Document:

Exhibit 4.2

 

CYOPTICS, INC. 

 

2011 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

 

THIS 2011 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of January 13, 2011, by and among CyOptics, Inc., a Delaware corporation (the “Company”) and the investors listed on Schedule A attached hereto (each of which is herein referred to individually as an “Investor” and collectively as the “Investors”).

 

RECITALS

 

WHEREAS, the Company and certain prior investors in the Company (the “Prior Investors”) are parties to that certain 2008 Amended and Restated Investor Rights Agreement dated as of July 24, 2008 (the “Prior Agreement”);

 

WHEREAS, certain of the Investors who are existing investors in the Company are parties to the Series C-1 Preferred Stock Purchase Agreement of even date herewith, between the Company and the Investors listed on the Schedule of Investors thereto (the “Purchase Agreement”), and it is a condition to closing of the sale of the Series C-1 Preferred (as defined below) to the Investors listed on such Schedule of Investors that such Investors, the Prior Investors and the Company will execute and deliver this Agreement;

 

WHEREAS, in connection with the sale of the Series C-1 Preferred, the Company shall effect a 1:52 reverse stock split of its Common Stock and Preferred Stock; and

 

WHEREAS, the Company and the Prior Investors desire to terminate the Prior Agreement and further desire that this Agreement supersede and replace the Prior Agreement in its entirety.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the parties hereto hereby agree that the Prior Agreement is amended and restated to read in its entirety as follows:

 

AGREEMENT

 

1.             Registration Rights. The Company covenants and agrees as follows:

 

1.1           Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

 

(a)           The term “Apogee Merger Agreement” shall mean that certain Merger Agreement and Plan of Reorganization dated as of March 13, 2007, by and among the Company, CyOptics Acquisition Corp., Apogee Photonics, Inc. (“Apogee”) and solely with respect to Article IX, Sujit Banerjee, as Stockholder Agent.

 

(b)           The term “Change in Control” shall mean (A) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including without limitation any reorganization, merger or consolidation unless the Company’s stockholders of record as constituted immediately prior to such acquisition will, immediately after such acquisition (by virtue of securities issued as consideration for the Company’s acquisition or otherwise) hold at least fifty percent (50%) of the voting power of the surviving or acquiring entity or the entity controlling such surviving or

 

 

acquiring entity; or (B) a sale of all or substantially all of the assets of the Company (including, for purposes of this section, intellectual property rights which, in the aggregate, constitute substantially all of the Company’s material assets); or (C) a transaction or series of transactions in which a person or group of persons (as defined in Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended) acquires beneficial ownership (as determined in accordance with Rule 13d 3 of the Securities Exchange Act of 1934, as amended) of more than 50% of the voting power of the Company.

 

(c)           The term “Common Stock” shall have the meaning set forth in the Company’s Restated Certificate.

 

(d)           The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(e)           The term “Finisar” means Finisar Corporation, a Delaware corporation.

 

(f)            The term “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

(g)           The term “Holder” means any person owning or having the right to acquire Registrable Securities, or any person to whom such securities are assigned in accordance with the terms of this Agreement; provided, however, that the term “Holder” shall also include, for the purpose of Section 1.12 of this Agreement only, all the Investors listed on Schedule A-1 hereto.

 

(h)         The term “Initial Public Offering” shall mean the first sale of the Company’s Common Stock to the general public in an underwritten public offering pursuant to a registration statement under the Securities Act.

 

(i)            The term “Major Investor” shall mean any Holder that together with its affiliates owns at least 57,692 Preferred Shares (and/or Common Stock issued upon conversion thereof) (as adjusted for all stock splits, dividends, combinations, reclassifications or like transactions); provided, however, that the term “Major Investor” shall mean, for the purpose of Section 2.1 of this Agreement only, any Holder that together with its affiliates owns at least 192,307 Preferred Shares (and/or Common Stock issued upon conversion thereof) (as adjusted all stock splits, dividends, combinations, reclassifications or like transactions, except for the Reverse Split, as defined in the Restated Certificate).

 

(j)            The term “Preferred Shares” shall mean shares of Series A Preferred, Series B Preferred, Series B-1 Preferred, Series B-2 Preferred, Series B-3 Preferred, Series C Preferred and Series C-1 Preferred.

 

(k)           The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

 

(l)            The term “Registrable Securities” means (i) Common Stock issued or issuable upon conversion of the Preferred Shares, (ii) Common Stock issued to Investors pursuant to the terms of the Apogee Merger Agreement, (iii) except with respect to Sections 1.2, 2 and 3 of this Agreement, up to 971,943 shares of Common Stock (as adjusted for all stock splits, dividends, combination, recapitalizations or like transactions) issued or issuable upon conversion of the Series B Preferred issued or issuable to Comerica

 

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Bank upon exercise of that certain warrant dated as of April 29, 2005 and amended as of October 9, 2007, and (iv) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i), (ii) or (iii) above, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his or her rights under this Section 1 are not assigned or any Registrable Securities after such securities have been sold to the public or sold pursuant to Rule 144 promulgated under the Securities Act.

 

(m)          The number of shares of “Registrable Securities then outstanding” shall be determined by the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Registrable Securities.

 

(n)           The term “Restated Certificate” shall mean the Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of the State of Delaware on January 13, 2011, as the same may be amended from time to time.

 

(o)           The term “SEC” shall mean the Securities and Exchange Commission.

 

(p)           The term “Securities Act” means the Securities Act of 1933, as amended.

 

(q)           The term “Series A Preferred” shall mean the Series A Preferred Stock of the Company.

 

(r)            The term “Series B Preferred” shall mean the Series B Preferred Stock of the Company.

 

(s)           The term “Series B-1 Preferred” shall mean the Series B-1 Preferred Stock of the Company. 

 

(t)            The term “Series B-2 Preferred” shall mean the Series B-2 Preferred Stock of the Company. 

 

(u)           The term “Series B-3 Preferred” shall mean the Series B-3 Preferred Stock of the Company.

 

(v)           The term “Series C Preferred” shall mean the Series C Preferred Stock of the Company.

 

(w)          The term “Series C-1 Preferred” shall mean the Series C-1 Preferred Stock of the Company.

 

Other capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Purchase Agreement.

 

1.2           Request for Registration.

 

(a)           Subject to the conditions of this Section 1.2 (including Section 1.2(b) hereof), if the Company shall receive at any time after 180 days following the effective date of an Initial Public Offering a written request from the Holders of thirty percent (30%) or more of the Registrable Securities then outstanding (the “Initiating Holders”) that the Company file a registration statement under the

 

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Securities Act covering the registration of Registrable Securities with an anticipated aggregate offering price of at least US $15 million, then the Company shall, within twenty (20) days of the receipt thereof, give written notice of such request to all Holders and subject to limitations of this Section 1.2, use commercial best efforts to effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered in a written request received by the Company within twenty (20) days of the mailing of such notice pursuant to this Section 1.2(a).

 

(b)         If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting with an underwriter to be selected as provided below, they shall so advise the Company as a part of their request made pursuant to this Section 1.2 and the Company shall include such information in the written notice referred to in Section 1.2(a). In such event the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in a customary form acceptable to the Company (which acceptance shall not be unreasonably withheld) with the underwriter or underwriters selected for such underwriting by the Company (which underwriter or underwriters shall be reasonably acceptable to a majority in interest of such Initiating Holders). Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Company that marketing factors require a limitation of the number of underwritten Registrable Securities, then the underwriter may (subject to the limitations set forth below) limit the number of Registrable Securities to be included in the registration and the underwriting (an “Exclusion Request”). If the underwriter makes an Exclusion Request, the Company shall advise all Holders of Registrable Securities affected by such request of the number of shares that each such Holder may include in the registration and the underwriting (“Adjusted Amount”), and the total number of shares to be included in the registration and the underwriting based on the Exclusion Request (“Adjusted Total”). The Company shall first exclude from the registration and the underwriting, all shares requested to be included by any third parties, then shares to be included by the Company. Then, the Company shall calculate the Adjusted Amount for each Holder on a pro-rata basis, based on the number of Registrable Securities proposed by such Holders to be included in such registration. If any Holder does not agree to the terms of any such underwriting, he shall be excluded therefrom by written notice from the Company or the underwriter. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration. In the event the aggregate Adjusted Amount is reduced below 50% of the total amount of securities originally requested by the Initiating Holders to be included in the public offering, such Initiating Holders shall be entitled to withdraw such request and, if such request is withdrawn, such demand registration shall not count as one of the two (2) permitted registrations hereunder.

 

(c)          The Company shall not be required to effect a registration pursuant to this Section 1.2:

 

(1st)        in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, unless the Company is already subject to service in such jurisdiction and except as may be required under the Securities Act; or

 

(2nd)       after the Company has effected two (2) registrations initiated by the Initiating Holders pursuant to Section 1.2(a), and such registrations have been declared or ordered effective; or

 

(3rd)        during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred eighty (180)

 

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days following the effective date of, a registration subject to Section 1.2 hereof and Section 1.3 below; provided, however, that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; or

 

(4th)        if the Initiating Holders propose to dispose of Registrable Securities that may be registered on Form S-3 pursuant to Section 1.4 hereof; or

 

(5th)        if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.2, a certificate signed by the Company’s President, Chief Executive Officer or Chairman of the Board of Directors of the Company (the “Board of Directors”) stating that in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating Holders; provided, however, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period.

 

1.3                                 Company Registration.

 

(a)           If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock or other securities under the Securities Act in connection with the public offering of such securities (other than a registration relating solely to the sale of securities to participants in a Company employee benefit stock plan, a registration relating to a corporate reorganization or other transaction under Rule 145 of the Securities Act or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 4.5, the Company shall, subject to the provisions of Section 1.3(c), use best efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered.

 

(b)           Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.7 hereof.

 

(c)           Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under this Section 1.3 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it and enter into an underwriting agreement in customary form acceptable to the Company (which acceptance shall not be unreasonably withheld) with an underwriter or underwriters selected by the Company, and then (except as provided below) only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion will not jeopardize the success of the offering; provided, however, that (i) in no event shall the amount of securities of the selling Holders included in the offering be reduced below twenty-five percent (25%) of the total amount of securities included in such offering, and (ii) such securities will be allocated among such

 

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selling Holders on a pro rata basis based on the number of securities each such Holder has requested to be included in such offering and in preference to any other holders of Common Stock; and provided, further, that the number of shares of Registrable Securities to be included in such offering shall not be reduced unless all other securities (other than, in the case of any registration initiated by the Company, shares to be issued by the Company) are first entirely excluded from the offering. For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder that is a Holder of Registrable Securities and that is a partnership or corporation, the partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such selling Holder shall be based upon the aggregate amount of Registrable Securities owned by all such related entities and individuals.

 

1.4           Form S-3 Registration. In case the Company shall at any time following the twelve-month anniversary of an Initial Public Offering, receive from time to time from the Holders of at least thirty percent (30%) of the Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, and the Company is a registrant entitled to use Form S-3 to register such Registrable Securities, the Company shall:

 

(a)           promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and

 

(b)           use best efforts to effect, as soon as practicable, such registration and all such qualifications and compliance as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holders joining in such request as are specified in a written request given within twenty (20) days after the mailing of such written notice from the Company, provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.4:

 

(1st)        if Form S-3 is not available for such offering by the Holders;

 

(2nd)       if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate offering price to the public of less than $500,000;

 

(3rd)        if the Company shall furnish to the Holders requesting a registration statement pursuant to this Section 1.4, a certificate signed by the Company’s President, Chief Executive Officer or Chairman of the Board of Directors stating that in the good faith judgment of the Company, it would be seriously detrimental to the Company for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 1.4; provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period;

 

(4th)        if the Company has, within the twelve (12) month period preceding the date of such request, already effected one registration on Form S-3 for the Holders pursuant to this Section 1.4; or

 

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(5th)        in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

 

(c)          Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under this Section 1.4 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering, but in no event shall the amount of securities of the selling Holders included in the offering be reduced below twenty-five (25%) of the total amount of securities included in such offering. Allocation of securities to be sold in any such offering shall be made on a pro-rata basis among such selling Holders based on the number of securities each such Holder has requested to be included in such offering and in preference to any other holders of Common Stock; and provided, further, that the number of shares of Registrable Securities to be included in such offering shall not be reduced unless all other securities are first entirely excluded from the offering. For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder that is a Holder of Registrable Securities and that is a partnership or corporation, the partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such selling Holder shall be based upon the aggregate amount of Registrable Securities owned by all such related entities and individuals.

 

(d)           Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. Registrations effected pursuant to this Section 1.4 shall not be counted as requests for registration effected pursuant to Section 1.2.

 

1.5        Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)           prepare and file with the SEC a registration statement with respect to such Registrable Securities and use best efforts to cause such registration statement to become effective, and keep such registration statement effective for a period of up to ninety (90) days or, if earlier, until the distribution contemplated in the Registration Statement has been completed; provided, however, that such ninety (90) 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 the Company;

 

(b)           prepare and file with the SEC 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;

 

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(c)           furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus in conformity with the requirements of the Securities Act, and such other documents incidental thereto as they may reasonably request;

 

(d)           use 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, however, 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 under 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;

 

(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 or 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 a 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 all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or quotation system on which similar securities issued by the Company are then listed or quoted;

 

(h)           at least five (5) business days prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to each Holder whose Registrable Securities are to be sold thereunder copies of such registration statement or prospectus (or amendment or supplement) as proposed to be filed (including, upon the request of such Holder, documents to be incorporated by reference therein) which documents will be subject to the reasonable review and comments of such Holder (and its attorneys) during such five (5) business-day period and the Company will not file any registration statement, any prospectus or any amendment or supplement thereto (or any such documents incorporated by reference) containing any statements with respect to such Holder to which such Holder shall reasonably object in writing during such period;

 

(i)            after the filing of each registration statement, promptly notify each Holder of the effectiveness thereof and of any stop order issued or threatened by the SEC and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered and promptly notify such Holder of such lifting or withdrawal of such order;

 

(j)            make available for inspection by any Holder and any attorney, accountant or other professional retained by any such Holder, all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility; and

 

(k)           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.

 

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1.6        Information from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall, at its sole cost and expense, promptly furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be reasonably requested by the Company and required to effect the registration of such Holder’s Registrable Securities.

