1999 Employee Stock Purchase Plan - Finisar Corp.
FINISAR CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Finisar Corporation 1999 Employee Stock Purchase
Plan (the "PLAN") is hereby established effective as of the
effective date of the initial registration by the Company of its
Stock under Section 12 of the Securities Exchange Act of 1934, as
amended (the "EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
Company and its stockholders by providing an incentive to attract,
retain and reward Eligible Employees of the Participating Company
Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan provides
such Eligible Employees with an opportunity to acquire a proprietary
interest in the Company through the purchase of Stock. The Company
intends that the Plan qualify as an "employee stock purchase plan"
under Section 423 of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Any term not expressly defined in the Plan but defined
for purposes of Section 423 of the Code shall have the same
definition herein. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(A) "BOARD" means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(B) "CODE" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.
(C) "COMMITTEE" means a committee of the Board duly appointed to
administer the Plan and having such powers as specified by the
Board. Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.
(D) "COMPANY" means Finisar Corporation, a Delaware corporation, or any
successor corporation thereto.
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(E) "COMPENSATION" means, with respect to any Offering Period, base
wages or salary, overtime pay, bonuses, commissions, shift
differentials, payments for paid time off, payments in lieu of
notice, and any of such compensation deferred under any program or
plan established by a Participating Company, including, without
limitation, pursuant to Section 401(k) or Section 125 of the Code.
Compensation shall be limited to amounts actually payable in cash
directly to the Participant or deferred by the Participant during
the Offering Period. However, notwithstanding the foregoing,
Compensation shall not include sign-on bonuses, profit sharing,
payments pursuant to a severance agreement, termination pay, moving
allowances, relocation payments, expense reimbursements, the cost of
employee benefits paid by a Participating Company, tuition
reimbursements, imputed income arising under any benefit program,
contributions made by a Participating Company under any employee
benefit plan, income directly or indirectly received pursuant to the
Plan or any other stock purchase or stock option plan, or any other
compensation not included above.
(F) "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements set
forth in Section 5 for eligibility to participate in the Plan.
(G) "EMPLOYEE" means a person treated as an employee of a Participating
Company for purposes of Section 423 of the Code. A Participant shall
be deemed to have ceased to be an Employee either upon an actual
termination of employment or upon the corporation employing the
Participant ceasing to be a Participating Company. For purposes of
the Plan, an individual shall not be deemed to have ceased to be an
Employee while on any military leave, sick leave, or other bona fide
leave of absence approved by the Company of ninety (90) days or
less. If an individual's leave of absence exceeds ninety (90) days,
the individual shall be deemed to have ceased to be an Employee on
the ninety-first (91st) day of such leave unless the individual's
right to reemployment with the Participating Company Group is
guaranteed either by statute or by contract. The Company shall
determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and
the effective date of such individual's employment or termination of
employment, as the case may be. For purposes of an individual's
participation in or other rights, if any, under the Plan as of the
time of the Company's determination, all such determinations by the
Company shall be final, binding and conclusive, notwithstanding that
the Company or any governmental agency subsequently makes a contrary
determination.
(H) "FAIR MARKET VALUE" means, as of any date:
(i) If the Stock is then listed on a national or regional securities
exchange or market system or is regularly quoted by a recognized
securities dealer, the closing sale price of a share of Stock (or
the mean of the closing bid and asked prices if the Stock is so
quoted instead) as quoted on the Nasdaq National Market, the Nasdaq
SmallCap Market or such other national or regional securities
exchange or market system constituting the primary market for the
Stock, or by such recognized securities dealer, as reported in THE
WALL STREET JOURNAL or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system or has
been quoted by such securities dealer, the date on which the Fair
Market Value is established shall be the last day on which the
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Stock was so traded or quoted prior to the relevant date, or such
other appropriate day as determined by the Board, in its discretion.
(ii) If, on the relevant date, the Stock is not then listed on a
national or regional securities exchange or market system or
regularly quoted by a recognized securities dealer, the Fair Market
Value of a share of Stock shall be as determined in good faith by
the Board.
(iii) Notwithstanding the foregoing, the Fair Market Value of a
share of Stock on the Effective Date shall be deemed to be the
public offering price set forth in the final prospectus filed with
the Securities and Exchange Commission in connection with the
Company's initial public offering of the Stock.
