EXCHANGE AGREEMENT
Exhibit 10.36
EXECUTION COPY
This Exchange Agreement (this “Agreement”) is made and entered into as of this 6th day
of October, 2006, by and between ___(the “Holder”), and Finisar Corporation, a
Delaware corporation (the “Company”).
RECITALS
WHEREAS, the Holder currently holds at least $___principal amount of the Company’s
21/2% Convertible Subordinated Notes due 2010 (the “Outstanding Notes”);
WHEREAS, the Holder desires to exchange the Outstanding Notes for an equal principal amount of
the Company’s 21/2% Convertible Senior Subordinated Notes due 2010 (the “New Notes”) on the
terms and conditions set forth in this Agreement (the “Exchange Transaction”);
WHEREAS, the New Notes will be issued pursuant to the Indenture, to be entered into by the
Company and the Trustee named therein (the “Indenture”), substantially in the form of
Exhibit A hereto;
WHEREAS, the Company desires to issue to the Holder $___principal amount of New
Notes in exchange for the Outstanding Notes in the Exchange Transaction; and
WHEREAS, in connection with the issuance of the New Notes the Company will agree to provide
the Holder registration rights pursuant to the Registration Rights Agreement, to be entered into by
the Company and the Holder and the other holders of Outstanding Notes exchanging such notes for New
Notes (the “Registration Rights Agreement”), substantially in the form of Exhibit B hereto;
NOW, THEREFORE, in consideration of the premises and the agreements set forth below, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
Exchange
Exchange
Section 1.1 The Exchange. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined herein), the Company shall issue and exchange $___
in aggregate principal amount of New Notes plus all accrued and unpaid interest on the Outstanding
Notes at the day prior to Closing for an equal principal amount of Outstanding Notes.
Section 1.2 Closing. The closing is anticipated to take place on the third business
day after the date hereof at the offices of the Company, 0000 Xxxxxx Xxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 or on such other date and at such other place as the parties may agree in writing
(the “Closing”). At the Closing, the Holder shall deliver or cause to be delivered to
the Company all of such Holder’s right, title and interest in and to all of the Outstanding Notes,
and all documentation related thereto, and whatever documents of conveyance or transfer may be
necessary or desirable to transfer to and confirm in the Company all right, title and interest in
and to the Outstanding Notes, and the Company shall issue to the Holder the New Notes and pay to
the Holder in cash by wire transfer of immediately available funds an amount equal to the accrued
and unpaid interest on the Holder’s Outstanding Notes at the day prior to the Closing.
Section 1.3 Conditions to Closing. This Agreement and the Exchange Transaction shall
become effective upon the satisfaction of the following conditions:
(a) The Holder and the Company shall have executed and delivered to each other this Agreement;
(b) The Company and the Trustee shall have executed and delivered the Indenture;
(c) The Company shall have executed and delivered the New Notes in the principal amount set
forth in Section 1.1;
(d) The Company and the Holder shall have executed and delivered the Registration Rights
Agreement;
(e) The Holder shall have delivered, or caused to be delivered, to the Company the Outstanding
Notes being exchanged pursuant to this Agreement;
(f) The Company shall have submitted an additional share listing application for the shares of
Common Stock issuable upon conversion of the New Notes with the Nasdaq Global Select Market; and
(g) The Company shall have delivered to the Holder a certificate of the Company, dated the
Closing Date, executed by the secretary of the Company certifying in such capacity and on behalf of
the Company (i) as to the incumbency and signature of the officer of the Company who executed this
Agreement and the New Notes; and (ii) as to the adoption of resolutions of the board of directors
of the Company which are in full force and effect on the Closing Date, authorizing (x) the
execution and delivery of this Agreement and the New Notes; and (y) the performance of the
obligations of the Company hereunder and thereunder.
Section 1.4 Exchange of Additional Notes. Simultaneously with or after the Closing,
subject to the terms of the Indenture, the Company may issue, to one or more holders of Outstanding
Notes, New Notes in an aggregate principal amount that, together with the New Notes issued pursuant
to this Agreement, does not exceed $100,000,000.
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ARTICLE II
Representations and Warranties of the Holder
Representations and Warranties of the Holder
The Holder hereby makes the following representations and warranties, each of which is true
and correct on the date hereof and shall survive the date of the Closing and the transactions
contemplated hereby to the extent set forth herein.
Section 2.1 Existence and Power.
(a) The Holder is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the power, authority and capacity to execute and deliver
this Agreement, to perform its obligations hereunder, and to consummate the transactions
contemplated hereby.
