EXHIBIT (d)(3)
PURCHASER OPTION AGREEMENT
PURCHASER OPTION AGREEMENT, dated as of October 8, 2003, by
and among Emulex corporation, a Delaware corporation ("Parent"), Aviary
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
Parent (the "Purchaser"), and Vixel Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Company, Parent and the Purchaser are entering
into an Agreement and Plan of Merger (the "Merger Agreement") of even date
herewith providing for (a) a cash tender offer to purchase any and all
outstanding shares of (i) common stock, par value $0.0015 per share of the
Company (the "Common Stock"), and (ii) Series B convertible preferred stock, par
value $0.001 per share, of the Company (the "Series B Preferred Stock" and,
together with the Common Stock, the "Shares") at a price of $ 10.00 per Share,
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in the Merger Agreement (the "Offer"); and (b) the
merger (the "Merger") of the Purchaser with and into the Company; and
WHEREAS, as a condition to the willingness of Parent and the
Purchaser to enter into the Merger Agreement and commence the Offer, Parent and
Purchaser have requested, and the Company has agreed to grant the Purchaser, the
option to purchase, as described herein, authorized but unissued shares of
Common Stock and/or Series B Preferred Stock.
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, and for other good and
valuable consideration the sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Grant of Option. On the terms and subject to the conditions of this
Agreement, the Company hereby grants to the Purchaser an irrevocable
option (the "Option") to purchase for the Offer Price, as defined in
the Merger Agreement (the "Purchase Price"), shares of Common Stock
and/or Series B Preferred Stock, in such relative amounts as shall be
determined by Purchaser in its discretion, up to 19.9% in the aggregate
of the then outstanding shares of Common Stock and Series B Preferred
Stock on as-converted basis (collectively, the "Optioned Shares");
provided, that the number of shares of Series B Preferred Stock
issuable under the Option may not exceed the number of authorized
shares of Series B Preferred Stock available for issuance.
2. Exercise of Option. Subject to the immediately succeeding sentence, the
Option may be exercised by the Purchaser, in whole or in part, at any
time or from time to time after Purchaser has purchased Shares pursuant
to the Offer and until the earlier of (a) immediately following the
Effective Time (as defined in the Merger Agreement) and (b) the
termination of the Merger Agreement in accordance with its terms. The
exercise of the Option for Common Stock is conditioned upon the
Purchaser and the Parent owning in the aggregate, immediately following
such
exercise, at least 90% of the outstanding shares of Common Stock, and
the exercise of the Option for Series B Preferred Stock is conditioned
upon the Purchaser and Parent owning in the aggregate, immediately
following such exercise, at least 90% of the outstanding shares of
Series B Preferred Stock. In the event the Purchaser wishes to exercise
the Option, the Purchaser shall give a written notice (the "Notice") to
the Company of its intention to exercise the Option, specifying the
number of Optioned Shares to be purchased. Such notice shall be
delivered to the Company in accordance with the requirements of Section
7(d), and shall specify a date (which may be the date of such notice)
not more than ten (10) business days from the date such Notice is given
for the purchase of the Optioned Shares. The closing (the "Closing") of
the purchase of the Optioned Shares shall take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 525 University Avenue, 11th
Floor, Palo Alto, California 94301, or at such other location as the
Purchaser shall elect. If any decree, injunction, order, law or
regulation shall not permit the purchase of the Optioned Shares to be
consummated on the date specified in such Notice, the date for the
Closing shall be as soon as practicable following the cessation of such
restriction on consummation, but in any event within two (2) business
days thereof.
3. Payment and Delivery of Certificate(s). At any Closing hereunder, (a)
the Purchaser shall make payment to the Company of the aggregate price
for the par value of the Optioned Shares so purchased in official bank
check or by wire transfer to a bank designated in writing by the
Company; (b) the Purchaser shall deliver to the Company a Promissory
Note substantially in the form attached hereto as Exhibit A (the
"Note") for the aggregate price for the Optioned Shares so purchased
less the amount paid in accordance with clause 3(a); and (c) the
Company shall deliver to the Purchaser a certificate or certificates
representing the number of Optioned Shares so purchased registered in
the name of the Purchaser. Certificates for Optioned Shares delivered
at the Closing may be endorsed with a restrictive legend that shall
read substantially as follows:
"THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM."
It is understood and agreed that the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "Act"), in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Parent shall have delivered to
the Company a copy of a letter from the staff of the Securities and
Exchange Commission, or an opinion of counsel or other evidence
reasonably satisfactory to the Company, to the effect that registration
of the future resale of the Optioned Shares is not required and that
such legend is not required for purposes of the Act.
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4. Representations and Warranties of the Company. The Company hereby
represents and warrants (such representations and warranties being
deemed repeated at and as of any Closing hereunder) to Parent and the
Purchaser as follows:
(a) Due Incorporation. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate
power and authority to enter into and perform this Agreement.
(b) Due Authorization, etc. This Agreement and the consummation of
the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by a duly
authorized officer of the Company and constitutes the valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(c) Company's Capital Stock. The Company has taken all necessary
corporate action to authorize and reserve for issuance upon
exercise of the Option the Optioned Shares, and at all times
from the date hereof through the date of termination of this
Agreement will keep reserved for issuance upon exercise of the
Option that number of shares of Common Stock that the
Purchaser is then entitled to purchase pursuant to the Option.
The shares of Common Stock and/or Series B Preferred Stock to
be issued upon due exercise, in whole or in part, of the
Option shall, when issued, be validly issued, fully-paid and
non-assessable, and shall be delivered free and clear of all
claims, liens, encumbrances and security interests, including
any preemptive right of any of the stockholders of the
Company.