(I) "OFFERING" means an offering of Stock as provided in Section 6.
(J) "OFFERING DATE" means, for any Offering, the first day of the
Offering Period.
(K) "OFFERING PERIOD" means a period established in accordance with
Section 6.1.
(L) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the
Code.
(M) "PARTICIPANT" means an Eligible Employee who has become a
participant in an Offering Period in accordance with Section 7 and
remains a participant in accordance with the Plan.
(N) "PARTICIPATING COMPANY" means the Company or any Parent Corporation
or Subsidiary Corporation designated by the Board as a corporation
the Employees of which may, if Eligible Employees, participate in
the Plan. The Board shall have the sole and absolute discretion to
determine from time to time which Parent Corporations or Subsidiary
Corporations shall be Participating Companies.
(O) "PARTICIPATING COMPANY GROUP" means, at any point in time, the
Company and all other corporations collectively which are then
Participating Companies.
(P) "PURCHASE DATE" means, for any Purchase Period, the last day of such
period.
(Q) "PURCHASE PERIOD" means a period established in accordance with
Section 6.2.
(R) "PURCHASE PRICE" means the price at which a share of Stock may be
purchased under the Plan, as determined in accordance with Section 9.
(S) "PURCHASE RIGHT" means an option granted to a Participant pursuant
to the Plan to purchase such shares of Stock as provided in Section
8, which the Participant may or may not exercise during the Offering
Period in which such option is outstanding. Such option arises from
the right of a Participant to withdraw any accumulated payroll
deductions of the Participant not previously applied to the purchase
of Stock under the Plan and to terminate participation in the Plan
at any
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time during an Offering Period.
(T) "STOCK" means the common stock of the Company, as adjusted from time
to time in accordance with Section 4.2.
(U) "SUBSCRIPTION AGREEMENT" means a written agreement in such form as
specified by the Company, stating an Employee's election to
participate in the Plan and authorizing payroll deductions under the
Plan from the Employee's Compensation.
(V) "SUBSCRIPTION DATE" means the last business day prior to the
Offering Date of an Offering Period or such earlier date as the
Company shall establish.
(W) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation
of any provision of the Plan. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall
include the singular. Use of the term "or" is not intended to be
exclusive, unless the context clearly requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan, of any form of
agreement or other document employed by the Company in the
administration of the Plan, or of any Purchase Right shall be
determined by the Board and shall be final and binding upon all
persons having an interest in the Plan or the Purchase Right.
Subject to the provisions of the Plan, the Board shall determine all
of the relevant terms and conditions of Purchase Rights; provided,
however, that all Participants granted Purchase Rights pursuant to
an Offering shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code. All expenses incurred in
connection with the administration of the Plan shall be paid by the
Company.
3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election that is the
responsibility of or that is allocated to the Company herein,
provided that the officer has apparent authority with respect to
such matter, right, obligation, determination or election.
3.3 POLICIES AND PROCEDURES ESTABLISHED BY THE COMPANY. The Company may,
from time to time, consistent with the Plan and the requirements of
Section 423 of the Code, establish, change or terminate such rules,
guidelines, policies, procedures, limitations, or adjustments as
deemed advisable by the Company, in its discretion, for the proper
administration of the Plan, including, without limitation, (a) a
minimum payroll deduction amount required for participation in an
Offering, (b) a limitation on the frequency or number of changes
permitted in the rate of payroll deduction during an Offering, (c)
an exchange ratio applicable to amounts withheld in a currency other
than United States dollars, (d) a payroll deduction greater than or
less than the amount
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designated by a Participant in order to adjust for the Company's
delay or mistake in processing a Subscription Agreement or in
otherwise effecting a Participant's election under the Plan or as
advisable to comply with the requirements of Section 423 of the
Code, and (e) determination of the date and manner by which the Fair
Market Value of a share of Stock is determined for purposes of
administration of the Plan.