(b) The execution of this Agreement by the Holder and the consummation by the Holder of the
transactions contemplated hereby do not and will not constitute or result in a breach, violation or
default under any note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement,
lease or license, whether written or oral, express or implied, or any statute, law, ordinance,
decree, order, injunction, rule, directive, judgment or regulation of any court, administrative or
regulatory body, governmental authority, arbitrator, mediator or similar body on the part of the
Holder or on the part of any other party thereto or cause the acceleration or termination of any
obligation or right of the Holder.
Section 2.2 Valid and Enforceable Agreement; Authorization. This Agreement has been
duly executed and delivered by the Holder and constitutes a legal, valid and binding obligation of
the Holder, enforceable against the Holder in accordance with its terms, except that such
enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general
principles of equity.
Section 2.3 Title to Outstanding Notes. The Holder is the sole legal and beneficial
owner of and has good and valid title to the Outstanding Notes, free and clear of any mortgage,
lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or
other adverse claim thereto. The Holder has not, in whole or in part, (i) assigned, transferred,
hypothecated, pledged or otherwise disposed of the Outstanding Notes or its rights in such
Outstanding Notes, or (ii) given any person or entity any transfer order, power of attorney or
other authority of any nature whatsoever with respect to such Outstanding Notes.
Section 2.4 Investment Decision. The Holder is either (i) a “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended (the
“Securities Act”) or (ii) an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act, and in either case was not organized for the purpose of
acquiring the New Notes or the shares of the Company’s common stock (the “Common Stock”),
$0.001 par value per share, into which the New Notes may be converted (the “Underlying Common
Stock”). The Holder (or its authorized representative) is familiar with the Company’s
objectives and business plan, has reviewed the Company’s filings with the Securities and Exchange
Commission (the “SEC”), including, without limitation, the Company’s Annual Report on Form
10-K filed on
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July 14, 2006, the Company’s Quarterly Report on Form 10-Q filed on September 8, 2006, the
Company’s Definitive Proxy Statement filed on August 28, 2006, and the Company’s Current Reports on
Form 8-K filed on June 5, 2006, June 7, 2006 (as amended on August 23, 2006), June 26, 2006, July
7, 2006 and October 2, 2006 (all of such filings with the SEC referred to, collectively, as the
“SEC Documents”), and has had such opportunity to ask questions of and to obtain from
representatives of the Company such information as is necessary to permit it to evaluate the merits
and risks of its investment in the Company and has independently, without reliance upon any
representatives of the Company and based on such information as the Holder deemed appropriate, made
its own analysis and decision to enter into this Agreement. The Holder has had the opportunity to
consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks
involved in the exchange of the Outstanding Notes pursuant hereto and to make an informed
investment decision with respect to such exchange. The Holder acknowledges that the Company is
relying on the truth and accuracy of the foregoing representations and warranties in the offering
of the New Notes to the Holder without having first registered the New Notes or the Underlying
Common Stock under the Securities Act.
Section 2.5 Purchase Entirely for Own Account. The Holder is acquiring the New Notes
only for investment purposes for its own account. The Holder is not acquiring the Notes with a view
to the resale or distribution of any part thereof, and the Holder has no present intention of
selling, granting any participation in, or otherwise distributing the same. The Holder does not
presently have any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with respect to any of the
New Notes.
Section 2.6 Restricted Securities. The Holder understands that neither the New Notes
nor the Underlying Common Stock have been registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of the Holder’s
representations as expressed herein. The Holder understands that the New Notes (and the Underlying
Common Stock) are “restricted securities” under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Holder must hold the New Notes (and the Underlying Common
Stock) indefinitely unless they are registered with the SEC and qualified by state authorities, or
an exemption from such registration and qualification requirements is available. The Holder further
acknowledges that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and manner of sale, the
holding period for the New Notes (and the Underlying Common Stock), and on requirements relating to
the Company which are outside the Holder’s control, and which the Company is under no obligation
and may not be able to satisfy.
Section 2.7 No Public Market. The Holder understands that no public market now exists
for the New Notes, and that the Company has made no assurance that a public market will ever exist
for the New Notes.
Section 2.8 Legends. The Holder understands that the New Notes and any shares of
Underlying Common Stock will bear one or more of the legends required by the Indenture, and the
removal of such legends shall be governed by the terms of the Indenture.
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Section 2.9 Affiliate Status. The Holder is not, and has not been during the
preceding three months, an “affiliate” of the Company as such term is defined in Rule 144 under the
Securities Act.
ARTICLE III
Representations, Warranties and Covenants of the Company
Representations, Warranties and Covenants of the Company
The Company hereby makes the following representations, warranties, and covenants each of
which is true and correct on the date hereof and shall survive the date of the Closing and the
transactions contemplated hereby to the extent set forth herein.
Section 3.1 Existence and Power.