 

1.7        Expenses of Registration. All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Sections 1.2 and 1.3 and the first registration under Section 1.4, or, if there be no registration under Section 1.2, then the first two registrations under Section 1.4, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company and reasonable fees and disbursements of one counsel for the Holders of Registrable Securities shall be borne by the Company; provided, however, that the Company shall not be required to pay:

 

(a)           for any expenses of any registration proceeding if begun pursuant to Section 1.2 or Section 1.4 if the registration request is subsequently withdrawn (other than pursuant to the last sentence of Section 1.2(b)) at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be requested in the withdrawn registration), provided, however, that if the Holders agree to forfeit one demand registration or if at the time of such withdrawal the Holders have learned of a material adverse change in the condition, business or prospects of the Company not previously known to the Holders, then the Holders shall not be required to pay such expenses; or

 

(b)           for the fees of more than one counsel to represent all Holders of Registrable Securities.

 

1.8        Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1:

 

(a)           To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners or officers, directors and stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or any state securities laws, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto under which such Registrable Securities were registered, (ii) the 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 (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities laws; and the Company will reimburse each such Holder, the partners or officers, directors and stockholders of each Holder, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 1.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any

 

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such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by or on behalf of any such Holder, underwriter or controlling person.

 

(b)           To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or any state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any person intended to be indemnified pursuant to this subsection 1.8(b), for any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 1.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld); provided, however, that in no event shall any indemnity under this subsection 1.8(b) exceed the net proceeds from the offering received by such Holder.

 

(c)           Promptly after an indemnified party under this Section 1.8 receives notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel satisfactory to the indemnifying party to be approved by the indemnified party, (which approval shall not be unreasonably withheld); provided, however, that an 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 reasonable 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. If the indemnified party fails to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, and if such failure is substantially prejudicial to the indemnifying party’s ability to defend such action, the indemnifying party shall be relieved of any liability to the indemnified party under this Section 1.8 to the extent of such prejudice. The omission of an indemnified party to deliver written notice to an indemnifying party will not release such indemnifying party of any liability that such indemnifying party may have to any other indemnified party otherwise than under this Section 1.8. Each indemnified party shall furnish such information regarding itself or the claim in question as an indemnifying party may reasonably request in writing and shall be reasonably required in connection with defense of such claim and litigation arising therefrom.

 

(d)           If the indemnification provided for in this Section 1.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the

 

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statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided, however, that in no event shall any contribution by a Holder under this Section 1.8(d) exceed the net proceeds from the offering received by such Holder; provided, further, that in no event shall any contribution under this Section 1.8 be available to any person finally adjudicated by a court of competent jurisdiction to be guilty of fraud. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

(e)           Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(f)            The obligations of the Company and Holders under this Section 1.8 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise.

 

1.9        Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to use its best efforts to:

 

(a)           make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times from and after ninety (90) days following the effective date of an Initial Public Offering of the Company’s Common Stock;

 

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c)           furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time from and after ninety (90) days after the effective date of the first registration statement filed by the Company), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.

 

1.10       Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities that (i) is a subsidiary, parent, partner, member, limited partner, retired partner, former partner or stockholder of a Holder, (ii) is a Holder’s family member or trust for the benefit of an individual Holder, or (iii) is a trust for the benefit of any of the entities and persons listed in (i) above, (iv) is a beneficiary of a trust which is a Holder, or (v) after such assignment or transfer, holds together with its affiliates at least the Minimum Transfer Amount (as defined below); provided, however, that: (a) the Company is, within a reasonable time prior to such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration

 

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rights are being assigned; and (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 1.12 below. “Minimum Transfer Amount” shall mean either (x) 57,692 Preferred Shares (or shares of Common Stock issuable upon conversion of the Preferred Shares) (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations, except for the Reverse Split), or (y) all of the shares owned by the transferor Holder if the transferor Holder owns less than 57,692 Preferred Shares (or shares of Common Stock issuable upon conversion of the Preferred Shares) (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations, except for the Reverse Split).

 

1.11      Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 1.3 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that are included or (b) to demand registration of their securities.

 

1.12     “Market Stand-Off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the effective date of a registration statement of the Company filed under the Securities Act relating to Company’s Initial Public Offering and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days) (or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; provided  that: all officers and directors of the Company and holders of at least one percent (1%) of the Company’s voting securities are bound by and have entered into similar agreements. The underwriters in connection with the Company’s Initial Public Offering are intended third-party beneficiaries of this Section 1.12 and shall have the right, power and authority to enforce the provisions of this Section 1.12 as though they were a party hereto. Any discretionary waiver or termination by the Company or the underwriters of the restrictions of this Section 1.12 shall apply to all Holders, pro rata based on the number of shares subject to the restrictions of this Section 1.12.

 

In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of period.

 

1.13      Termination of Registration Rights. No Holder shall be entitled to exercise any right provided for in this Section 1 after (x) five (5) years following the consummation of the Company’s Initial Public Offering or (y) as to any Holder that, together with its affiliates, owns less than 1% of the outstanding Common Stock, such earlier time at which all the Registrable Securities held by such Holder (and any

 

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affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can be sold in any three (3)-month period without registration in compliance with Rule 144 of the Securities Act.

 

2.           Covenants of the Company.

 

2.1         Delivery of Financial Statements. The Company shall deliver to each Major Investor:

 

(a)           as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, a consolidated income statement for such fiscal year, a consolidated balance sheet of the Company and consolidated statement of stockholder’s equity as of the end of such year, and a consolidated statement of cash flows for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and audited and certified by independent public accountants of nationally recognized standing selected by the Company and duly approved by the Audit Committee of the Board of Directors;

 

(b)           as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, an unaudited consolidated income statement, consolidated statement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end of such fiscal quarter;

 

(c)           promptly following the preparation thereof, monthly reports as are prepared by the Company from time to time in a format approved by the Board of Directors;

 

(d)           as soon as practicable, but in any event at least fifteen (15) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, operating budget and monthly budgets, including balance sheets, income statements and statements of cash flows for such months and, as soon as prepared, any other budgets or revised budgets prepared by the Company; and

 

(e)           together with the delivery of any unaudited financial statements delivered pursuant to the foregoing provisions, an instrument signed by the Chief Financial Officer of the Company certifying that such financials were delivered in accordance with GAAP and fairly present the consolidated financial condition of the Company and its subsidiaries at such time.

 

2.2        Inspection. The Company will provide each Major Investor, as requested by any Major Investor, reasonable access to all management personnel and all Company information and materials, including without limitation, reports of operations, reports of material adverse developments, copies of any management letters prepared by the Company’s auditors, and press releases and registration statements as well as reasonable access to all senior managers. The Company shall permit each Major Investor at such reasonable times as shall be requested by such Major Investor 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; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to information which the Company is bound by a contractual commitment to a third party not to disclose.

 

2.3        Notice. The Company shall notify each Major Investor (i) if the Company issues a press release, within a reasonable period of time after such issuance; (ii) if there is a material change in the employment relationship between the Company and any key employee, within a reasonable period of time after such change; provided, however, that such notice shall only be required in the event that such key employee holds a position of Vice President or above at the Company (a “Key Employee”); and (iii) if there is

 

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a Change in Control of the Company, within twenty-four hours of such Change in Control. The Company shall provide, together with any such notification, to the extent applicable, a copy of such press release, a summary of the major terms of such Change in Control and an explanation of the circumstances surrounding the change in the employment relationship of any Key Employee.

 

2.4        Termination of and Limitations to Information, Inspection and Notice Covenants. The covenants set forth in Sections 2.1, 2.2 and 2.3 (x) shall terminate as to Major Investors and be of no further force or effect when the sale of securities pursuant to a registration statement filed by the Company under the Securities Act in connection with the firm commitment underwritten offering of its Common Stock to the general public is consummated or when the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the Exchange Act, whichever event shall first occur and (y) are subject to the following provisos: (1) the rights set forth in Sections 2.1, 2.2 and 2.3 are limited to exercising such rights only for purposes related to such Major Investor’s stock ownership in the Company and not for commercial or competitive purposes; (2) the Company shall not be obligated pursuant to the rights set forth in Sections 2.1, 2.2 and 2.3 to provide access to information which the Company (a) is bound by a contractual commitment to a third party not to disclose or (b) reasonably believes constitutes trade secret or confidential information; and (3) the Company shall not be obligated pursuant to the rights set forth in Sections 2.1, 2.2 and 2.3 to provide to those Major Investors whose primary business is other than venture capital investment listed on Schedule B hereto (“Strategic Investors”), access to any information rights the disclosure of which would put the Company at a competitive disadvantage, as reasonably determined by the Board of Directors.

 

2.5        Right of First Offer. Subject to the terms and conditions specified in this Section 2.5, the Company hereby grants to each Major Investor a right of first offer with respect to future sales by the Company of its Shares (as hereinafter defined). For purposes of this Section 2.5, a “Major Investor” includes any affiliate, partners, member and shareholder of a Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted it among itself and its partners and affiliates or, if a partnership, partners within such Major Investor, in such proportions as it deems appropriate.

 

Each time the Company proposes to offer any shares of or securities convertible into or exchangeable or exercisable for any shares of, any class of its capital stock (“Shares”), the Company shall first make an offering of such Shares to each Major Investor in accordance with the following provisions.

 

(a)           The Company shall deliver a notice in accordance with Section 4.5 (“Notice”) to each Major Investor stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price (in cash) and terms upon which it proposes to offer such Shares.

 

(b)           By written notification received by the Company, within fourteen (14) calendar days after receipt of the Notice, the Major Investors may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of such Shares that would enable such Major Investor to maintain its percentage ownership in the Company, which percentage ownership shall be calculated as the proportion that the number of shares of capital stock of the Company held by such Major Investor (on an as-converted basis) bears to the total outstanding Common Stock of the Company (on an as-converted and as-exercised basis) (“Pro Rata Share”). The Company shall promptly, in writing, inform each Major Investor that elects to purchase all the shares available to it (a “Fully-Exercising Holder”) of any other Major Investor’s failure to do likewise. Any Shares that any Major Investor fails or declines to acquire as aforesaid shall be re-offered to all such Fully-Exercising Holders. Such Fully-Exercising Holders shall have five (5) calendar days after receipt of such notice to notify the Company of their election to purchase all or a portion of the unsubscribed shares that they are eligible to purchase. In lieu of giving notice to the Major Investors prior to the issuance of the Shares as provided in this Section 2.5, the Company may elect to give notice to the Major Investors within thirty (30) days after the issuance of the Shares. Such notice shall describe the type,

 

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price and terms of the Shares. Each Major Investor shall have up to fourteen (14) days from the date of receipt of such notice to elect to purchase up to the number of shares that would, if purchased by such Major Investor, maintain such Major Investor’s Pro Rata Share of the Company’s equity securities. The closing of any such sale shall occur within thirty (30) days after the date of such notice to the Major Investors.

 

(c)           The Company may, during a ninety (90)-day period following the expiration of the fourteen (14)-day period provided in subsection 2.5(b) hereof, offer the remaining unsubscribed portion of any of the Shares that the Fully-Exercising Holders are entitled to obtain pursuant to subsection 2.5(b) which are not elected to be obtained as provided in subsection 2.5(b) hereof, to any person or persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Notice. If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within ninety (90) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors in accordance herewith.

 

(d)           In addition to the restrictions on the right of first offer set out in Section 2.7 below, the right of first offer in this Section 2.5 shall not be applicable to (i) the issuance or sale of shares of Common Stock (or options therefor), to employees, directors and consultants pursuant to a stock grant, option plan or purchase plan or other stock incentive program or arrangement approved by at least two-thirds (2/3) of the Board of Directors for employees, officers, directors or consultants or advisors of the Company; (ii) the issuance of securities pursuant to a bona fide, firmly underwritten public offering of shares of Common Stock, registered under the Securities Act, (iii) the issuance of securities pursuant to the conversion or exercise of convertible or exercisable securities, (iv) the issuance of securities in connection with a bona fide business acquisition of or by the Company, approved by at least two-thirds (2/3) of the Board of Directors, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, (v) the issuance of securities to financial institutions, entities that engage as one of their principal businesses in the lending of money or lessors in connection with commercial credit arrangements, debt financings, equipment financings or similar transactions in each case as approved by at least two-thirds (2/3) of the Board of Directors, (vi) the issuance of securities in connection with any stock split, stock dividend, recapitalization or the like by the Company, (vii) the issuance of securities pursuant to currently outstanding options, warrants or other rights to acquire capital stock of the Company, (viii) the issuance of Preferred Shares pursuant to the Purchase Agreement, (ix) the issuance of securities in connection with strategic transactions, as determined unanimously by the Board of Directors, and (x) the issuance of Preferred Shares pursuant to (A) the Note Purchase Agreement dated as of October 9, 2007 by and among the Company and the Investors (as defined therein) and (B) that certain Note Purchase Agreement dated as of February 20, 2008 by and among the Company and the Investors (as defined therein).

 

2.6         Board Representation. (a) The Board of Directors shall be constituted as follows:

 

(1st) With respect to one (1) member of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Series A Preferred, entities affiliated with Jerusalem Venture Partners L.P. (“JVP”) shall be entitled to appoint such representative to the Board of Directors; provided, however, that JVP and its affiliates continue to hold at least an aggregate of 1,875,000 shares of the Company’s capital stock, subject to appropriate adjustments for stock splits, dividends, recapitalizations and the like by the Company, except for the Reverse Split;

 

(2nd) With respect to one (1) member of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Series B Preferred, entities affiliated with Birchmere Ventures III L.P. (“Birchmere”) shall be entitled to appoint one (1) representative to the Board of Directors; provided, however, that Birchmere and its affiliates continues to hold at least an aggregate of 174,000 shares

 

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of the Company’s capital stock, subject to appropriate adjustments for stock splits, dividends, recapitalizations and the like by the Company, except for the Reverse Split;

 

(3rd) With respect to one (1) member of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Series C Preferred and Series C-1 Preferred (voting together, not as separate series, as if a single class and on an as-converted to Common Stock basis), JVP shall be entitled to appoint such representative to the Board of Directors; provided, however, that JVP and its affiliates continue to hold at least an aggregate of 1,875,000 shares of the Company’s capital stock, subject to appropriate adjustments for stock splits, dividends, recapitalizations and the like by the Company, except for the Reverse Split, as defined in the Restated Certificate;

 

(4th) With respect to one (1) of the two (2) members of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Series A Preferred, Series B Preferred and Series C Preferred (voting together, not as separate series, as if a single class and on an as-converted to Common Stock basis), entities affiliated with Sprout Group (“Sprout”) shall be entitled to appoint one (1) representative to the Board of Directors; provided, however, that Sprout and its affiliates continue to hold at least 375,000 shares of the Company’s capital stock, subject to appropriate adjustments for stock splits, dividends, recapitalizations and the like by the Company, except for the Reserve Split, as defined in the Restated Certificate;

 

(5th) With respect to one (1) of the two (2) members of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Series A Preferred, Series B Preferred and Series C Preferred (voting together, not as separate series, as if a single class and on an as-converted to Common Stock basis), entities affiliated with TL Ventures V L.P. (“TL”) shall be entitled to appoint one (1) representative;  provided, however, that TL and its affiliates continue to hold at least 165,000 shares of the Company’s capital stock, subject to appropriate adjustments for stock splits, dividends, recapitalizations and the like by the Company, except for the Reserve Split;

 

(6th) With respect to one (1) member of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Common Stock, the holders of Common Stock shall elect the person serving as Chief Executive Officer of the Company; and

 

(7th) With respect to the member or members of the Board of Directors to be elected pursuant to the Restated Certificate by the holders of Common Stock and Preferred Shares (voting together, not as separate series, as if a single class and on an as-converted to Common Stock basis), one (1) representative shall be an independent director unaffiliated with any of the Investors, who shall have experience in the industry in which the Company competes and shall be approved by the Board of Directors.