3.4 INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or officers or employees of
the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom
authority to act for the Board or the Company is delegated shall be
indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may
be a party by reason of any action taken or failure to act under or
in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that
such person is liable for gross negligence, bad faith or intentional
misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such
person shall offer to the Company, in writing, the opportunity at
its own expense to handle and defend the same.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided
in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be two hundred fifty thousand
(250,000), cumulatively increased on May 1, 2001 and each May 1
thereafter until and including May 1, 2010 by two hundred fifty
thousand (250,000) shares (the "ANNUAL INCREASE"), and shall consist
of authorized but unissued or reacquired shares of Stock, or any
combination thereof. If an outstanding Purchase Right for any reason
expires or is terminated or canceled, the shares of Stock allocable
to the unexercised portion of that Purchase Right shall again be
available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital
structure of the Company, or in the event of any merger (including a
merger effected for the purpose of changing the Company's domicile),
sale of assets or other reorganization in which the Company is a
party, appropriate adjustments shall be made in the number and class
of shares subject to the Plan, the Annual Increase and each Purchase
Right, and in the Purchase Price. If a majority of the shares of the
same class as the shares subject to outstanding Purchase Rights are
exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event) shares of another corporation
(the "NEW SHARES"), the Board may unilaterally amend the outstanding
Purchase Rights to provide that such Purchase Rights are exercisable
for New Shares. In the event of any such amendment, the number of
shares subject to, and the Purchase Price of, the outstanding
Purchase Rights shall be adjusted in a fair and equitable
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manner, as determined by the Board, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from
an adjustment pursuant to this Section 4.2 shall be rounded down to
the nearest whole number, and in no event may the Purchase Price be
decreased to an amount less than the par value, if any, of the stock
subject to the Purchase Right. The adjustments determined by the
Board pursuant to this Section 4.2 shall be final, binding and
conclusive.
5. ELIGIBILITY.
5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Each Employee of a Participating
Company is eligible to participate in the Plan and shall be deemed
an Eligible Employee, except any Employee who is either: (a)
customarily employed by the Participating Company Group for twenty
(20) hours or less per week or (b) customarily employed by the
Participating Company Group for not more than five (5) months in any
calendar year.
5.2 EXCLUSION OF CERTAIN STOCKHOLDERS. Notwithstanding any provision of
the Plan to the contrary, no Employee shall be granted a Purchase
Right under the Plan if, immediately after such grant, the Employee
would own or hold options to purchase stock of the Company or of any
Parent Corporation or Subsidiary Corporation possessing five percent
(5%) or more of the total combined voting power or value of all
classes of stock of such corporation, as determined in accordance
with Section 423(b)(3) of the Code. For purposes of this Section
5.2, the attribution rules of Section 424(d) of the Code shall apply
in determining the stock ownership of such Employee.
6. OFFERINGS.
6.1 OFFERING PERIODS. Except as otherwise set forth below, the Plan
shall be implemented by two series of Offerings. One series shall be
of sequential Offerings of approximately twelve (12) months duration
or such other duration as the Board shall determine (an "ANNUAL
OFFERING PERIOD"). The second series shall be of Offerings of
approximately six (6) months duration or such other duration as the
Board shall determine (a "HALF-YEAR OFFERING PERIOD"). Annual
Offering Periods shall commence on or about December 1 of each year
and end on or about the first November 30 occurring thereafter.
Half-Year Offering Periods shall commence on or about June 1 of each
year and end on or about the first November 30 occurring thereafter.
However, an initial Offering (the "INITIAL OFFERING PERIOD") shall
commence on the Effective Date and end on or about November 30,
2000. Notwithstanding the foregoing, the Board may establish a
different duration for one or more Offering Periods or different
commencing or ending dates for such Offering Periods; provided,
however, that no Offering Period may have a duration exceeding
twenty-seven (27) months. If the first or last day of an Offering
Period is not a day on which the national securities exchanges or
Nasdaq Stock Market are open for trading, the Company shall specify
the trading day that will be deemed the first or last day, as the
case may be, of the Offering Period.
6.2 PURCHASE PERIODS. Each Annual Offering Period shall consist of two
(2) consecutive Purchase Periods of approximately six (6) months
duration, or such other number or duration as the Board determines.
A Purchase Period commencing on or about December 1 shall end on or
about the
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next May 31. A Purchase Period commencing on or about June 1 shall
end on or about the next November 30. Each Half-Year Offering Period
shall consist of a single Purchase Period of approximately six (6)
months duration coterminous with such Offering Period. However, the
Initial Offering Period shall consist of two (2) consecutive
Purchase Periods ending on or about May 31, 2000 and November 30,
2000, respectively. Notwithstanding the foregoing, the Board may
establish a different duration for one or more Purchase Periods or
different commencing or ending dates for such Purchase Periods. If
the first or last day of a Purchase Period is not a day on which the
national securities exchanges or Nasdaq Stock Market are open for
trading, the Company shall specify the trading day that will be
deemed the first or last day, as the case may be, of the Purchase
Period.