5. Representations and Warranties of the Purchaser and Parent. Parent and
the Purchaser hereby jointly and severally represent and warrant (such
representations and warranties being deemed repeated at and as of any
Closing hereunder) to the Company as follows:
(a) Due Incorporation. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the
requisite corporate power and authority to enter into and
perform this Agreement.
(b) Due Authorization, etc. This Agreement and the consummation of
the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Purchaser
and Parent. This Agreement has been duly executed and
delivered by a duly authorized officer of the Purchaser and of
Parent, and constitutes the valid and binding obligation of
the Purchaser and of Parent, enforceable against each in
accordance with its terms.
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(c) Distribution. The Purchaser acknowledges and agrees that the
Optioned Shares have not been registered, and that the Company
is under no obligation to register, the Optioned Shares under
the Act or any state securities laws. The Purchaser is
acquiring the Option and will acquire the Optioned Shares to
be purchased upon exercise of the Option for its own account
and not with a view to the distribution thereof within the
meaning of the Act. The foregoing representation and warranty
shall be made by any assignee under Section 7(a) and shall be
binding upon such assignee.
6. Adjustment Upon Changes in Capitalization. In the event of any change
in the shares of the Company's capital stock by reason of any stock
dividend, stock split, merger, recapitalization, combination,
conversion, exchange of shares, issuance of shares (or agreements or
commitments to issue shares) or the like, the number of Optioned Shares
subject to the Option and the purchase price per Optioned Share shall
be appropriately and equitably adjusted.
7. Miscellaneous.
(a) Assignment; Guarantee of the Purchaser's Obligations. This
Agreement shall not be assigned by the Purchaser, except to
Parent or a wholly-owned subsidiary of Parent, without the
prior written consent of the Company. Parent hereby
unconditionally guarantees the full and punctual performance
by Purchaser of all of the obligations of Purchaser or any of
its assignees hereunder and under the Note. In connection with
the obligations of Parent under the immediately preceding
sentence, Parent hereby waives any and all rights, notices and
defenses to which it otherwise would be entitled solely in its
capacity as a guarantor under this Agreement or the Note.
(b) Amendments. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery
of a written agreement executed by the parties hereto.
(c) Non-survival of representations, etc. All representations,
warranties and agreements in this Agreement shall terminate at
the Closing.
(d) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so
given) by delivery, by cable, telegram or telex, or by mail
(registered or certified mail, postage prepaid, return receipt
requested) to the respective parties as follows:
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If to the Company:
Vixel Corporation
11911 North Creek Parkway South
Bothell, Washington 98011
Attention: Kurtis L. Adams
Chief Financial Officer
Facsimile: (425) 806-4001
With a copy to:
Heller Ehrman White & McAuliffe LLP
701 Fifth Avenue, Suite 6100
Seattle, Washington 98104
Attention: David R. Wilson
Facsimile: (206) 447-0849
If to Parent or the Purchaser:
Emulex Corporation
3535 Harbor Boulevard
Costa Mesa, California 92626
Attention: Randall G. Wick
Vice President, General Counsel
Facsimile: (714) 641-0172
With copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 1100
Palo Alto, California 94301
Attention: Gregory C. Smith
Facsimile: (650) 470-4570
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive law of the State
of Delaware without giving effect to the principles of
conflict of laws thereof.
(f) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
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(g) Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
(h) Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters
referred to herein and supersedes all prior agreements or
understandings, both written or oral, among the parties, or
any of them, with respect to the subject matter hereof.
(i) Specific Performance. Purchaser, Parent and the Company each
acknowledge and agree that the other would be irreparably
damaged in the event any of the provisions of this Agreement
were not performed by it in accordance with the specific terms
or were otherwise breached. The Company agrees that if for any
reason the Company shall have failed to issue Optioned Shares
or to perform any of its other obligations under the
Agreement, then the Purchaser and Parent shall be entitled to
specific performance and injunctive and other equitable relief
and the Company agrees to waive any requirement for the
securing or posting of a bond in connection with the obtaining
of any such injunctive or other equitable relief. This
provision is without prejudice to any other rights the
Purchaser and Parent may have against the Company for any
failure to perform its obligations under this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Purchaser Option Agreement to be duly executed on the day and year
first above written.
VIXEL CORPORATION
By: /s/ JAMES McCLUNEY
Name: James McCluney
Title: President and Chief
Executive Officer
AVIARY ACQUISITION CORPORATION
By: /s/ PAUL FOLINO
Name: Paul Folino
Title: President and Chief
Executive Officer
EMULEX CORPORATION
By: /s/ PAUL FOLINO
Name: Paul Folino
Title: Chairman of the Board and
Chief Executive Officer
Signature Page to Purchaser Option Agreement
EXHIBIT A
NON-TRANSFERABLE PROMISSORY NOTE
FOR VALUE RECEIVED, Aviary Acquisition Corporation, a Delaware
corporation ("the Maker"), hereby promises to pay to Vixel Corporation, a
Delaware Corporation, the principal amount of [_________________] ($______)],
with no interest, on [insert date that is six months after the date of exercise]
by wire transfer of immediately available funds to an account designated by the
payee. The amount due hereunder shall be payable in money of the United States
of America lawful at such time for the payment of public and private debts.
The Maker hereby waives presentment, diligence, protest and demand,
notice of protest, demand, dishonor and nonpayment of this Note, and all other
notices of any kind in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to the principles of
conflicts of laws thereof.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed as of
the _____ day of ______, 200__.
AVIARY ACQUISITION CORPORATION
By: __________________________
Name:
Title: