RECEIVED BY
XXXXXXX X. XXXXXXXX & CO. INCORPORATED
By: /s/ XXXXXXX X. XXXXXXXX
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EXHIBIT 1
NOTICE OF EXERCISE
TO: CIENA CORPORATION
1. The undersigned hereby elects to acquire ________ shares of Common
Stock of CIENA Corporation pursuant to the terms of the attached Warrant, and
[CIRCLE EITHER (A) OR (B)]
(a) tenders herewith payment of the purchase price of such
shares in full or
(b) elects to exercise its right of conversion set forth in
Paragraph 3(b) of the attached Warrant.
2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
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(Name)
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(Address)
3. The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.
4. The Purchaser is an "accredited investor" as defined in Securities
and Exchange Commission Rule 501(a) issued pursuant to the Securities Act of
1933, as amended.
5. The undersigned represents and warrants that the undersigned has no
present intention to bring any claim of any kind, whether in arbitration,
litigation or any other forum, including specifically any claims for breach of
the Settlement Agreement and Mutual Release dated as of August 21, 1996 between
the Holder and the Company (the "Settlement"), against the Company, Xxxxx Xxxxx
or any of the entities identified in paragraph 10 of the Settlement.
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