7. PARTICIPATION IN THE PLAN.
7.1 INITIAL PARTICIPATION. An Eligible Employee may become a Participant
in an Offering Period by delivering a properly completed
Subscription Agreement to the office designated by the Company not
later than the close of business for such office on the Subscription
Date established by the Company for that Offering Period. An
Eligible Employee who does not deliver a properly completed
Subscription Agreement to the Company's designated office on or
before the Subscription Date for an Offering Period shall not
participate in the Plan for that Offering Period or for any
subsequent Offering Period unless the Eligible Employee subsequently
delivers a properly completed Subscription Agreement to the
appropriate office of the Company on or before the Subscription Date
for such subsequent Offering Period. An Employee who becomes an
Eligible Employee after the Offering Date of an Offering Period
shall not be eligible to participate in that Offering Period but may
participate in any subsequent Offering Period provided the Employee
is still an Eligible Employee as of the Offering Date of such
subsequent Offering Period.
7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the next Offering Period commencing immediately after
the final Purchase Date of each Offering Period in which the
Participant participates provided that the Participant remains an
Eligible Employee on the Offering Date of the new Offering Period
and has not either (a) withdrawn from the Plan pursuant to Section
12.1 or (b) terminated employment as provided in Section 13. A
Participant who may automatically participate in a subsequent
Offering Period, as provided in this Section, is not required to
deliver any additional Subscription Agreement for the subsequent
Offering Period in order to continue participation in the Plan.
However, a Participant may deliver a new Subscription Agreement for
a subsequent Offering Period in accordance with the procedures set
forth in Section 7.1 if the Participant desires to change any of the
elections contained in the Participant's then effective Subscription
Agreement.
8. RIGHT TO PURCHASE SHARES.
8.1 GRANT OF PURCHASE RIGHT. Except as set forth below, on the Offering
Date of each Offering Period, each Participant in that Offering
Period shall be granted automatically a Purchase Right determined as
follows:
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(A) ANNUAL OFFERING PERIOD. Each Purchase Right granted on the Offering
Date of an Annual Offering Period shall consisting of an option to
purchase that number of whole shares of Stock determined by dividing
Twenty-Five Thousand Dollars ($25,000) by the Fair Market Value of a
share of Stock on the Offering Date.
(B) HALF-YEAR OFFERING PERIOD. Each Purchase Right granted on the
Offering Date of a Half-Year Offering Period shall consist of an
option to purchase that number of whole shares of Stock determined
by dividing Twelve Thousand Five Hundred Dollars ($12,500) by the
Fair Market Value of a share of Stock on the Offering Date.
8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. If the Board establishes an
Offering Period of any duration other than twelve months or six
months, then the number of shares of Stock subject to each Purchase
Right granted on the Offering Date of such Offering Period shall be
determined as provided in Section 8.1, except that the applicable
dollar amount shall be determined by multiplying $2,083.33 by the
number of months (rounded to the nearest whole month) in the
Offering Period and rounding to the nearest whole dollar.
8.3 CALENDAR YEAR PURCHASE LIMITATION. Notwithstanding any provision of
the Plan to the contrary, no Participant shall be granted a Purchase
Right which permits his or her right to purchase shares of Stock
under the Plan to accrue at a rate which, when aggregated with such
Participant's rights to purchase shares under all other employee
stock purchase plans of a Participating Company intended to meet the
requirements of Section 423 of the Code, exceeds Twenty-Five
Thousand Dollars ($25,000) in Fair Market Value (or such other
limit, if any, as may be imposed by the Code) for each calendar year
in which such Purchase Right is outstanding at any time. For
purposes of the preceding sentence, the Fair Market Value of shares
purchased during a given Offering Period shall be determined as of
the Offering Date for such Offering Period. The limitation described
in this Section shall be applied in conformance with applicable
regulations under Section 423(b)(8) of the Code.