 

(b)         So long as (x) Finisar continues to hold at least an aggregate of 57,692 Preferred Shares (subject to appropriate adjustments for stock splits, dividends, recapitalizations and the like, except for the Reverse Split), Finisar shall have the right to designate one (1) individual (the “Finisar Designee”), and (y) investment entities affiliated with Intel Capital Corporation and Middlefield Ventures, Inc. (collectively, “Intel”) continue to hold at least 96,153 shares of Series B-1 Preferred (subject to appropriate adjustment to stock splits, dividends, recapitalization and the like, except for the Reverse Split), Intel shall have the right to designate one (1) individual (the “Intel Designee”), in each case, to attend all meetings of the Board of Directors and each committee of the Board of Directors in a non-voting observer capacity and, in this respect, the Company shall give each such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that each such representative shall agree to hold in confidence all non-public information; and provided, further, that the Board of Directors and each committee of the Board of Directors shall have the right to exclude the Finisar Designee and/or the

 

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Intel Designee from portions of meetings of the Board of Directors or omit to provide the Finisar Designee and/or the Intel Designee with certain information if the Board of Directors or a committee of the Board of Directors reasonably believes in good faith that such exclusion or omission is necessary in order to (A) upon advice of counsel, preserve the Company’s attorney-client privilege or (B) fulfill the Company’s written obligations with respect to confidential or proprietary information of third parties. In addition, the Board of Directors may in good faith and for legitimate business reasons exclude the Finisar Designee and/or the Intel Designee from executive sessions or portions of meetings closed to persons other than company counsel; provided, that the Board of Directors will conduct the usual and customary business and policy making functions of the Board of Directors in meetings of the entire Board of Directors and not in meetings of its executive or other committees, if any.

 

(c)          Each Investor agrees, immediately upon request of any Investor or Investors having the right to designate a director pursuant to this Section (a “Designating Holder”) to execute a stockholders’ consent with respect to the Company, or vote its shares of stock of the Company at, or nominate persons to be directors in connection with, any annual or special meeting of stockholders where action with respect to the election of directors is to be taken, in each case so as to give effect to the provisions of this Section 2.6.

 

(d)         Each Designating Holder may at any time revoke the designation as to a particular individual designated by such Designating Holder pursuant to this Section 2.6, in which case the parties to this Agreement will take all actions contemplated pursuant to the immediately preceding paragraph to effect the immediate removal of such individual from the Board of Directors. If as a result of death, disability, retirement, resignation or removal of the designee of the Designating Holder, there shall exist or occur any vacancy on the Board of Directors, such Designating Holder may, in accordance with the terms of this Section 2.6 designate another individual to fill such capacity and serve as a director.

 

(e)          Each Investor agrees that if, at any time, it is then entitled to vote for the removal of directors of the Company, it will not vote any of its shares of stock of the Company in favor of the removal of any director who shall have been designated pursuant to this Section 2.6 unless the Designating Holder shall have consented to such removal in writing.

 

(f)          The Chairman of the Board of Directors shall be one of the aforementioned directors and shall be elected by a majority of the Board of Directors.

 

(g)         For avoidance of doubt, no holders of Preferred other than those specifically referred to in Sections 2.6(a) and (b) above shall be entitled (i) to designate any member of the Board of Directors and (ii) to Board observation rights.

 

2.7        Termination of Certain Covenants. The covenants set forth in Sections 2.5 and 2.6 shall terminate and be of no further force or effect upon (i) the consummation of the sale of securities pursuant to a bona fide, firmly underwritten public offering of shares of Common Stock, registered under the Securities Act or (ii) a Deemed Liquidation, as defined in the Restated Certificate.

 

2.8        Public Disclosure — Strategic Investor Limitation. The Company shall not use the name of or refer to any Strategic Investor (set forth on Schedule B attached hereto) directly or indirectly in connection with such Strategic Investor’s relationship with the Company in any advertisement, news release or professional or trade publication, or in any other manner, unless otherwise required by law or with such Strategic Investor’s prior written consent. Notwithstanding any of the foregoing in this section, the Company shall be permitted to make customary reference to the identity of the Company’s strategic and venture capital 

 

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investors, the form of which reference, to be approved by such Strategic Investor once in advance of all press releases containing such customary reference (and no other reference to them).

 

2.9        Vesting of Employee Shares. Unless otherwise approved by the Board of Directors, all shares of Common Stock issued after the date hereof to any employee of or consultant or other service provider to the Company shall have the following vesting schedule: 25% of the shares will vest at the end of the first year following the vesting commencement date, with the remaining 75% of the shares to vest monthly over the next three years. With respect to any shares of Common Stock held by any employee of or consultant or other service provider to the Company and subject to vesting, the Company’s agreement with such employee, consultant or service provider governing the vesting of such shares shall provide that upon termination of employment with or service to the Company, with or without cause, the Company or its assignee shall have the option to purchase at the lower of fair market value or the original purchase price any unvested shares of Common Stock held by such employee, consultant or service provider, to the extent permissible under applicable law.

 

2.10      Insurance. Unless otherwise determined by the Board of Directors, the Company shall use its commercially reasonable efforts to obtain, from a financially sound and reputable insurer term “key person” insurance on the life of Ed Coringrato, in such amount, if any, as shall be determined by the Board of Directors at its sole discretion.

 

2.11      Exercise of Powers. Each of the parties hereto shall exercise all such powers, (including voting at any meetings of the Company), do all such things and sign and deliver all such documents and instruments as shall be reasonably required in order to give full effect to the provisions of this Agreement.

 

3.               Agreements with Certain Strategic Investors.

 

3.1        Finisar Right of First Refusal. In the event that the Company receives, and (as determined in good faith by the Board of Directors) is inclined to pursue, a bona fide proposal or offer by a non-affiliated third party (a “Third-Party Offer”) to enter into one or a series of related transactions (other than primarily for capital-raising purposes) that would result in a Change of Control with a non-affiliated third party purchaser (a “Sale Transaction”), the Company, within ten (10) days following receipt of such Third-Party Offer, shall provide Finisar with written notice of such Third-Party Offer, including the material terms and conditions thereof (the “Third-Party Offer Notice”), and Finisar shall have ten (10) days following receipt of such Third-Party Offer Notice (the “Finisar Offer Period”) to submit to the Company a written offer to acquire the Company in a Sale Transaction (notwithstanding that Finisar may be an affiliate of the Company) on terms and conditions at least as favorable to the Company and its stockholders (as determined in good faith by the Board of Directors) as those proposed by the Third Party Offer; provided, however, that the aggregate consideration proposed to be paid by Finisar in the Sale Transaction shall be paid in the form of cash and/or stock of Finisar (a “Finisar Qualifying Offer”) (which Finisar stock shall not be subject to any trading “black-out” period or similar restriction and shall be, as applicable: (i) freely tradable registered stock to be valued at the average closing value of the Finisar stock during the five trading-day period immediately preceding the closing date of an acquisition transaction with Finisar; (ii) registered for resale by the holders within a commercially reasonable time after the closing, with (A) Finisar agreeing, subject to the proviso below, to pay to the Company (the “Consideration Adjustment”), within forty-eight (48) hours of the Effective Date (defined below), the positive remainder, if any, in cash or by issuing to the Company an equivalent-value number of shares of Finisar stock, that results from subtracting (x) the value of the Finisar stock issued at the closing of the acquisition transaction from (y) the average closing value of the Finisar stock during the five trading-day period immediately preceding the date on which the registration statement relating to such stock becomes effective (the “Effective Date”) (provided, that, Finisar shall not be required to effect the

 

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Consideration Adjustment in a Finisar Qualifying Offer in respect of the portion of the consideration offered to the Company by the third party in the Third Party Offer, if any, that is (i) in the form of equity securities and (ii) contains no price adjustment provision substantially similar to the Consideration Adjustment), or (B) the Company agreeing to pay to Finisar within forty-eight (48) hours of the Effective Date, the positive remainder, if any, in cash or by forfeiting to Finisar an equivalent-value number of shares of Finisar stock, that results from subtracting (x) the average closing value of the Finisar stock during the five trading-day period immediately preceding the Effective Date from (y) the value of the Finisar stock issued at the closing of the acquisition transaction; or (iii) Finisar restricted stock to be valued at the average closing value of the Finisar stock during the five trading-day period immediately preceding the closing date of an acquisition transaction with Finisar, in respect of the portion of the Third-Party Offer that includes restricted common stock with no obligation on the part of the issuer to effect a registration of the stock). In the event that Finisar submits a Finisar Qualifying Offer pursuant to this Section 3.1, Finisar shall proceed to consummate the Sale Transaction contemplated by the Finisar Qualifying Offer promptly and within a period of time commensurate with that contemplated by the Third Party Offer. In the event that Finisar fails to submit a Finisar Qualifying Offer pursuant to this Section 3.1, the Company may consummate the Sale Transaction contemplated by such Third-Party Offer; provided, however, that the Sale Transaction contemplated by such Third-Party Offer is consummated within the Third-Party Offer Closing Period (as defined below). In the event that the Sale Transaction contemplated by such Third-Party Offer is not consummated within the Third-Party Offer Closing Period (as defined below), the right of first refusal provided by this Section 3.1 (the “Finisar Right of First Refusal”) shall revive, and Finisar again shall have the right to submit a Finisar Qualifying Offer pursuant to this Section 3.1. In the event that, prior to expiration of the Third-Party Offer Closing Period (as defined below), the Company receives, and (as determined in good faith by the Board of Directors) is inclined to pursue, another Third-Party Offer in lieu of the Third-Party Offer originally received, the Third-Party Offer Closing Period (as defined below) immediately shall terminate, the Company shall provide Finisar with a Third-Party Offer Notice relating to such other Third-Party Offer pursuant to this Section 3.1, the Finisar Right of First Refusal shall revive, and Finisar shall have the right to submit a Finisar Qualifying Offer relating to such other Third-Party Offer pursuant to this Section 3.1 (excluding instances in which the third-party that delivered the Third-Party Offer subsequently offers, during such period, materially more favorable terms relating to the Sale Transaction than those contained in the Third-Party Offer, or in which a new third-party which is not a competitor of Finisar’s (as reasonably determined in good faith by Finisar within three (3) days after the Company notifies Finisar of the material terms of such offer and the identity of the new third party) agrees to effect a Sale Transaction with the Company on terms and conditions at least as favorable to the Company and its stockholders (as determined in good faith by the Board of Directors) as those contained in the Third-Party Offer). Notwithstanding the foregoing, the Finisar Right of First Refusal shall terminate and cease to be of further force and effect immediately upon the earliest to occur of (a) a Change of Control or (b) an Initial Public Offering (each, a “Finisar Right Termination Event”). The “Third-Party Offer Closing Period” shall mean the period commencing on the date on which Finisar fails to submit a Finisar Qualifying Offer pursuant to this Section 3.1 and ending one hundred and fifty (150) days thereafter; provided, however, that the Third-Party Offer Closing Period (x) shall be extended beyond one hundred and fifty (150) days (the “Extension Period”) if, on the one hundred and fiftieth (150th) day of such period, the Company shall have executed a definitive agreement with the third-party who submitted the Third-Party Offer relating to a Sale Transaction and is working with such third party in good faith to consummate such Sale Transaction, and (y) shall be extended for so long as at all times during the Extension Period, the Company and such third party shall continue to be working in good faith to consummate such Sale Transaction. The terms of this Section 3.1 do not in any way limit or seek to limit the ability of the Board of Directors to fulfill any legal or fiduciary duty in connection with any new offer, which would result in materially greater consideration to the stockholders, by the original third party to effect a Sale Transaction.