(a) The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the power, authority and capacity to execute and deliver
this Agreement, to perform the Company’s obligations hereunder, and to consummate the transactions
contemplated hereby.
(b) The execution of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby (i) does not require the consent, approval, authorization, order,
registration or qualification of, or filing with, any governmental authority or court, or body or
arbitrator having jurisdiction over the Company other than the SEC, state securities regulators,
the Nasdaq Global Select Market, The Depository Trust Company and The PORTAL Market; and (ii) does
not and will not constitute or result in a breach, violation or default under any note, bond,
mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license, whether written
or oral, express or implied, or with the Company’s Certificate of Incorporation or by-laws, or any
statute, law, ordinance, decree, order, injunction, rule, directive, judgment or regulation of any
court, administrative or regulatory body, governmental authority, arbitrator, mediator or similar
body on the part of the Company or on the part of any other party thereto or cause the acceleration
or termination of any obligation or right of the Company or any other party thereto.
Section 3.2 Valid and Enforceable Agreement; Authorization. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general
principles of equity.
Section 3.3 Capitalization. At the Closing, the authorized capital stock of the
Company will consist of 750,000,000 shares of Common Stock, par value $0.001 per share, and
5,000,000 shares of Preferred Stock, par value $0.001 per share, 500,000 shares of which are
designated as Series RP Preferred Stock. The shares of Series RP Preferred Stock are issuable upon
exercise of rights attached to shares of the Company’s Common Stock pursuant to the
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Rights Agreement dated as of September 25, 2002 between the Company and American Stock
Transfer & Trust Company. As of the close of business on October 2, 2006, there were 307,679,261
shares of Common Stock issued and outstanding. All such issued and outstanding shares have been
duly authorized and validly issued, and are fully paid and non-assessable, and were issued in
compliance with all applicable state and federal laws concerning the issuance of securities and all
applicable pre-emptive, participation, rights of first refusal and other similar rights.
Section 3.4 Valid Issuance of the New Notes. The New Notes, when issued, sold and
delivered in accordance with the terms and for the consideration set forth in this Agreement and
the Indenture, will constitute legal and binding obligations of the Company, be validly issued and
free of restrictions on transfer other than restrictions on transfer under this Agreement,
applicable state and federal securities laws and liens or encumbrances created by or imposed by the
Holder, and enforceable against the Company in accordance with their terms, except that such
enforcement may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general
principles of equity. Assuming the accuracy of the representations of the Holder in Section 2 of
this Agreement and subject to the filings required under the federal and state securities laws, the
New Notes will be issued in compliance in all material respects with all applicable federal and
state securities laws. The Underlying Common Stock has been duly reserved for issuance, and upon
issuance in accordance with the terms of the Company’s Certificate of Incorporation, as amended,
will be validly issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under applicable federal and state securities laws and liens or
encumbrances created by or imposed by the Holder. Based in part upon the representations of the
Holder in Section 2 of this Agreement, the Underlying Common Stock, when issued and delivered in
accordance with the terms of the New Notes and the Indenture, will be issued in compliance in all
material respects with all applicable federal and state securities laws.
Section 3.5 Financial Statements. Except as qualified in the SEC Documents, the
audited and unaudited financial statements and schedules included in the SEC Documents, present
fairly in all material respects the consolidated financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated results of operations and cash flows of
the Company and its subsidiaries for the periods specified; except as qualified in the SEC
Documents, such financial statements and schedules have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis during the periods involved.
Section 3.6 Legal Proceedings. No legal or governmental proceedings or investigations
are pending or, to the knowledge of the Company, threatened to which the Company is a party or to
which the property of the Company or any of its subsidiaries is subject that are not described in
the SEC Documents, except for such proceedings or investigations which would not reasonably be
expected to, singly or in the aggregate, result in a Material Adverse Effect. As used in this
Agreement, the term “Material Adverse Effect” shall mean when used in respect of any matter
relating to the Company a material adverse effect on the business, condition (financial or
otherwise), properties or results of operations of the Company and its subsidiaries, considered as
one enterprise, or would materially adversely affect the ability of the
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Company to perform its obligations under this Agreement, the Indenture, the Registration
Rights Agreement and the New Notes.
Section 3.7 Compliance with Laws; Permits. The Company and its subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except where the failure
to have such certificates, authorizations and permits would not reasonably be expected to have a
Material Adverse Effect, and none of the Company and its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate, authorization or
permit which would reasonably be expected to, singly or in the aggregate, result in a Material
Adverse Effect. The Company and its subsidiaries are and have been in compliance with all
applicable laws, statutes, ordinances, rules, regulations, orders, judgments, decisions, decrees,
standards, and requirements relating to their respective businesses, except where any such
non-compliance would not reasonably be expected to have a Material Adverse Effect.