9. PURCHASE PRICE.
The Purchase Price at which each share of Stock may be
acquired in an Offering Period upon the exercise of all or any
portion of a Purchase Right shall be established by the Board;
provided, however, that the Purchase Price on each Purchase Date
shall not be less than eighty-five percent (85%) of the lesser of
(a) the Fair Market Value of a share of Stock on the Offering Date
of the Offering Period or (b) the Fair Market Value of a share of
Stock on the Purchase Date. Unless otherwise provided by the Board
prior to the commencement of an Offering Period, the Purchase Price
on each Purchase Date during that Offering Period shall be
eighty-five percent (85%) of the lesser of (a) the Fair Market Value
of a share of Stock on the Offering Date of the Offering Period, or
(b) the Fair Market Value of a share of Stock on the Purchase Date.
10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.
Shares of Stock acquired pursuant to the exercise of all or
any portion of a
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Purchase Right may be paid for only by means of payroll deductions
from the Participant's Compensation accumulated during the Offering
Period for which such Purchase Right was granted, subject to the
following:
10.1 AMOUNT OF PAYROLL DEDUCTIONS. Except as otherwise provided herein,
the amount to be deducted under the Plan from a Participant's
Compensation on each payday during an Offering Period shall be
determined by the Participant's Subscription Agreement. The
Subscription Agreement shall set forth the percentage of the
Participant's Compensation to be deducted on each payday during an
Offering Period in whole percentages of not less than one percent
(1%) (except as a result of an election pursuant to Section 10.3 to
stop payroll deductions) or more than twenty percent (20%);
provided, however, that in no event may a Participant's payroll
deductions on any payday for the purchase of shares under the Plan
and all other employee stock purchase plans of a Participating
Company intended to meet the requirements of Section 423 of the Code
exceed twenty percent (20%) of the Participant's Compensation on
such payday. The Board may change the foregoing limits on payroll
deductions effective as of any Offering Date.
10.2 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall
continue to the end of the Offering Period unless sooner altered or
terminated as provided herein.
10.3 ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During an Offering
Period, a Participant may elect to increase or decrease the rate of
or to stop deductions from his or her Compensation by delivering to
the Company's designated office an amended Subscription Agreement
authorizing such change on or before the Change Notice Date, as
defined below. A Participant who elects, effective following the
first payday of an Offering Period, to decrease the rate of his or
her payroll deductions to zero percent (0%) shall nevertheless
remain a Participant in the current Offering Period unless such
Participant withdraws from the Plan as provided in Section 12.1. The
"CHANGE NOTICE DATE" shall be the day immediately prior to the
beginning of the first pay period for which such election is to be
effective, unless a different date is established by the Company and
announced to the Participants.
10.4 ADMINISTRATIVE SUSPENSION OF PAYROLL DEDUCTIONS. The Company may, in
its sole discretion, suspend a Participant's payroll deductions
under the Plan as the Company deems advisable to avoid accumulating
payroll deductions in excess of the amount that could reasonably be
anticipated to purchase the maximum number of shares of Stock
permitted (a) under the Participant's Purchase Right or (b) during a
calendar year under the limit set forth in Section 8.3. Payroll
deductions shall be resumed at the rate specified in the
Participant's then effective Subscription Agreement at the
beginning, respectively, of (a) the next Offering Period, provided
that the individual is a Participant in such Offering Period or (b)
the next Purchase Period the Purchase Date of which falls in the
following calendar year, unless the Participant has either withdrawn
from the Plan as provided in Section 12.1 or has ceased to be an
Eligible Employee.
10.5 PARTICIPANT ACCOUNTS. Individual bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a
Participant's Compensation shall be credited to such Participant's
Plan account and shall be deposited with the general funds of the
Company. All
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payroll deductions received or held by the Company may be used by
the Company for any corporate purpose.
10.6 NO INTEREST PAID. Interest shall not be paid on sums deducted from a
Participant's Compensation pursuant to the Plan.