 

3.2        Finisar Right of First Offer. In the event that the Board of Directors has resolved to pursue, initiate, commence or otherwise effect a Solicitation (defined below) relating to a Sale Transaction

 

19

 

with a non-affiliated third-party purchaser (a “Solicited Sale Transaction”), the Company shall promptly notify Finisar of such decision and provide Finisar a description of the material terms and conditions of the Solicited Sale Transaction, if any (the “Commencement Notice”). Finisar shall advise the Company in writing within seven (7) days following receipt of such Commencement Notice if Finisar desires to initiate the process to make an offer acquire the Company pursuant to a Sale Transaction (the “Negotiation Notice”) (notwithstanding that Finisar may be an affiliate of the Company). If Finisar fails to deliver the Negotiation Notice within such seven (7) day period, the Company shall be free to proceed towards effecting a Solicited Sale Transaction. For a period of thirty-seven (37) days following the date of the Company’s receipt of the Negotiation Notice (the “Exclusivity Period”), the Company will negotiate in good faith the proposed material terms and conditions of a Sale Transaction exclusively with Finisar; provided, that, Finisar is negotiating in good faith with the Company towards effecting a Sale Transaction during this period. During the Exclusivity Period, the Company will not engage in any negotiations, discussions or meetings with any non-affiliated third-party in respect of a Sale Transaction other than with Finisar. Following delivery of the Negotiation Notice and during the Exclusivity Period, Finisar may (i) examine such documents and other materials of the Company as Finisar shall reasonably request (subject to usual and customary confidentiality terms) and (ii) submit an offer for a Sale Transaction to the Company. During the Exclusivity Period, the Company shall promptly respond to Finisar’s reasonable requests for documents and other information relating to the Company. Following submission of any offer for a Sale Transaction from Finisar, the parties shall promptly commence good faith negotiations in respect of such proposed Sale Transaction. Should the Company and Finisar be unable to reach an agreement in respect of a Sale Transaction, the Company may, subject to Finisar’s Right of First Refusal, effect a Solicitation and enter into a Solicited Sale Transaction; provided, however, that any negotiations with a single third party resulting from a Solicited Sale Transaction shall not be subject to Finisar’s Right of Negotiation set forth in Section 3.3 below. Notwithstanding the foregoing, the Finisar Right of First Offer shall terminate and cease to be of further force and effect immediately upon a Finisar Right Termination Event. Should the Company fail to enter into a Sale Transaction within twelve (12) months following the first day of negotiations conducted pursuant to the Exclusivity Period (the “Solicited Transaction Closing Period”), or the end of the seven (7) day notice period if Finisar has not elected to deliver a Negotiation Notice, the Company must provide Finisar with the Commencement Notice described above and Finisar shall again have the rights provided under this Section 3.2 with respect to any subsequent decision(s) of the Board of Directors to effect a Solicitation relating to a Sale Transaction. The Solicited Sale Transaction Closing Period (x) shall be extended beyond twelve (12) months (the “Solicited Sale Transaction Extension”) if, on the final day of such twelve (12) month period, the Company shall have executed a definitive agreement with the third-party who submitted the offer resulting from the Solicited Sale Transaction, and (y) shall be extended for so long as at all times during the Solicited Sale Transaction Extension, the Company and such third-party shall continue to be working in good faith to consummate such a Solicited Sale Transaction. Should Finisar and the Company enter into a letter of intent, term sheet, memorandum of understanding or other similar agreement setting forth the price and material terms of a Sale Transaction (each, an “LOI”) in connection with the process set out in this Section 3.2, such terms shall include (i) a reasonable break-up fee should the Company subsequently effect a Sale Transaction with any third party other than Finisar or a Finisar affiliate (other than as a result of Finisar’s inability to consummate a Sale Transaction or Finisar’s material breach of the definitive agreement relating to the Sale Transaction), and (ii) an extension of the Exclusivity Period for that amount of time reasonably necessary to consummate the Sale Transaction with Finisar as set forth in the LOI. Nothing in this paragraph shall be deemed to compel the Company to accept an offer or effect a Sale Transaction with Finisar. For purposes of this Right of First Offer, a “Solicitation” shall mean the act of soliciting, encouraging, pursuing or negotiating offers from one or more non-affiliated prospective third-party purchasers to effect a Sale Transaction, including without limitation, in connection with an auction, competitive bidding situation or similar arrangement.

 

20

 

3.3        Finisar Right of Negotiation. In the event that the Board of Directors has resolved to pursue, initiate, commence or otherwise effect a Targeted Solicitation (defined below) relating to a Sale Transaction, it shall promptly notify Finisar of such decision and provide Finisar with a Commencement Notice. Finisar shall advise the Company in writing within five (5) days following receipt of such Commencement Notice, pursuant to a Negotiation Notice in the event that Finisar desires to initiate the process to make an offer to acquire the Company pursuant to a Sale Transaction. If Finisar fails to deliver the Negotiation Notice within such five (5) day period, the Company shall be free to proceed towards effecting a Targeted Solicitation relating to a Sale Transaction. For a period of twenty-five (25) days following the date of the Company’s receipt of the Negotiation Notice (the “Open Negotiation Period”), the Company will not enter into an exclusive negotiating or standstill agreement with any third-party and will at all times negotiate in good faith the proposed material terms and conditions of a Sale Transaction with Finisar (including following the submission of any bona fide offer from Finisar); provided, that, Finisar is negotiating in good faith with the Company towards effecting a Sale Transaction at all times during such period. Following delivery of the Negotiation Notice and during the Open Negotiation Period, Finisar may (i) examine such documents and other materials of the Company as Finisar shall reasonably request (subject to usual and customary confidentiality terms) and (ii) submit an offer for a Sale Transaction to the Company. During the Open Negotiation Period, the Company shall promptly respond to Finisar’s reasonable requests for documents and other information. Should the Company and Finisar be unable to reach an agreement in respect of a Sale Transaction, the Company may, subject to Finisar’s Right of First Refusal, offer to enter into a Sale Transaction in respect of the Targeted Solicitation. Thereafter, should the Company fail to enter into a Sale Transaction within twelve (12) months after the first day of the Open Negotiation Period (provided, that, such twelve-month period shall be extended if at the end of such twelve-month period the Company and the third-party purchaser have entered into a definitive agreement relating to a Sale Transaction and such parties are working in good faith to consummate such Sale Transaction, and provided, further, that such period shall be extended for so long as during such extended period the parties are working in good faith to consummate such Sale Transaction), or after the expiration of the five (5) day notice period if Finisar has elected not to deliver a Negotiation Notice, the Company must again give the Commencement Notice (as described in the Right of First Offer above) and Finisar shall again have the rights provided herein in respect of any subsequent decision(s) of the Board of Directors to effect a Targeted Solicitation relating to a Sale Transaction. If the parties enter into an LOI in connection with the process set out in this Section 3.3, it shall include (i) a reasonable break-up fee if the Company subsequently effects a Sale Transaction with any third party other than Finisar or a Finisar affiliate (other than as a result of Finisar’s inability to consummate a Sale Transaction or Finisar’s material breach of the definitive agreement relating to the Sale Transaction), and (ii) an exclusive negotiating or standstill period for that amount of time reasonably necessary to consummate the Sale Transaction with Finisar as set forth in the LOI. Nothing in this paragraph shall be deemed to compel the Company to accept and offer or effect a Sale Transaction with Finisar. For purposes of this Right of Negotiation, a “Targeted Solicitation” shall mean the act of soliciting, encouraging, pursuing or negotiating an offer from one (1) non-affiliated prospective third-party purchaser to effect a Sale Transaction, including without limitation, following receipt of a Sale Transaction proposal by such third party that the Board of Directors determines to pursue.

 

4.               Miscellaneous.

 

4.1        Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties; provided, however, that the rights of entities affiliated with Sprout to designate directors shall be assignable, subject to approval of such transfer by the Company (which approval shall not be unreasonably withheld), in connection with a transfer of shares equal to or exceeding the Minimum Transfer Amount. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or

 

21

 

liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. For avoidance of doubt, a Major Investor may assign his rights under Section 2 (but only with all related obligations) to a transferee or assignee that, after such assignment or transfer, holds together with its affiliates (including for the avoidance of doubt the persons and entities listed in Section 1.10 (i), (ii), (iii) and (iv) above) at least the Minimum Transfer Amount. Without limiting the generality of the foregoing, the parties hereby confirm that Tapot LLC and SFM Domestic Investments LLC may each in the future assign its rights and obligations hereunder in connection with a transfer of certain of the shares of capital stock of the Company held by it to TowerBrook Capital Partners, L.P., to an affiliate of any of them, or to an affiliate of Soros Fund Management LLC (“Soros”), without implicating the rights of the Major Investors hereunder (including without limitation Section 2.5 hereof). In the event of such a transfer, such transferee shall have all of the rights and obligations of an Investor under this Agreement.

 

4.2        Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware as applied to agreements entered into and to be performed entirely within Delaware.

 

4.3        Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

4.4        Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

4.5        Notices. Any notice required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed given to such party under this Agreement on the earliest of the following: (a) the date of personal delivery; (b) one (1) business day after transmission by facsimile or telecopier, addressed to the other party at its facsimile number or telecopier address, with confirmation of transmission; (c) one (1) business day after deposit with a return receipt express overnight courier for United States deliveries, or three (3) business days after such deposit for deliveries outside of the United States; or (d) three (3) business days after deposit in the United States mail by registered or certified mail (return receipt requested) for United States deliveries. All notices not delivered personally or by facsimile will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address set forth below such party’s signature on this Agreement hereto, or at such other address as such other party may designate by ten (10) days advance written notice to the other parties hereto. All notices for delivery outside the United States will be sent by facsimile or by express courier. Any notice given hereunder to more than one person will be deemed to have been given, for purposes of counting time periods hereunder, on the date effectively given to the last party required to be given such notice. Notices to the Company will be marked “Attention: Chief Executive Officer” with a copy to Company counsel.

 

4.6        Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 

4.7        Remedies. The parties hereto shall have all remedies for breach of this Agreement available to them as provided by law or equity. Without limiting the generality of the foregoing, the parties agree that in addition to any other rights and remedies available at law or in equity, the parties shall be entitled to obtain specific performance of the obligations of each party to this Agreement and immediate injunctive relief and that, in the event any action or proceeding is brought in equity or to enforce the same, no party will argue, as a defense, that there is an adequate remedy at law.

 

22

 

4.8        Entire Agreement. This Agreement constitutes and contains the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties respecting the subject matter hereof, including, without limitation, the Prior Agreement and any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the Company and any Prior Investor.

 

4.9        Amendments. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of (a) the Company and (b) the holders of at least a majority of the Common Stock issued or issuable upon conversion of the Preferred Shares then outstanding; provided, however, that any amendment or waiver with respect to Section 3 shall require the written consent of Finisar. Notwithstanding the above, in the event that any such amendment or waiver by its terms adversely affects the obligations and/or rights of any Holder or group of Holders in a different manner than the other Holders, such amendment or waiver shall also require the written consent of such affected Holder (or at least a majority in interest of a group of such Holders similarly adversely affected). Any amendment or waiver effected in accordance with this Section 4.9 shall be binding upon all Holders, the Company and their respective successors and assigns. For the avoidance of any doubt, and without derogating from the generality of the foregoing, it is hereby acknowledged and agreed that amendments adversely affecting a Holder’s right(s) of appointment to the Board of Directors as set out in Section 2.6 may only be made, without such Holder’s consent, where such amendments are also applied universally, on a pro rata basis, with respect to the rights of appointment to the Board of Directors as held by all Holders.

 

4.10      Amendment of Prior Agreement. The Prior Agreement is hereby amended and restated in its entirety and shall be of no further force and effect.

 

4.11      Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

4.12      Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities or persons (including for the avoidance of doubt the persons and entities listed in Section 1.10 (i), (ii), (iii) and (iv) above) shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. For the avoidance of doubt, all shares of Registrable Securities held or acquired by Jerusalem Ventures Partners L.P. and all shares of Registrable Securities held or acquired by Jerusalem Ventures Partners (Israel) L.P. shall be aggregated together for all means and purposes, including for determination of the availability of any rights and for the calculation of any of such entities’ pro rata share. All shares of Registrable Securities held or acquired by Soros shall be aggregated together with the shares of Registrable Securities held or acquired by partners within or affiliates of Soros. All shares of Registrable Securities held or acquired by Sprout shall be aggregated together with the shares of Registrable Securities held or acquired by partners within or affiliates of Sprout. For the avoidance of doubt, all shares of Registrable Securities held or acquired by TL Ventures V L.P. and all shares of Registrable Securities held or acquired by TL Ventures V Interfund L.P. shall be aggregated together for all means and purposes, including for determination of the availability of any rights and for the calculation of any of such entities’ pro rata share. For the avoidance of doubt, all shares of Registrable Securities held or acquired by Nokia Venture Partners II, L.P. and all shares of Registrable Securities held or acquired by NVP II Affiliates Funds, L.P. shall be aggregated together for all means and purposes, including for determination of the availability of any rights and for the calculation of any of such entities’ pro rata share. For the avoidance of doubt, all shares of Registrable Securities held or acquired by Intel Capital Corporation and all shares of Registrable Securities

 

23

 

held or acquired by Middlefield Ventures, Inc. shall be aggregated together for all means and purposes, including for determination of the availability of any rights and for the calculation of any of such entities’ pro rata share. Also, for the avoidance of doubt, all shares of Registrable Securities held or acquired by Semi Conductor Devices (“SCD”) and all shares of Registrable Securities held or acquired by the partners within SCD shall be aggregated together for all means and purposes, including for determination of the availability of any rights and for the calculation of any of such entities’ pro rata share.

 

4.13      Waiver of Notice and Right of First Offer by Prior Investors. In consideration of the benefits conferred upon the Company pursuant to the transactions contemplated by the Purchase Agreement, each Prior Investor hereby irrevocably waives its right of first offer to acquire Preferred Shares (and Common Stock issued or issuable upon conversion thereof), or rights to acquire Preferred Shares (and Common Stock issued or issuable upon conversion thereof), in connection with the Purchase Agreement, as such right is set forth in Section 2.5 of the Prior Agreement, together with any right to receive notice in connection with such issuances pursuant to such Section 2.5.

 

4.14      Recapitalization. In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any shares of Preferred or Common Stock by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the Preferred Shares or any other change in capital structure of the Company, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Agreement.

 

* * *

 

24

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
CYOPTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ettore J. Coringrato
    
	
 
    	
Name:   Ettore J. Coringrato
    
	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
Address:
    	
9999   Hamilton Blvd.
    
	
 
    	
 
    	
Breinigsville,   PA 18031
    
	
 
    	
 
    	
Attention:   Chief Executive Officer
    
	
 
    	
 
    	
E-mail:   ecoringrato@cyoptics.com
    
	
 
    	
 
    
	
 
    	
With   a copy to:
    
	
 
    	
 
    
	
 
    	
 
    	
Goodwin   Procter LLP
    
	
 
    	
 
    	
135   Commonwealth Drive
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    
	
 
    	
 
    	
Attention:   Caine T. Moss
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
JERUSALEM   VENTURE PARTNERS III, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners III, L.P., its General partner
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Venture Partners Corporation, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:
    	
156   Fifth Avenue, Suite 410
    
	
 
    	
 
    	
New   York, NY 10010
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JERUSALEM   VENTURE PARTNERS III (ISRAEL), L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Ventures Partners III (Israel)
    
	
 
    	
Management   Company Ltd., its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Address:   
    	
Hebron   Road 24
    
	
 
    	
 
    	
Jerusalem,   93542, Israel
    
	
 
    	
 
    
	
 
    	
JERUSALEM   VENTURE PARTNERS ENTREPRENEUR FUND III, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners III, L.P., its General Partner
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Venture Partners Corporation, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
156   Fifth Avenue, Suite 410
   New York, NY 10010
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
JERUSALEM   VENTURE PARTNERS (ISRAEL), L.P.
    