Section 3.8 No Material Adverse Effect. Since the respective dates as of which
information is given in the SEC Documents, there has not been any event or occurrence having a
Material Adverse Effect on the Company or its subsidiaries, except as reflected or disclosed in a
subsequent SEC Document.
Section 3.9 Additional Share Listing. The Company will use its best efforts to have
the shares of Common Stock issuable upon conversion of the New Notes approved by the Nasdaq Global
Select Market for listing promptly following the Closing Date.
ARTICLE IV
Miscellaneous Provisions
Miscellaneous Provisions
Section 4.1 Notice. Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered, or mailed first class mail (postage prepaid) with return
receipt requested or sent by reputable overnight courier service (charges prepaid) to such address
and to the attention of such person as the recipient party has specified by prior written notice to
the sending party. Notices will be deemed to have been given hereunder when delivered personally,
three business days after deposit in the U.S. mail postage prepaid with return receipt requested
and two business days after deposit postage prepaid with a reputable overnight courier service for
delivery on the next business day.
Section 4.2 Xxxx-Xxxxx-Xxxxxx Act. The Holder agrees not to convert any New Notes
unless any waiting period under the Xxxx-Xxxxx-Xxxxxx Antirust Improvements Act of 1976, as
amended, applicable to such conversion shall have expired or been terminated. The Company agrees
to use commercially reasonable efforts to assist the Holder in causing any such waiting period to
expire or terminate.
Section 4.3 Entire Agreement. This Agreement and the other documents and agreements
executed in connection with the Exchange Transaction embody the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous oral or written agreements, representations, warranties, contracts, correspondence,
conversations, memoranda and understandings between or among the parties or
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any of their agents, representatives or affiliates relative to such subject matter, including,
without limitation, any term sheets, emails or draft documents.
Section 4.4 Assignment; Binding Agreement. This Agreement and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon the parties hereto
and their successors and assigns.
Section 4.5 Counterparts. This Agreement may be executed in multiple counterparts,
and on separate counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Any counterpart or other signature hereupon
delivered by facsimile shall be deemed for all purposes as constituting good and valid execution
and delivery of this Agreement by such party.
Section 4.6 Remedies Cumulative. Except as otherwise provided herein, all rights and
remedies of the parties under this Agreement are cumulative and without prejudice to any other
rights or remedies available at law.
Section 4.7 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the substantive laws of the State of New York, without reference to
its choice of law rules.
Section 4.8 No Third Party Beneficiaries or Other Rights. Nothing herein shall grant
to or create in any person not a party hereto, or any such person’s dependents or heirs, any right
to any benefits hereunder, and no such party shall be entitled to xxx any party to this Agreement
with respect thereto.
Section 4.9 Waiver; Consent. This Agreement may not be changed, amended, terminated,
augmented, rescinded or discharged (other than in accordance with its terms), in whole or in part,
except by a writing executed by the parties hereto. No waiver of any of the provisions or
conditions of this Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have given or consented
thereto. Except to the extent otherwise agreed in writing, no waiver of any term, condition or
other provision of this Agreement, or any breach thereof shall be deemed to be a waiver of any
other term, condition or provision or any breach thereof, or any subsequent breach of the same
term, condition or provision, nor shall any forbearance to seek a remedy for any noncompliance or
breach be deemed to be a waiver of a party’s rights and remedies with respect to such noncompliance
or breach.
Section 4.10 Word Meanings. The words such as “herein”, “hereinafter”, “hereof”, and
“hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires. The singular shall include the plural, and vice
versa, unless the context otherwise requires. The masculine shall include the feminine and neuter,
and vice versa, unless the context otherwise requires.
Section 4.11 No Broker. Neither party has engaged any third party as broker or finder
or incurred or become obligated to pay any broker’s commission or finder’s fee in connection with
the transactions contemplated by this Agreement other than such fees and expenses for which it
shall be solely responsible.
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Section 4.12 Further Assurances. The Holder and the Company each hereby agree to
execute and deliver, or cause to be executed and delivered, such other documents, instruments and
agreements, and take such other actions, as either party may reasonably request in connection with
the transactions contemplated by this Agreement.
Section 4.13 Costs and Expenses. The Holder and the Company shall each pay their own
respective costs and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement, including, but not limited to, attorneys’ fees.
Section 4.14 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.15 Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of
the date first above written.
HOLDER: | ||
By: | ||
Name: | ||
Title: | ||
THE COMPANY: | ||
FINISAR CORPORATION | ||
By: | ||
Name: | ||
Title: |
Signature Page to Exchange Agreement
Exhibit A
Form of Indenture
Exhibit B
Form of Registration Rights Agreement