10.7 VOLUNTARY WITHDRAWAL FROM PLAN ACCOUNT. A Participant may withdraw
all or any portion of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock
by delivering to the Company's designated office a written notice on
a form provided by the Company for such purpose. A Participant who
withdraws the entire remaining balance credited to his or her Plan
account shall be deemed to have withdrawn from the Plan in
accordance with Section 12.1. Amounts withdrawn shall be returned to
the Participant as soon as practicable after the Company's receipt
of the notice of withdrawal and may not be applied to the purchase
of shares in any Offering under the Plan. The Company may from time
to time establish or change limitations on the frequency of
withdrawals permitted under this Section, establish a minimum dollar
amount that must be retained in the Participant's Plan account, or
terminate the withdrawal right provided by this Section.
11. PURCHASE OF SHARES.
11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
Period, each Participant who has not withdrawn from the Plan and
whose participation in the Offering has not otherwise terminated
before such Purchase Date shall automatically acquire pursuant to
the exercise of the Participant's Purchase Right the number of whole
shares of Stock determined by dividing (a) the total amount of the
Participant's payroll deductions accumulated in the Participant's
Plan account during the Offering Period and not previously applied
toward the purchase of Stock by (b) the Purchase Price. However, in
no event shall the number of shares purchased by the Participant
during an Offering Period exceed the number of shares subject to the
Participant's Purchase Right. No shares of Stock shall be purchased
on a Purchase Date on behalf of a Participant whose participation in
the Offering or the Plan has terminated before such Purchase Date.
11.2 PRO RATA ALLOCATION OF SHARES. If the number of shares of Stock
which might be purchased by all Participants in the Plan on a
Purchase Date exceeds the number of shares of Stock available in the
Plan as provided in Section 4.1, the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as
practicable and as the Company determines to be equitable. Any
fractional share resulting from such pro rata allocation to any
Participant shall be disregarded.
11.3 DELIVERY OF CERTIFICATES. As soon as practicable after each Purchase
Date, the Company shall arrange the delivery to each Participant of
a certificate representing the shares acquired by the Participant on
such Purchase Date; provided that the Company may deliver such
shares to a broker designated by the Company that will hold such
shares for the benefit of the Participant. Shares to be delivered to
a Participant under the Plan shall be registered in the name of the
Participant, or, if requested by the Participant, in the name of the
Participant and his or her
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spouse, or, if applicable, in the names of the heirs of the
Participant.
11.4 RETURN OF CASH BALANCE. Any cash balance remaining in a
Participant's Plan account following any Purchase Date shall be
refunded to the Participant as soon as practicable after such
Purchase Date. However, if the cash balance to be returned to a
Participant pursuant to the preceding sentence is less than the
amount that would have been necessary to purchase an additional
whole share of Stock on such Purchase Date, the Company may retain
the cash balance in the Participant's Plan account to be applied
toward the purchase of shares of Stock in the subsequent Purchase
Period or Offering Period, as the case may be.
11.5 TAX WITHHOLDING. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant
disposes of some or all of the shares of Stock he or she acquires
under the Plan, the Participant shall make adequate provision for
the federal, state, local and foreign tax withholding obligations,
if any, of the Participating Company Group which arise upon exercise
of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be
obligated to, withhold from the Participant's compensation the
amount necessary to meet such withholding obligations.
11.6 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering
Period to which the Purchase Right relates shall expire immediately
upon the end of the Offering Period.
11.7 PROVISION OF REPORTS AND STOCKHOLDER INFORMATION TO PARTICIPANTS.
Each Participant who has exercised all or part of his or her
Purchase Right shall receive, as soon as practicable after the
Purchase Date, a report of such Participant's Plan account setting
forth the total payroll deductions accumulated prior to such
exercise, the number of shares of Stock purchased, the Purchase
Price for such shares, the date of purchase and the cash balance, if
any, remaining immediately after such purchase that is to be
refunded or retained in the Participant's Plan account pursuant to
Section 11.4. The report required by this Section may be delivered
in such form and by such means, including by electronic
transmission, as the Company may determine. In addition, each
Participant shall be provided information concerning the Company
equivalent to that information provided generally to the Company's
common stockholders.