	
 
    	
 
    
	
 
    	
By:   J.V.P. Jerusalem Ventures Partners (Israel)
    
	
 
    	
Management   Ltd., its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:
    	
Hebron   Road 24
    
	
 
    	
 
    	
Jerusalem,   93542, Israel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JERUSALEM   VENTURE PARTNERS, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners, L.P., its General Partner
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Venture Partners Corporation, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Address:   
    	
156   Fifth Avenue, Suite 410
    
	
 
    	
 
    	
New   York, NY 10010
    
	
 
    	
 
    
	
 
    	
JVP III   ANNEX FUND, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Annex Partners III, L.P., its General Partner
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Venture Partners Corporation, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
156   Fifth Avenue, Suite 410
   New York, NY 10010
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
JERUSALEM   VENTURE PARTNERS IV, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners IV LP, its General Partner
    
	
 
    	
 
    
	
 
    	
By:   JVP Corp IV, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
156   Fifth Avenue, Suite 410
    
	
 
    	
 
    	
New   York, NY 10010
    
	
 
    	
 
    
	
 
    	
Attention:
    	
Erel   Margalit
    
	
 
    	
Facsimile:
    	
(212)   213-1776
    
	
 
    	
 
    
	
 
    	
JERUSALEM   VENTURE PARTNERS IV-A LP
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners IV LP, its General Partner
    
	
 
    	
 
    
	
 
    	
By:   JVP Corp IV, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
156   Fifth Avenue, Suite 410
    
	
 
    	
 
    	
New   York, NY 10010
    
	
 
    	
 
    
	
 
    	
Attention:
    	
Erel   Margalit
    
	
 
    	
Facsimile:
    	
(212)   213-1776
    
					

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
JERUSALEM   VENTURE PARTNERS IV (ISRAEL), L.P.
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners IV — Venture Capital, L.P., its General Partner
    
	
 
    	
 
    
	
 
    	
By:   JVP Corp IV, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
Hebron   Road 24
    
	
 
    	
 
    	
Jerusalem,   93542, Israel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Erel Margalit
    
	
 
    	
 
    	
Facsimile:   +972 2 640 9001
    
	
 
    	
 
    
	
 
    	
JERUSALEM   VENTURE PARTNERS ENTREPRENEURS FUND IV LP
    
	
 
    	
 
    
	
 
    	
By:   Jerusalem Partners IV LP, its General Partner
    
	
 
    	
 
    
	
 
    	
By:   JVP Corp IV, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
156   Fifth Avenue, Suite 410
    
	
 
    	
 
    	
New   York, NY 10010
    
	
 
    	
 
    
	
 
    	
Attention:
    	
Erel   Margalit
    
	
 
    	
Facsimile:
    	
(212)   213-1776
    
					

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
JVP Opportunity Fund, L.P.,
    For itself and as nominee for certain other entities
    
	
 
    	
 
    
	
 
    	
By:   JP Opportunity Fund, L.P., its general partner
    
	
 
    	
 
    
	
 
    	
By:   JVP Corp IV, its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erel Margalit
    
	
 
    	
Name:   Erel Margalit
    
	
 
    	
Title:   Officer
    
	
 
    	
 
    
	
 
    	
Address:   
    	
24   Hebron Road 
    
	
 
    	
 
    	
Jerusalem   93542
    
	
 
    	
 
    	
Israel
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
TL VENTURES V L.P.
    
	
 
    	
 
    
	
 
    	
By:   TL Ventures V Management L.P., its general partner
    
	
 
    	
By:   TL Ventures V LLC, its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark DeNino
    
	
 
    	
 
    	
Name:
    	
Mark   DeNino
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
Address:
    	
Attn:   Mark DeNino 
    
	
 
    	
 
    	
700   Building
    
	
 
    	
 
    	
4335   Devon Park Drive
    
	
 
    	
 
    	
Wayne,   PA 19087
    
	
 
    	
 
    	
 
    
	
 
    	
TL VENTURES V INTERFUND L.P.
    
	
 
    	
 
    
	
 
    	
By:   TL Ventures V LLC, its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark DeNino
    
	
 
    	
 
    	
Name:
    	
Mark   DeNino
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
Address:
    	
Attn:   Mark DeNino 
    
	
 
    	
 
    	
700   Building
    
	
 
    	
 
    	
4335   Devon Park Drive
    
	
 
    	
 
    	
Wayne,   PA 19087
    
					

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
DLJ   CAPITAL CORPORATION
    
	
 
    	
 
    
	
 
    	
/s/   Tracy M. Urquiaga
    
	
 
    	
By:
    	
Tracy   M. Urquiaga
    
	
 
    	
Its:
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
Address:
    	
Eleven   Madison Avenue, 13th Fir
    
	
 
    	
 
    	
New   York, NY 10010-3629
    
	
 
    	
 
    
	
 
    	
SPROUT   CAPITAL VIII, L.P.
    
	
 
    	
By:
    	
DLJ   Capital Corporation
    
	
 
    	
Its:
    	
Managing   General Partner
    
	
 
    	
 
    
	
 
    	
/s/   Tracy M. Urquiaga
    
	
 
    	
By:
    	
Tracy   M. Urquiaga
    
	
 
    	
Its:
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
Address:
    	
Eleven   Madison Avenue, 13th Fir
    
	
 
    	
 
    	
New   York, NY 10010-3629
    
	
 
    	
 
    
	
 
    	
SPROUT   VENTURE CAPITAL, L.P.
    
	
 
    	
By:
    	
DLJ   Capital Corporation
    
	
 
    	
Its:
    	
~al   Partner
    
	
 
    	
 
    
	
 
    	
/s/   Tracy M. Urquiaga
    
	
 
    	
By:
    	
Tracy   M. Urquiaga
    
	
 
    	
Its:
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
Address:
    	
Eleven   Madison Avenue, 13th Fir
    
	
 
    	
 
    	
New   York, NY 10010-3629
    
	
 
    	
 
    
	
 
    	
DLJ ESC II, L.P.
    
	
 
    	
By:
    	
DLJLBO   Plans Management Corporation
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Tracy M. Urquiaga
    
	
 
    	
By:
    	
Tracy   M. Urquiaga
    
	
 
    	
Its:
    	
Attorney   in Fact
    
	
 
    	
 
    
	
 
    	
Address:
    	
Eleven   Madison Avenue, 13th Fir
    
	
 
    	
 
    	
New   York, NY 10010-3629
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

TN WlTNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
CYOPTlCS I L.L.C.
    
	
 
    	
By:
    	
 Sprout   Capital VIII, L.P.
    
	
 
    	
Title:
    	
 Member
    
	
 
    	
By:
    	
 DLJ   Capital Corp.
    
	
 
    	
Title:
    	
 M~g       General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tracy M. Urquiaga
    
	
 
    	
Name:
    	
Tracy   M. Urquiaga
    
	
 
    	
Its:
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
Address:
    	
Eleven   Madison Avenue, 13th Fir
    
	
 
    	
 
    	
New   York, NY 10010-3629
    
	
 
    	
 
    	
 
    
	
 
    	
CYOPTICS II L.L.c.
    
	
 
    	
By:
    	
 DLJ   ESC II, L.P.
    
	
 
    	
Title:
    	
 Member
    
	
 
    	
By:
    	
 DLJ   LBO Plans Management Corporation
    
	
 
    	
Title:
    	
 G~artner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tracy M. Urquiaga
    
	
 
    	
Name:
    	
Tracy   M. Urquiaga
    
	
 
    	
Title:
    	
Attorney   in Fact
    
	
 
    	
 
    
	
 
    	
Address:
    	
Eleven   Madison Avenue, 13th Fir
    
	
 
    	
 
    	
New   York, NY 10010-3629
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
TAPOT   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay A. Schoenfarber
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jay   A. Schoenfarber
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Attorney-in-Fact
    
	
 
    	
 
    
	
 
    	
Address:
    	
Soros   Fund Management LLC
    
	
 
    	
 
    	
888   Seventh Avenue, Suite 3300
    
	
 
    	
 
    	
New   York, NY 10106
    
	
 
    	
 
    
	
 
    	
SFM   DOMESTIC INVESTMENTS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay A. Schoenfarber
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jay   A. Schoenfarber
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Attorney-in-Fact
    
	
 
    	
 
    
	
 
    	
Address:
    	
Soros   Fund Management LLC
    
	
 
    	
 
    	
888   Seventh Avenue, Suite 3300
    
	
 
    	
 
    	
New   York, NY 10106
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
SEMI CONDUCTOR DEVICES
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Baruck Glick  Roni Mansur
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Baruck Glick  Roni Mansur
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
CEO    CFO
    
	
 
    	
 
    
	
 
    	
Address:
    	
Attn:   Roni Mansur or Baruck Glick 
    
	
 
    	
 
    	
P.O. Box 2250
    
	
 
    	
 
    	
Haifa   31021,
    
	
 
    	
 
    	
Israel
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
PIRELLI & C. S.p.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Francesco Tanzi
    
	
 
    	
Name:
    	
Francesco   Tanzi
    
	
 
    	
Title:   
    	
Finance   Director
    
	
 
    	
 
    
	
 
    	
Address:
    	
via Piero E Alberto Pirelli 25,
    
	
 
    	
 
    	
20126   Milano - Italy
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
MORGENTHALER   PARTNERS VI, L.P.
    
	
 
    	
 
    
	
 
    	
Morgenthaler   Management Partners VI, LLC, its
   managing partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Theodore A. Laufik
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    	
50   Public Square
    
	
 
    	
 
    	
Suite   2700
    
	
 
    	
 
    	
Terminal   Tower
    
	
 
    	
 
    	
Cleveland,   OH 44113
    
	
 
    	
 
    	
Fascimile:   (650) 388-7601
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
BIRCHMERE VENTURES III L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
BV3 Management,  LP, 
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
BV3 LLC,
    
	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Sean D.S. Sebastian
    
	
 
    	
Name:
    	
Sean   D.S. Sebastian
    
	
 
    	
Title:   
    	
Managing Member
    
	
 
    	
 
    
	
 
    	
Address:
    	
12   Federal Street, Suite 201
    
	
 
    	
 
    	
Pittsburgh,   PA 15212
    
					

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
NOKIA VENTURE PARTNERS II, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
N.V.P.   II SP, L.P.
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
By:
    	
N.V.P.   II, L.L.C.
    
	
 
    	
 
    	
Its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Andrew Thornborrow
    
	
 
    	
Name:
    	
Andrew   Thornborrow
    
	
 
    	
Title:   
    	
Attorney-in-Fact
    
	
 
    	
 
    
	
 
    	
Address:
    	
Attn:   Sujit Banerjee 
    
	
 
    	
 
    	
545   Middlefield Road
    
	
 
    	
 
    	
Suite 210
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    
	
 
    	
 
    	
 
    
	
 
    	
NVP   II AFFILIATES FUNDS, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
N.V.P.   II SP, L.P.
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
By:
    	
N.V.P.   II, L.L.C.
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Andrew Thornborrow
    
	
 
    	
Name:
    	
Andrew   Thornborrow
    
	
 
    	
Title:   
    	
Attorney-in-Fact
    
	
 
    	
 
    
	
 
    	
Address:
    	
Attn:   Sujit Banerjee 
    
	
 
    	
 
    	
545   Middlefield Road
    
	
 
    	
 
    	
Suite 210
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    
					

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
EUROFUND 2000 (NON-ISRAELI) L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Aharon Beth-Halachmi
    
	
 
    	
Name:
    	
Aharon   Beth-Halachmi
    
	
 
    	
Title:   
    	
Managing   Partner
    
	
 
    	
 
    
	
 
    	
Address:
    	
Attn:   Aharon Beth-Halachmi
    
	
 
    	
 
    	
99   Hayarkon Street
    
	
 
    	
 
    	
Tel   Aviv, 63432
    
	
 
    	
 
    	
Israel
    
	
 
    	
 
    	
 
    
	
 
    	
EUROFUND 2000 (ISRAELI) L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Aharon Beth-Halachmi
    
	
 
    	
Name:
    	
Aharon   Beth-Halachmi
    
	
 
    	
Title:   
    	
Managing   Partner
    
	
 
    	
Address:
    	
Attn:   Aharon Beth-Halachmi
    
	
 
    	
 
    	
99   Hayarkon Street
    
	
 
    	
 
    	
Tel   Aviv, 63432
    
	
 
    	
 
    	
Israel
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
EPHRAIM   ABRAMSON
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ephraim Abramson
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
GARY   WEBER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gary Weber
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Gary   Weber
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Investor
    
	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
				

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this 2011 Amended and Restated Investor Rights Agreement as of the date first above written.

 

	
 
    	
M.   FIRON TRUST COMPANY LTD.
    
	
 
    	
 
    
	
 
    	
By:   
    	
F.E.   Capital Management Ltd. by proxy
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dov Ninveh Tzvi Kernev
    
	
 
    	
 
    
	
 
    	
Name:
    	
Dov   Ninveh Tzvi Kernev
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
Hayarkon   99
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tel-Aviv
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Israel.
    
					

 

Signature Page to 2011 Amended and Restated Investor Rights Agreement

 

 

Schedule A

 

Investors

 

DLJ Capital Corp.

 

DLJ ESC II, L.P.

 

CyOptics II LLC

 

CyOptics I LLC

 

Sprout Venture Capital, L.P.

 

Sprout Capital VIII, L.P.

 

Tapot LLC

 

SFM Domestic Investments LLC

 

Jerusalem Venture Partners, L.P.

 

Jerusalem Venture Partners (Israel), L.P. 

 

Jerusalem Venture Partners III, LP

 

Jerusalem Venture Partners Entrepreneur Fund III, L.P. 

 

Jerusalem Venture Partners III (Israel), L.P.

 

JVP III Annex Fund, L.P.

 

Jerusalem Venture Partners IV, L.P.

 

Jerusalem Venture Partners IV-A, L.P. 

 

Jerusalem Venture Partners IV (Israel), L.P.

 

Jerusalem Venture Partners Entrepreneurs Fund IV, L.P. 

 

JVP Opportunity Fund, L.P.

 

EuroFund 2000 (Non-Israeli) L.P.

 

EuroFund 2000 (Israeli) L.P.

 

M. Firon Trust Company Ltd.

 

Finisar Corporation

 

 

TriQuint Semiconductor, Inc.