12. WITHDRAWAL FROM OFFERING OR PLAN.
12.1 VOLUNTARY WITHDRAWAL. A Participant may withdraw from the Plan or
any Offering by signing and delivering to the Company's designated
office a written notice of withdrawal on a form provided by the
Company for this purpose. Such withdrawal may be elected at any time
prior to the end of an Offering Period; provided, however, that if a
Participant withdraws from the Plan or an Offering after a Purchase
Date, the withdrawal shall not affect shares of Stock acquired by
the Participant on such Purchase Date. A Participant who voluntarily
withdraws from the Plan or an Offering is prohibited from resuming
participation in the Plan in the same Offering from which he or she
withdrew, but may participate in any subsequent Offering by again
satisfying the requirements of Sections 5 and 7.1. The Company may
impose, from time to time, a requirement that the notice of
withdrawal be on file with the Company's designated office for a
reasonable
<PAGE>
period prior to the effectiveness of the Participant's withdrawal.
12.2 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's voluntary
withdrawal from the Plan or an Offering pursuant to Section 12.1,
the Participant's accumulated payroll deductions which have not been
applied toward the purchase of shares shall be refunded to the
Participant as soon as practicable after the withdrawal, without the
payment of any interest, and the Participant's interest in the Plan
or the Offering, as applicable, shall terminate. Such accumulated
payroll deductions to be refunded in accordance with this Section
may not be applied to any other Offering under the Plan.
13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.
Upon a Participant's ceasing, prior to a Purchase Date, to
be an Employee of the Participating Company Group for any reason,
including retirement, disability or death, or upon the failure of a
Participant to remain an Eligible Employee, the Participant's
participation in the Plan shall terminate immediately. In such
event, the Participant's accumulated payroll deductions which have
not been applied toward the purchase of shares shall, as soon as
practicable, be returned to the Participant or, in the case of the
Participant's death, to the Participant's beneficiary designated in
accordance with Section 20, if any, or legal representative, and all
of the Participant's rights under the Plan shall terminate. Interest
shall not be paid on sums returned pursuant to this Section 13. A
Participant whose participation has been so terminated may again
become eligible to participate in the Plan by satisfying the
requirements of Sections 5 and 7.1.
14. CHANGE IN CONTROL.
14.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty
percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company is a party; (iii) the sale,
exchange, or transfer of all or substantially all of the assets of
the Company; or (iv) a liquidation or dissolution of the Company.
(b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately
before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their
ownership of shares of the Company's voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more
than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or
corporations to which the assets of the Company were transferred
(the "TRANSFEREE CORPORATION(S)"), as the case may be. For purposes
of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of
the voting stock of one or more corporations which, as a result of
the Transaction,
<PAGE>
own the Company or the Transferee Corporation(s), as the case may
be, either directly or through one or more subsidiary corporations.
The Board shall have the right to determine whether multiple sales
or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be
final, binding and conclusive.
14.2 EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS. In the event of a
Change in Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case
may be (the "ACQUIRING CORPORATION"), may assume the Company's
rights and obligations under the Plan. If the Acquiring Corporation
elects not to assume the Company's rights and obligations under
outstanding Purchase Rights, the Purchase Date of the then current
Purchase Period shall be accelerated to a date before the date of
the Change in Control specified by the Board, but the number of
shares of Stock subject to outstanding Purchase Rights shall not be
adjusted. All Purchase Rights which are neither assumed by the
Acquiring Corporation in connection with the Change in Control nor
exercised as of the date of the Change in Control shall terminate
and cease to be outstanding effective as of the date of the Change
in Control.
15. NONTRANSFERABILITY OF PURCHASE RIGHTS.
Neither payroll deductions credited to a Participant's Plan
account nor a Participant's Purchase Right may be assigned,
transferred, pledged or otherwise disposed of in any manner other
than as provided by the Plan or by will or the laws of descent and
distribution. (A beneficiary designation pursuant to Section 20
shall not be treated as a disposition for this purpose.) Any such
attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an
election to withdraw from the Plan as provided in Section 12.1. A
Purchase Right shall be exercisable during the lifetime of the
Participant only by the Participant.
16. COMPLIANCE WITH SECURITIES LAW.
The issuance of shares under the Plan shall be subject to
compliance with all applicable requirements of federal, state and
foreign law with respect to such securities. A Purchase Right may
not be exercised if the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of
any securities exchange or market system upon which the Stock may
then be listed. In addition, no Purchase Right may be exercised
unless (a) a registration statement under the Securities Act of
1933, as amended, shall at the time of exercise of the Purchase
Right be in effect with respect to the shares issuable upon exercise
of the Purchase Right, or (b) in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Purchase Right may
be issued in accordance with the terms of an applicable exemption
from the registration requirements of said Act. The inability of the
Company to obtain from any regulatory body having jurisdiction the
authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares under the
Plan 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. As a condition to the
exercise of a Purchase Right, the Company may require the
Participant to satisfy any qualifications that
<PAGE>
may be necessary or appropriate, to evidence compliance with any
applicable law or regulation, and to make any representation or
warranty with respect thereto as may be requested by the Company.