 

Dan Sheinbein

 

Deal Revocable Trust U/A DTD 10/06/98 

 

Conrad Leifur

 

CIV LLC

 

Lior Bregman

 

Birchmere Ventures III LP

 

M.R.Com Holdings S.A.

 

FinaFund I, L.P.

 

Intel Capital Corporation

 

TL Ventures V L.P.

 

TL Ventures V Interfund L.P.

 

Nokia Venture Partners II, L.P.

 

NVP II Affiliates Funds, L.P.

 

Middlefield Ventures, Inc

 

Pirelli & C. S.p.A.

 

Mark Copman

 

Ephraim Abramson

 

Semi Conductor Devices

 

Andrew Kaye

 

Ventech Leasing and Lending

 

Innovacom

 

WS Investment Company, LLC (2004D) 

 

WS Investment Company, LLC (2004A) 

 

WS Investment Company, LLC (2007A) 

 

Morgenthaler Partners VI, L.P.

 

 

Michael Cyrus

 

Gary Weber

 

Joseph Shmulovich

 

 

Schedule A-1

 

Holders

 

Cisco Systems, Inc.

 

Vitesse Venture Fund, L.P.

 

Intel Atlantic, Inc.

 

FCPR Ventech

 

Ephraim Abramson & Co.

 

Brobeck, Phleger & Harrison LLP

 

Farrokh Billimoria

 

Maximilian Schuetz

 

WIT SOUNDVIEW PHOTONICS FUND 2000, LLC 

 

Nikos Theodosopoulos

 

Charles and Grace Willhoit Family Trust Dated 4/19/02 

 

Paul Silverstein

 

Jonathan Art

 

Greg Geiling

 

Artesian Trust

 

Pirelli & C. S.p.A.

 

Tulchinsky-Stern Properties Ltd.

 

Tulchinsky-Stern Properties (1996) Ltd.

 

WS Investment Company 2000B

 

Jeffrey D. Saper and Vivian E. Saper Trust UA 03-14-85, FBO Family Trust 

 

Caine Moss

 

Anjani Ragade

 

WS Investment Company, LLC

 

 

WS Investment Company 99B

 

WS Investment Company 2000

 

WS Investment Company 2000B

 

Joseph Wolf

 

Neil J. Rappaport & Susan J. Rappaport Trustees of the Rappaport Trust dated March 31, 1997 

 

Rappaport Venture Partners, LLC.

 

Jeff Lipton 

 

Rick Schaeffer 

 

Jim Jungjohann

 

SiWave Management and Business Development Ltd.

 

Vitesse Venture Fund, L.P.

 

LRFA, LLC 

 

CENiX, Inc.

 

 

Schedule B

 

Strategic Investors

 

Finisar Corporation

 

TriQuint Semiconductor, Inc.

 

Intel Capital Corporation 

 

Middlefield Ventures, IncExhibit 10.2

 

CYOPTICS, INC.

AMENDED AND RESTATED

1999 STOCK OPTION PLAN

 

(Sub-plans for Israeli Employees attached as Appendix A and Appendix B)

 

1.                                       Purposes of the Plan.  The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business.  Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.  Restricted Stock may also be granted under the Plan.

 

2.                                       Definitions.  As used herein, the following definitions shall apply:

 

(a)                                  “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

 

(b)                                 “Applicable Laws” means the requirements relating to the administration of equity compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Awards are, or will be, granted under the Plan.

 

(c)                                  “Award” means, individually or collectively, a grant under the Plan of Options or Restricted Stock.

 

(d)                                  “Board” means the Board of Directors of the Company.

 

(e)                                  “Change in Control” means the occurrence of any of the following events:

 

(i)                                Change in Ownership of the Company.  A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or

 

(ii)                             Change in Effective Control of the Company.  If the Company has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of this clause (ii), if any Person is considered to be in 

 

 

effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

(iii)                          Change in Ownership of a Substantial Portion of the Company’s Assets.  A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.  For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

For purposes of this Section 2(e), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

Notwithstanding the foregoing, a transaction shall not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A of the Code, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.

 

Further and for the avoidance of doubt, a transaction shall not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that shall be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

(f)                                    “Code” means the Internal Revenue Code of 1986, as amended.  Any reference to a section of the Code herein shall be a reference to any successor or amended section of the Code.

 

(g)                                 “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or by the compensation committee of the Board, in accordance with Section 4 hereof.

 

(h)                                 “Common Stock” means the Common Stock of the Company.

 

(i)                                     “Company” means Cyoptics, Inc., a Delaware corporation together with any Subsidiary that may be formed by the Company from time to time.

 

(j)                                     “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

 

(k)                                  “Director” means a member of the Board of Directors of the Company, or any Subsidiary.

 

2

 

(l)                                     “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

(m)                               “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.  For purposes of Incentive Stock Options, no such leave may exceed three months, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six months following the 1st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 

(n)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(o)                                 “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)                                If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market, the Nasdaq Global Select Market or the Nasdaq Capital Market, its Fair Market Value shall be the closing sales price for such stock (or, if no closing sales price was reported on that date, as applicable, on the last trading date such closing sales price was reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)                             If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii)                          In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

 

(p)                                 “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder.

 

(q)                                 “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

 

3

 

(r)                                    “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(s)                                  “Option” means a stock option granted pursuant to the Plan.

 

(t)                                    “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms and conditions of the Plan; however, in the event that any provision contained in the Plan is inconsistent with that contained in the Option Agreement, such provision in the Option Agreement shall govern Optionee.

 

(u)                                 “Option Exchange Program” means a program under which (i) outstanding Options are surrendered or cancelled in exchange for Options of the same type (which may have higher or lower exercise prices and different terms), Restricted Stock, and/or cash, (ii) Optionees would have the opportunity to transfer any outstanding Options to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Option is reduced.  The Administrator will determine the terms and conditions of any Option Exchange Program in its sole discretion.

 

(v)                                 “Optioned Stock” means the Common Stock subject to an Award.

 

(w)                               “Optionee” means the holder of an outstanding Award granted under the Plan.

 

(x)                                   “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(y)                                 “Plan” means this 1999 Stock Plan.

 

(z)                                   “Restatement Effective Date” means July 17, 2008, the date on which the Board adopted an amendment and restatement of the Plan.

 

(aa)                            “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 11 of the Plan, or issued pursuant to the early exercise of an Option.

 

(bb)                          Restricted Stock Purchase Agreement” means a written or electronic agreement between the Company and the Optionee evidencing the terms and restrictions applying to Shares purchased under a Restricted Stock award.  The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant.

 

(cc)                             “Section 16(b) “ means Section 16(b) of the Securities Exchange Act of 1934, as amended.

 

(dd)                          “Service Provider” means an Employee, Director or Consultant.  A Service Provider shall not cease to be a Service Provider in the case of (i) any leave of absence approved by the Company, or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

 

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(ee)                            “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 below.

 

(ff)                                “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

(gg)                           “Transaction” shall have the meaning set out in Section 12(c)(i).

 

3.                                       Stock Subject to the Plan.  Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is forty-six million six hundred eighty-three thousand five hundred thirty-four (46,683,534) Shares.  The Shares may be authorized but unissued, or reacquired Common Stock.

 

If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).  However, Shares that have actually been issued under the Plan, upon exercise of an Award, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.  Notwithstanding the foregoing and, subject to adjustment provided in Section 12, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in the first paragraph of this Section, plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under this second paragraph of this Section.

 

4.                                       Administration of the Plan.

 

(a)                                  Administrator.  The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

 

(b)                                 Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(i)                                     to determine the Fair Market Value;

 

(ii)                                  to select the Service Providers to whom Awards may from time to time be granted hereunder;

 

(iii)                               to determine the number of Shares to be covered by each such Award granted hereunder;

 

(iv)                              to approve forms of agreement for use under the Plan;

 

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(v)                                 to determine the terms and conditions, of any Awards granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(vi)                              to determine whether and under what circumstances an Option may be settled in cash under subsection 9(e) instead of Common Stock;

 

(vii)                           to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

 

(viii)                        to initiate an Option Exchange Program;

 

(ix)                                to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws or otherwise satisfying applicable foreign laws;

 

(x)                                   to allow Optionees to satisfy withholding tax obligations as prescribed in Section 13;

 

(xi)                                to modify or amend each Award (subject to Section 15(c) of the Plan) including but not limited to the discretionary authority to extend the post-termination exercise period of Awards and to extend the maximum term of an Option (subject to Section 7 regarding Incentive Stock Options);

 

(xii)                             to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

(xiii)                          to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; and

 

(xiv)                         to alter, revise or otherwise adjust the terms of the Plan and the Option Agreement or Restricted Stock Purchase Agreement, as may be required pursuant to any applicable laws of local or foreign jurisdictions.

 

(c)                                  Effect of Administrator’s Decision.  All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

 

5.                                       Eligibility.

 

(a)                                  Nonstatutory Stock Options and Restricted Stock may be granted to Service Providers.  Incentive Stock Options may be granted only to Employees.

 

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(b)                                 Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted, and calculation will be performed in accordance with Code Section 422 and Treasury Regulations promulgated thereunder.

 

(c)                                  Neither the Plan nor any Award shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

 

6.                                       Term of Plan.  The Plan shall become effective upon its adoption by the Board.  It shall continue in effect until July 17, 2018 unless sooner terminated under Section 15 of the Plan.

 

7.                                       Term of Option.  The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof.  In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

 

8.                                       Option Exercise Price and Consideration.

 

(a)                                  The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

 

(i)                                     In the case of an Incentive Stock Option

 

(1)                                  granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

 

(2)                                  granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(ii)                                  In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

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(iii)                               Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above in accordance with and pursuant to a transaction described in Section 424 of the Code.

 

(b)                                 The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised and provided that accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to the Company, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, (6) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws, or (7) any combination of the foregoing methods of payment.  In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

 

9.                                       Exercise of Option.

 

(a)                                  Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement.  With respect to Options granted on or after the Restatement Effective Date, unless the Administrator provides otherwise or except as otherwise required by Applicable Law, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence.  An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised, together with any applicable withholding taxes.  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

 

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

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(b)                                 Termination of Relationship as a Service Provider.  If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement).  In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination.  Unless the Administrator provides otherwise, if on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(c)                                  Disability of Optionee.  If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement).  In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination.  Unless the Administrator provides otherwise, if on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(d)                                 Death of Optionee.  If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to the Optionee’s death in a form acceptable to the Administrator.  If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution.  In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination.  If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan.  If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(e)                                  Buyout Provisions.  The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.  No such offer shall obligate Optionee to relinquish his or her Option.

 

10.                                 Non-Transferability of Awards.  Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, including by entering into any short position, any “put equivalent 

 

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position” or any “call equivalent position” (as defined in Section 16a-1(h) and Section 16a-1(b) of the Exchange Act, respectively) with respect to such securities, other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee.

 

11.                                 Restricted Stock.

 

(a)                                  Rights to Purchase.  Restricted Stock may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that it will offer Restricted Stock under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid (if any), and the time within which such person must accept such offer.

 

(b)                                 Repurchase Option.  Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable within ninety (90) days of the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability).  Unless the Administrator provides otherwise, the purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company.  The repurchase option shall lapse at such rate as the Administrator may determine.  With respect to Awards of Restricted Stock granted on or after the Restatement Effective Date, unless the Administrator provides otherwise or except as otherwise required by Applicable Law, vesting of the Restricted Stock granted hereunder shall be tolled during any unpaid leave of absence.

 

(c)                                  Other Provisions.  The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

 

(d)                                 Rights as a Stockholder.  Once the Restricted Stock is purchased or otherwise issued, the purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Restricted Stock is purchased or otherwise issued, except as provided in Section 12 of the Plan.

 

12.                                 Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

 

(a)                                  Changes in Capitalization.  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall adjust the number and class of Shares that 

 

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may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award; provided, however, that with respect to Service Providers resident in California, the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

 

(b)                                 Dissolution or Liquidation.  In the event of a proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction.  The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable.  In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Award shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated.  To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)                                  Merger, Acquisition, or Asset Sale.

 

(i)                           With respect to Awards granted prior to the Restatement Effective Date, in the event of a stock sale, merger or consolidation of the Company in which more than 50% of the voting power of the Company’s securities is transferred to a third party or third parties, or a sale of all or substantially all of the Company’s assets (each such event, a “Transaction”), each outstanding Award shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporation refuses to assume or substitute for the Award, the Optionee shall fully vest in and have the right to exercise the Award as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable.  If an Award is not assumed or substituted for in the event of a Transaction, the Administrator shall notify the Optionee in writing or electronically that the Award shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and any Award not assumed or substituted for shall terminate upon the expiration of such period for no consideration, unless otherwise determined by the Administrator.  For the purposes of this paragraph, the Award shall be considered assumed if, following a Transaction, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Award immediately prior to the Transaction, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Transaction is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Award, for each Share subject to the Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

 

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(ii)                                  With respect to Awards granted on or after the Restatement Effective Date, in the event of a merger or Change in Control, each outstanding Award shall be treated as the Administrator determines, including, without limitation, that each Award be assumed or an equivalent award substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  The Administrator shall not be required to treat all Awards similarly in the transaction.

 

Notwithstanding the foregoing, in the event of a Change in Control in which the successor corporation does not assume or substitute for the Award, the Optionee shall fully vest in and have the right to exercise his or her outstanding Awards, including Shares as to which such Award would not otherwise be vested or exercisable, and restrictions on all of the Optionee’s Restricted Stock shall lapse.  In addition, if an Award is not assumed or substituted in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that the Award shall be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and any Award not assumed or substituted for shall terminate upon the expiration of such period for no consideration, unless otherwise determined by the Administrator.

 

For the purposes of this Section 12(c)(ii), the Award shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Award, for each Share subject to the Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control.

 

13.                                 Tax Withholding.  Prior to the delivery of any Shares pursuant to an Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Optionee to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Optionee’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, shall determine in what manner it shall allow a Optionee to satisfy such tax withholding obligation and may permit the Optionee to satisfy such tax withholding obligation, in whole or in part by one (1) or more of the following: (a) paying cash (or by check), (b) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum amount statutorily required to be withheld, or (c) selling a sufficient number of such Shares otherwise deliverable to a Optionee through such means as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the minimum amount statutorily required to be withheld.

 

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14.                                 Time of Granting Awards.  The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such other date as is determined by the Administrator.  Notice of the determination shall be given to each Employee or Consultant to whom an Award is so granted within a reasonable time after the date of such grant.