17. RIGHTS AS A STOCKHOLDER AND EMPLOYEE.
A Participant shall have no rights as a stockholder by
virtue of the Participant's participation in the Plan until the date
of the issuance of a certificate for the shares purchased pursuant
to the exercise of the Participant's Purchase Right (as evidenced by
the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment shall be
made for dividends, distributions or other rights for which the
record date is prior to the date such certificate is issued, except
as provided in Section 4.2. Nothing herein shall confer upon a
Participant any right to continue in the employ of the Participating
Company Group or interfere in any way with any right of the
Participating Company Group to terminate the Participant's
employment at any time.
18. LEGENDS.
The Company may at any time place legends or other
identifying symbols referencing any applicable federal, state or
foreign securities law restrictions or any provision convenient in
the administration of the Plan on some or all of the certificates
representing shares of Stock issued under the Plan. The Participant
shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired
pursuant to a Purchase Right in the possession of the Participant in
order to carry out the provisions of this Section. Unless otherwise
specified by the Company, legends placed on such certificates may
include but shall not be limited to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY
THE CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES
UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT
FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION
IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER
HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER
THE PLAN IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY
NOMINEE)."
19. NOTIFICATION OF DISPOSITION OF SHARES.
The Company may require the Participant to give the Company
prompt notice of any disposition of shares acquired by exercise of a
Purchase Right. The Company may require that until such time as a
Participant disposes of shares acquired upon exercise of a Purchase
Right, the Participant shall hold all such shares in the
Participant's name (or, if elected by the Participant, in the name
of the Participant and his or her spouse but not in the name of any
nominee) until the later of two years after the date of grant of
such Purchase Right or one year
<PAGE>
after the date of exercise of such Purchase Right. The Company may
direct that the certificates evidencing shares acquired by exercise
of a Purchase Right refer to such requirement to give prompt notice
of disposition.
20. DESIGNATION OF BENEFICIARY.
20.1 DESIGNATION PROCEDURE. A Participant may file a written designation
of a beneficiary who is to receive (a) shares and cash, if any, from
the Participant's Plan account if the Participant dies subsequent to
a Purchase Date but prior to delivery to the Participant of such
shares and cash or (b) cash, if any, from the Participant's Plan
account if the Participant dies prior to the exercise of the
Participant's Purchase Right. If a married Participant designates a
beneficiary other than the Participant's spouse, the effectiveness
of such designation shall be subject to the consent of the
Participant's spouse. A Participant may change his or her
beneficiary designation at any time by written notice to the Company.
20.2 ABSENCE OF BENEFICIARY DESIGNATION. If a Participant dies without an
effective designation pursuant to Section 20.1 of a beneficiary who
is living at the time of the Participant's death, the Company shall
deliver any shares or cash credited to the Participant's Plan
account to the Participant's legal representative.
21. NOTICES.
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company
at the location, or by the person, designated by the Company for the
receipt thereof.
22. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may at any time amend or terminate the Plan,
except that (a) no such amendment or termination shall affect
Purchase Rights previously granted under the Plan unless expressly
provided by the Board and (b) no such amendment or termination may
adversely affect a Purchase Right previously granted under the Plan
without the consent of the Participant, except to the extent
permitted by the Plan or as may be necessary to qualify the Plan as
an employee stock purchase plan pursuant to Section 423 of the Code
or to comply with any applicable law, regulation or rule. In
addition, an amendment to the Plan must be approved by the
stockholders of the Company within twelve (12) months of the
adoption of such amendment if such amendment would authorize the
sale of more shares than are then authorized for issuance under the
Plan or would change the definition of the corporations that may be
designated by the Board as Participating Companies.
IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing Finisar Corporation 1999 Employee Stock
Purchase Plan was duly adopted by the Board of Directors of the
Company on September 9, 1999.
/s/ Stephen Workman
------------------------------------
Secretary