 

15.                                 Amendment and Termination of the Plan.

 

(a)                                  Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b)                                 Stockholder Approval.  The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)                                  Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing (which may include e-mail) and signed by the Optionee and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

 

16.                                 Conditions Upon Issuance of Shares.

 

(a)                                  Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)                                 Investment Representations.  As a condition to the exercise of an Award, the Administrator may, in its discretion, require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares.

 

17.                                 Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

18.                                 Reservation of Shares.  The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

19.                                 Stockholder Approval.  The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted.  Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws.

 

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20.                                 No Effect on Employment or Service.  Neither the Plan nor any Award shall confer upon any participant any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

 

21.                                 Information to Optionees.  Beginning on the date that the aggregate number of Optionees under this Plan is five hundred (500) or more and until such time as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or is no longer relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange Act, the Company will provide to each Optionee the information described in Rule 701 paragraphs (e)(3), (4), and (5) of Rule 701 under the Securities Act not less frequently than every six (6) months with the financial statements being not more than 180 days old and with such information provided either by physical or electronic delivery to the Optionees or by written notice to the Optionees of the availability of the information on an Internet site that may be password-protected and of any password needed to access the information.  The Company may request that Optionees agree to keep the information to be provided pursuant to this section confidential.  If an Optionee does not agree to keep the information to be provided pursuant to this section confidential, then the Company will not be required to provide the information.

 

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APPENDIX A

 

TO THE 1999 STOCK OPTION PLAN

 

Rules for Israeli Option Grants

 

The following rules shall apply in the case of Awards granted to Israeli residents.  Unless otherwise indicated, the terms and definitions under the 1999 Stock Plan shall apply to Awards granted pursuant to this Sub-Plan.  Awards granted under this Sub-Plan are not intended to qualify under Rule 701 of the Securities Act, but instead the Company intends upon relying on the exception to registration as provided under Regulation S promulgated under the Securities Act.

 

1.                                       Definitions.  As used herein, the following definitions shall apply:

 

(a)                                  “Acquisition Date” means the respective dates on which the Shares are issued upon exercise of an Award.

 

(b)                                 “Applicable Laws” means the legal requirements relating to the administration of stock option plans under Israeli corporate, securities, and tax laws.

 

(c)                                  “Disability” means total and permanent disability, as defined under Applicable Laws.

 

(d)                                 “ITA” means the Israeli Tax Authorities.

 

(e)                                  “Ordinance” means the 1961 Israeli Income Tax Ordinance [New Version], 1961 as now in effect or as hereafter amended.

 

(f)                                    “Section 102” means Section 102 of the Israeli Income Tax Ordinance [New Version], 1961, and the rules promulgated thereunder.

 

(g)                                 “Section 3 Tet” means Section 3(i) of the Israeli Income Tax Ordinance [New Version], 1961, and the rules promulgated thereunder.

 

(h)                                 “Securities Act” means the Securities Act of 1933, as amended.

 

(i)                                     “Sub-Plan” means the rules under this Appendix A to the Plan.

 

(j)                                     “Trustee” means any individual or entity appointed by the Company to serve as trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

 

(k)                                  “United States” means, the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

 

 

(l)                                     “U.S. Person” means:

 

(i)                                     Any natural person resident in the United States:

 

(ii)                                  Any partnership or corporation organized or incorporated under the laws of the United States:

 

(iii)                               Any estate of which any executor or administrator is a U.S. Person:

 

(iv)                              Any trust of which any trustee is a U.S. Person:

 

(v)                                 Any agency or branch of a foreign entity located in the United States

 

(vi)                              Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person:

 

(vii)                           Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States: and

 

(viii)                        Any partnership or corporation if:

 

(1)                                  Organized or incorporated under the laws of any foreign jurisdiction: and

 

(2)                                  Formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) promulgated under the Securities Act) who are not natural person, estates or trusts.

 

2.                                       Eligibility.                                           Only non-United States resident Service Providers shall be eligible for the grant of Awards under this Sub-Plan pursuant to the provisions of Section 102 and Section 3 Tet; provided, however, that no Service Provider may be granted Awards to purchase 10% or more of Common Stock.

 

3.                                       Limitations.  Neither the Plan nor any Option Agreement or Restricted Stock Purchase Agreement shall confer upon any Optionee any right with respect to continuing the Optionee’s employment relationship with the Company.

 

4.                                       Special Provisions for Plan Participants who are Israeli Residents.

 

(a)                                  Details regarding the terms and conditions of Awards granted pursuant to the provisions of Section 102 in addition to those set forth herein, will be delivered to the participants who are Israeli residents along with the remaining terms and conditions.

 

(b)                                 If Awards are granted pursuant to the provisions of Section 102, or to other specific or general provisions administered by the Israeli Tax Authorities or any body of law applicable to this Sub-Plan as promulgated from time to time, each Award, and each Share with 

 

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respect to which an Award has been exercised by an Optionee who is an Israeli resident, may be issued by the Company to, and held in trust (the “Trust”) for the benefit of such Optionee by the Trustee pursuant to Section 102.  All certificates representing Shares issued to the Trustee under the Sub-Plan shall be deposited with the Trustee, and shall be held by the Trustee until such time that such Shares are released from the Trust as herein provided.

 

(c)                                  Notwithstanding anything herein to the contrary, no Awards granted, or Shares purchased or issued as a bonus or similar distribution pursuant to Section 102 shall be released from the Trust prior to two (2) years after the grant of the Awards to the Trustee on behalf of the Optionee (the “Release Date”), or two (2) years from the date of approval of the Sub-Plan by the Israeli Income Tax authorities, whichever is later unless a specific waiver has been granted by the Israeli Tax Authority or a general relax of such requirement has been embodied within the Israeli law.  Subject to the terms hereof, at any time after the Release Date with respect to any Options, Restricted Stock or Shares, each Optionee may require (but shall not be obligated to require) the Trustee to release such Options, Restricted Stock or Shares, provided that no securities shall be released from the Trust to the Optionee unless and until such Optionee shall have deposited with the Trustee an amount of money which, in the Trustee’s opinion, is sufficient and necessary for the discharge of such Optionee’s tax obligations with respect to such Shares.

 

(d)                                 Upon sale by an Optionee of any securities held in Trust, the Company shall (or shall cause the Trustee to) withhold from the proceeds of such sale all applicable taxes, shall remit the amount withheld to the appropriate Israeli tax authorities, shall pay the balance thereof directly to such Optionee, and shall report to such Optionee the amount so withheld and paid to said tax authorities.

 

(e)                                  All Shares issued upon the exercise of Awards granted under the Sub-Plan shall entitle the Optionee to receive dividends with respect thereto, and to vote the same at any meeting of the shareholders of the Company.  The cash dividends paid with respect to Shares issued or issuable upon the exercise of Awards shall be remitted to the Optionee.

 

(f)                                    At the Administrator’s discretion, for purposes of simplicity and in order to ensure compliance with Israel’s tax regulations, the exercise of the Awards and the purchase and sale of Shares issued upon the exercise of Restricted Stock made under the Plan shall be executed by the Company or its Subsidiaries, as appropriate.

 

(g)                                 With respect to the Sub-Plan participants who are Israeli residents, the Sub-Plan and all instruments issued thereunder or in connection therewith shall be governed by, and interpreted in accordance with, the laws of the State of Israel.

 

(h)                                 Any tax consequences arising from the grant or exercise of any Awards, from the payment for Shares covered thereby or from any other event or act (whether of the Optionee or of the Company or its Subsidiaries) hereunder, shall be borne solely by the Optionee.  Furthermore, such Optionee shall agree to indemnify the Company or Subsidiary that employs the Optionee and the Trustee and hold each harmless against and from any and all liability for any such tax, interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Optionee.

 

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5.                                       Restrictions on Transfer of Shares.       Any Shares issued under the Sub-Plan shall not be offered or sold to a U.S. Person or for the account or benefit of a U.S. Person prior to the expiration of one (1) year from the Acquisition Date.  Any Shares issued under the Sub-Plan offered or sold prior to the expiration of one (1) year from the Acquisition Date may be offered or sold only pursuant to the following conditions: (i) the purchaser of the Shares certifies that it is not a U.S. Person and is not acquiring the Shares for the account or benefit of any U.S. Person or is a U.S. Person who purchased the Shares in a transaction that did not require registration under the Securities Act; (ii) the purchaser of the Shares agrees to resell such Shares only in accordance with the provisions of Regulation S promulgated under the Securities Act, pursuant to a registration under the Securities Act, or pursuant to an available exemption from registration; and agrees not to engage in hedging transactions with regard to such Share unless in compliance with the Securities Act; and (iii) the certificate evidencing the Shares shall contain restrictive legends similar in effect as set forth in (ii).  In addition, any Shares issued under the Sub-Plan shall also be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Administrator may determine.

 

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APPENDIX B

 

TO THE 1999 STOCK OPTION PLAN

 

1.                                      GENERAL

 

1.1                                 This Appendix (the “Appendix”) shall apply only to optionees who are residents of the state of Israel for the payment of tax. The provisions specified hereunder shall form an integral part of the 1999 stock option plan of Cyoptics Inc. (hereinafter: the “Plan”), which applies to the issuance of options to purchase Common Stock of Cyoptics Inc. (hereinafter: the “Company”). According to the Plan, options to purchase the Company’s Common Stock may be issued to employees, directors and consultants and advisors of the Company or its Affiliates

 

1.2                                 This Appendix is effective with respect to Options granted as of January l, 2003 and shall comply with Amendment No. 132 of the Israeli Tax Ordinance.

 

1.3                                 This Appendix is to be read as a continuation of the Plan and only modifies Options granted to Israeli optionees so that they comply with the requirements set by the Israeli law in general, and in particular with the provisions of Section 102 (as specified herein), as may be amended or replaced from time to time.  For the avoidance of doubt, this Appendix does not add to or modify the Plan in respect of any other category of optionees.

 

1.4                                 The Plan and this Appendix are complimentary to each other and shall be deemed as one. In any case of contradiction, whether explicit or implied, between the provisions of this Appendix and the Plan, the provisions set out in the Appendix shall prevail.

 

1.5                                 Any capitalized terms not specifically defined in this Appendix shall be construed according to the interpretation given to it in the Plan.

 

2.                                      DEFINITIONS

 

2.1                                 “Affiliate” means any “employing company” within the meaning of Section 102(a) of the Ordinance.

 

2.2                                 “Approved 102 Option” means an Option granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the optionee.

 

2.3                                 “Capital Gain Option (CGO)” means an Approved 102 Option elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.

 

2.4                                 “Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.

 

2.5                                 “Employee” means a person who is employed by the Company or its Affiliates, including an individual who is serving as a director or an office holder, but excluding any Controlling Shareholder.

 

 

2.6                                 “ITA” means the Israeli Tax Authorities.

 

2.7                                 “Non-Employee” means a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee.

 

2.8                                 “Ordinary Income Option (OIO)” means an Approved 102 Option elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance.

 

2.9                                 “Option” means an option to purchase one or more Common Stock of the Company pursuant to the Plan.

 

2.10                           “102 Option” means any Option granted to Employees pursuant to Section 102 of the Ordinance.

 

2.11                           “3(i) Option” means an Option granted pursuant to Section 3(i) of the Ordinance to any person who is a Non- Employee.

 

2.12                           “Option Agreement” means the share option agreement between the Company and a optionee that sets out the terms and conditions of an Option.

 

2.13                           “Ordinance” means the 1961 Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.

 

2.14                           “Section 102” means Section 102 of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder as now in effect or as hereafter amended.

 

2.15                           “Trustee” means any individual or entity appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

 

2.16                           “Unapproved 102 Option” means an Option granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

 

3.                                      ISSUANCE OF OPTIONS

 

3.1                                 The persons eligible for participation in the Plan as optionees shall include any Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that (i) Employees may only be granted 102 Options; and (ii) Non-Employees and/or Controlling Shareholders may only be granted 3(i) Options

 

3.2                                 The Company may designate Options granted to Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.

 

3.3                                 The grant of Approved 102 Options shall be made under this Appendix adopted by the Board, and shall be conditioned upon the approval of this Appendix by the ITA.

 

3.4                                 Approved 102 Options may either be classified as Capital Gain Options (“CGOs”) or Ordinary Income Options (“OIOs”). .

 

2

 

 

3.5                                 No Approved 102 Options may be granted under this Appendix to any eligible Employee, unless and until, the Company’s election of the type of Approved 102 Options as CGI or OIO granted to Employees (the “Election”), is appropriately filed with the ITA. Such Election shall become effective beginning the first Grant Date of an Approved 102 Option under this Appendix and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Options. The Election shall obligate the Company to grant only the type of Approved 102 Option it has elected, and shall apply to all optionees who were granted Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options simultaneously.

 

3.6                                 All Approved 102 Options must be held in trust by a Trustee, as described in Section 4- below.

 

3.7                                 For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102.

 

4.                                      TRUSTEE

 

4.1                                 Approved 102 Options which shall be granted under this Appendix and/or any Common Stock allocated or issued upon exercise of such Approved 102 Options and/or other shares received subsequently following any realization of rights including without limitation, bonus rights, shall be allocated or issued to the Trustee and held for the benefit of the optionees for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”. In the case the requirements for Approved 102 Options are not met, then the Approved 102 Options shall be regarded as Unapproved 102 Options, all in accordance with the provisions of Section 102.

 

4.2                                 Notwithstanding anything to the contrary, the Trustee shall not release any Common Stock allocated or issued upon exercise of Approved 102 Options prior to the full payment of the optionee ‘s tax liabilities arising from Approved 102 Options which were granted to him and/or any Common Stock allocated or issued upon exercise of such Options.

 

4.3                                 With respect to any Approved 102 Option, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, an Optionee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Option and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Optionee.

 

4.4                                 Upon receipt of Approved 102 Option, the optionee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with this Appendix, or any Approved 102 Option or Ordinary Share granted to him thereunder.

 

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5.                                      THE OPTIONS

 

The terms and conditions upon which the Options shall be issued and exercised, shall be as specified in the Option Agreement to be executed pursuant to the Plan and to this Appendix. Each Option Agreement shall state, inter  alia, the number of Common Stock to which the Option relates, the type of Option granted thereunder (whether a CGI, OIO, Unapproved 102 Option or a 3(i) Option), the vesting provisions and the exercise price.

 

With respect to Unapproved 102 Option, if the Optionee ceases to be employed by the Company or any Affiliate, the Optionee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

 

6.                                      FAIR MARKET VALUE FOR TAX PURPOSES

 

Solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the date of grant the Company’s shares are listed on any established stock exchange or a national market system or if the Company’s shares will be registered for trading within ninety (90) days following the date of grant of the CGOs, the fair market value of the Common Stock at the date of grant shall be determined in accordance with the average value of the Company’s shares on the thirty (30) trading days preceding the date of grant or on the thirty (30) trading days following the date of registration for trading, as the case may be.

 

7.                                      EXERCISE OF OPTIONS

 

Options shall be exercised by the optionee according with section 9 to the Plan.

 

8.                                      ASSIGNABILITY AND SALE OF OPTIONS

 

8.1                                 Notwithstanding any other provision of the Plan, no Option or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to them given to any third party whatsoever, and during the lifetime of the optionee each and all of such optionee ‘s rights to purchase Common Stock hereunder shall be exercisable only by the optionee .

 

Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.

 

8.2                                 As long as Options or Common Stock purchased pursuant to thereto are held by the Trustee on behalf of the optionee, all rights of the optionee over the shares are personal, can not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

 

9.                                      INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER’S PERMIT

 

9.1                                 With regards to Approved 102 Options, the provisions of the Plan and/or the Appendix and/or the Option Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Appendix and of the Option Agreement.

 

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9.2                                 Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Appendix or the Option Agreement, shall be considered binding upon the Company and the optionees .

 

10.                               DIVIDEND

 

With respect to all Shares (but excluding, for avoidance of any doubt, any unexercised Options) allocated or issued upon the exercise of Options purchased by the Optionee and held by the Optionee or by the Trustee, as the case may be, the Optionee shall be entitled to receive dividends in accordance with the quantity of such Shares, subject to the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.

 

11.                               TAX CONSEQUENCES

 

11.1                           Any tax consequences arising from the grant or exercise of any Option, from the payment for Common Stock covered thereby or from any other event or act (of the Company, and/or its Affiliates, and the Trustee or the optionee ), hereunder, shall be borne solely by the optionee . The Company and/or its Affiliates, and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the optionee shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the optionee.

 

11.2                           The Company and/or, when applicable, the Trustee shall not be required to release any share certificate to an optionee until all required payments have been fully made.

 

12.                               GOVERNING LAW & JURISDICTION

 

This Appendix shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Haifa, Israel shall have sole jurisdiction in any matters pertaining to this Appendix.

 

*    *    *

 

5

 

AMENDMENT TO THE

CYOPTICS, INC.

AMENDED AND RESTATED 1999 STOCK OPTION PLAN

 

CyOptics, Inc. (the “Company”), having adopted the Amended and Restated 1999 Stock Option Plan (the “Plan”), hereby amends the Plan as follows:

 

1. Section 3 of the Plan is hereby deleted in its entirety and replaced with the following:

 

“3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is (following the reverse split effected upon the filing of the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on January 13, 2011) two million two hundred forty-three thousand nine hundred thirteen (2,243,913) Shares. The Shares may be authorized but unissued, or reacquired Common Stock.

 

If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Award, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. Notwithstanding the foregoing and, subject to adjustment provided in Section 12, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in the first paragraph of this Section.”

 

[Signature page to follow]

 

 

IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this amendment to the Plan as of this 13th  day of January, 2011.

 

 

	
 
    	
CYOPTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ettore J. Coringrato
    
	
 
    	
Name:   Ettore J. Coringrato
    
	
 
    	
Title:   President and Chief Executive
    
	
 
    	
Officer
    

 

 

 

 

                                    , 200  

 

Optionee Name

CyOptics, Inc.

 

Dear                :

 

I am pleased to join the CyOptics Board of Directors in awarding you a stock option grant effective                                     , 200  .

 

Our offer of this stock option grant as part of your overall compensation package is evidence of our confidence in the talents and skills that you bring and the impact it will have on the success of our company.  We believe that CyOptics will provide you with both a challenging and rewarding experience and we look forward to a long and successful relationship together.

 

This option to purchase              shares of CyOptics common stock has an exercise price of $[            ] per share and a maximum [ten-year term] OR IF GRANTING ISO TO A >10% SH USE [five-year term].  Assuming your continued eligibility under the plan, the option may be exercised in accordance with the following vesting schedule: 25% of these shares vest and become exercisable on the first anniversary of the vesting commencement date and 6.25% of these shares vest and become exercisable each subsequent three month period thereafter, in each case subject to your continued service to CyOptics on each relevant vesting date.  You will find additional details on the terms of this grant in the attached Notice of Stock Option Grant.  The option was granted under the provisions of the CyOptics, Inc. Amended and Restated 1999 Stock Option Plan, and is governed by the provisions of the plan and your Stock Option Agreement.  These documents are included in the attached package.

 

To accept this option grant, please sign the enclosed Notice of Stock Option Grant, retain one copy for your files and return the other copy to Lorie Sugra, Human Resources.

 

If you have any questions concerning this grant, please feel free to speak with me.  Thank you for your continued support of, and commitment to, our business.

 

Sincerely,

 

 

Ed Coringrato

President & CEO

 

 

	
9999   Hamilton Boulevard
    	

    
	
Breinigsville,   PA 18031
    
	
Phone:   484-397-2000
    
	
Fax:   610-336-5861
    
	
www.cyoptics.com
    

 

 

CYOPTICS, INC.

AMENDED AND RESTATED 1999 STOCK OPTION PLAN

NOTICE OF STOCK OPTION GRANT

 

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

 

I. NOTICE OF STOCK OPTION GRANT

 

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

 

	
Name   of Optionee:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date   of Grant:
    	
 
    	
            ,   200
    
	
 
    	
 
    	
 
    
	
Vesting   Commencement Date:
    	
 
    	
            ,   200
    
	
 
    	
 
    	
 
    
	
Exercise   Price per Share:
    	
 
    	
$[            ]
    
	
 
    	
 
    	
 
    
	
Total   Number of Shares Granted:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Type   of Option:
    	
 
    	
o   Incentive Stock Option (ISO)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
o   Nonstatutory Stock Option (NSO)
    
	
 
    	
 
    	
 
    
	
Term/Expiration   Date:
    	
 
    	
10 years from date of grant
    
	
 
    	
 
    	
 
    
	
Vesting   Schedule:
    	
 
    	
This   Option shall be exercisable, in whole or in part, according to the following   vesting schedule: 25% of the Shares subject to the Option shall vest on   [                        ],   and thereafter 6.25% of the Shares subject to the Option shall vest at the   end of each subsequent three-month period, subject to Optionee’s continuing   to be a Service Provider on such dates.
    
	
 
    	
 
    	
 
    
	
Termination   Period:
    	
 
    	
This   Option shall be exercisable for 90 (ninety) days after Optionee ceases to be   a Service Provider, unless such termination is due to Optionee’s death or   Disability, in which case this Option shall be exercisable for 12 months   after Optionee ceases to be a Service Provider. Notwithstanding the foregoing   sentence, in no event may this Option be exercised after the Term/Expiration   Date as provided above and this Option may be subject to earlier termination   as provided in Section 12(c) of the Plan.
    
	
 
    	
 
    	
 
    
	
Acknowledgement
    	
 
    	
By signing below, the Optionee agrees that   this Option is granted under and governed by the terms and conditions of this   Notice of Stock Option Grant and the remainder of the Option Agreement, which   is attached and made a part of this document, and of the Amended and Restated   1999 Stock Option Plan. Optionee agrees to accept as binding, conclusive and   final all decisions or interpretations of the Administrator regarding any   questions relating to the Amended and Restated 1999 Stock Option Plan and   this Option Agreement.
    

 

 

	
OPTIONEE:
    	
 
    	
CYOPTICS, INC.
    
	
 
    	
 
    	

    
	
Signature
    	
 
    	
By:
    	
Ed   J. Coringrato, Jr.
    
	
 
    	
 
    	
Title:
    	
Chief   Executive Officer
    

 

 

CYOPTICS, INC.

AMENDED AND RESTATED 1999 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

 

II. AGREEMENT

 

1.               Grant of Option.  The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference.  Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

 

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.  Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”).  Further, if for any reason this Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a NSO granted under the Plan.  In no event shall the Administrator, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Optionees (or any other person) due to the failure of the Option to qualify for any reason as an ISO.

 

2.               Exercise of Option.

 

(a)          Right to Exercise.  This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Stock Option Grant (in Section 1 hereof) and with the applicable provisions of the Plan and this Option Agreement.

 

(b)         Method of Exercise.  This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares, together with any applicable tax withholding.  This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

 

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with Applicable Laws.  Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

 

3.               Optionee’s Representations.  In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B, and shall read the applicable rules attached to such Investment Representation Statement.

 

4.               Lock-Up Period.  Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to

 

 

another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred and eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act (or such other period as may be requested by the Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto).

 

Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto.  In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act.  The obligations described in this Section shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future.  The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred and eighty (180) day (or other) period.  Optionee agrees that any transferee of the Option or shares acquired pursuant to the Option shall be bound by this Section.

 

5.               Method of Payment.  Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

 

(a)          cash or check;

 

(b)         consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

 

(c)          surrender of other Shares which (i) shall be valued at its Fair Market Value on the date of exercise, and (ii) must be owned free and clear of any liens, claims, encumbrances or security interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to the Company.

 

6.               Restrictions on Exercise.  This Option may not be exercised until such time as the Plan has been approved by the stockholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law.

 

7.               Non-Transferability of Option.  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee.  The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

8.               Term of Option.  This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

 

 

9.               Tax Obligations.

 

(a)          Tax Withholding.  Optionee agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise.  Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

 

(b)         Notice of Disqualifying Disposition of ISO Shares.  If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of Grant, or (ii) the date one (1) year after the date of exercise, Optionee shall immediately notify the Company in writing of such disposition.  Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by Optionee.

 

(c)          Code Section 409A.  Under Code Section 409A, an Option that vests after December 31, 2004 (or that vested on or prior to such date but which was materially modified after October 3, 2004) that was granted with a per Share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant (a “discount option”) may be considered “deferred compensation.”  An Option that is a “discount option” may result in (i) income recognition by Optionee prior to the exercise of the Option, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges.  The “discount option” may also result in additional state income, penalty and interest tax to the Optionee.  Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share exercise price of this Option equals or exceeds the Fair Market Value of a Share on the date of grant in a later examination.  Optionee agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the date of grant, Optionee shall be solely responsible for Optionee’s costs related to such a determination.

 

10.         Entire Agreement; Governing Law.  The Plan is incorporated herein by reference.  The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.  This agreement is governed by the internal substantive laws but not the choice of law rules of the State of Pennsylvania.

 

11.         No Guarantee of Continued Service.  OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER.  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions

 

 

thereof.  Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

 

EXHIBIT A

 

AMENDED AND RESTATED 1999 STOCK OPTION PLAN

 

EXERCISE NOTICE

 

CyOptics, Inc.

 

                                

 

                                

 

Attention:                                 

 

1.               Exercise of Option.  Effective as of today,                         , 20    , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase                      shares of the Common Stock (the “Shares”) of CyOptics, Inc. (the “Company”) under and pursuant to the Amended and Restated 1999 Stock Option Plan (the “Plan”) and the Stock Option Agreement dated                         , 200     (the “Option Agreement”).

 

2.               Delivery of Payment.  Purchaser herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

 

3.               Representations of Optionee.  Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

 

4.               Rights as Stockholder.  Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option.  The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 12 of the Plan.

 

5.               Company’s Right of First Refusal.  Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).

 

(a)          Notice of Proposed Transfer.  The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating:  (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

 

(b)         Exercise of Right of First Refusal.  At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all,

 

7

 

but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below.

 

(c)          Purchase Price.  The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price.  If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

 

(d)         Payment.  Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

 

(e)          Holder’s Right to Transfer.  If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice, that any such sale or other transfer is effected in accordance with any applicable securities laws and that the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee.  If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

 

(f)            Exception for Certain Family Transfers.  Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section.  “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister.  In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

 

(g)         Termination of Right of First Refusal.  The Right of First Refusal shall terminate as to any Shares upon the earlier of (i) the first sale of Common Stock of the Company to the general public, or (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded.

 

 

6.               Tax Consultation.  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

 

7.               Restrictive Legends and Stop-Transfer Orders.

 

(a)          Legends.  Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.  SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER PRIOR TO THE EXPIRATION OF SUCH PERIOD WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.

 

(b)         Stop-Transfer Notices.  Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

 

(c)          Refusal to Transfer.  The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

 

8.               Successors and Assigns.  The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

 

 

9.               Interpretation.  Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the Administrator shall be final and binding on all parties.

 

10.         Governing Law; Severability.  This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of the Commonwealth of Pennsylvania.  In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.

 

 

11.         Entire Agreement.  The Plan and Option Agreement are incorporated herein by reference.  This Exercise Notice, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

 

	
Submitted   by:
    	
 
    	
Accepted   by:
    
	
 
    	
 
    	
 
    
	
OPTIONEE:
    	
 
    	
CYOPTICS,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature
    	
 
    	
By:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Print   Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Social   Security Number
    	
 
    	
Date   Received:
    	
 
    
						

 

 

EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

OPTIONEE:

 

COMPANY:                                        CYOPTICS, INC.

 

SECURITY:                                          COMMON STOCK

 

AMOUNT:

 

DATE:

 

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

 

(a)  Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)  Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein.  In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one (1) year or any other fixed period in the future.  Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities shall be imprinted with any legend required under applicable state securities laws.

 

(c)  Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Optionee, the exercise shall be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of the applicable conditions specified by Rule 144, including in the case of affiliates (1) the availability of certain public information about the Company, (2) the amount of Securities being sold during any three (3) month period not exceeding 

 

 

specified limitations, (3) the resale being made in an unsolicited “broker’s transaction”, transactions directly with a “market maker” or “riskless principal transactions” (as those terms are defined under the Securities Exchange Act of 1934) and (4) the timely filing of a Form 144, if applicable.

 

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which may require (i) the availability of current public information about the Company; (ii) the resale to occur more than a specified period after the purchase and full payment (within the meaning of Rule 144) for the Securities; and (iii) in the case of the sale of Securities by an affiliate, the satisfaction of the conditions set forth in sections (2), (3) and (4) of the paragraph immediately above.

 

(d)                                 Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

 

 

	
Signature   of Optionee:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date:

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