EXHIBIT 10.18
COLLATERAL PLEDGE
AND SECURITY AGREEMENT
Dated as of October 15, 2003
among
FINISAR CORPORATION
as Pledgor,
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee, and
U.S. BANK NATIONAL ASSOCIATION
as Collateral Agent
This Collateral Pledge and Security Agreement (this "Pledge Agreement")
is made and entered into as of October 15, 2003 among Finisar Corporation, a
Delaware corporation (the "Pledgor"), having its principal offices at 1308
Moffett Park Drive, Sunnyvale, California 94089, U.S. Bank Trust National
Association, a national banking association, having its principal corporate
trust office at 100 Wall Street, 16th Floor, New York, New York, 10005, as
trustee (in such capacity, the "Trustee") for the holders (the "Holders") of the
Notes (as defined herein) issued by the Pledgor under the Indenture referred to
below, and U.S. Bank National Association, a national banking association,
having a corporate trust office at 100 Wall Street, 16th Floor, New York, New
York, 10005, as collateral agent for the Trustee and the holders from time to
time of the Notes referred to below (in such capacity, the "Collateral Agent")
and securities intermediary.
W I T N E S S E T H:
WHEREAS, the Pledgor and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, A.G. Edwards & Sons, Inc., CIBC World Markets Corp., Needham &
Company, Inc., RBC Dain Rauscher Inc., SoundView Technology Group Corporation
and Thomas Weisel Partners LLC (collectively, the "Initial Purchasers") are
parties to a Purchase Agreement dated October 8, 2003 (the "Purchase
Agreement"), pursuant to which the Pledgor will issue and sell to the Initial
Purchasers $150 million aggregate principal amount of 2 1/2% Convertible
Subordinated Notes due 2010 (the "Notes"), which amount includes $20 million
aggregate principal amount of Notes as to which the Initial Purchasers have
exercised their option set forth in Section 2(b) of the Purchase Agreement;
WHEREAS, the Pledgor and U.S. Bank Trust National Association, as
Trustee, have entered into that certain indenture dated as of the date hereof
(as amended, restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Pledgor is issuing the Notes on the date
hereof;
WHEREAS, pursuant to the Indenture, the Pledgor is required to
purchase, or cause the purchase of, and pledge to the Collateral Agent for the
benefit of the Trustee and the Holders, at the Closing Time (as defined in the
Purchase Agreement), U.S. Government Obligations (as defined in the Indenture)
in an amount that will be sufficient upon receipt of scheduled interest and
principal payments of such securities, in the written opinion of Ernst & Young
LLP or another nationally recognized firm of independent public accountants
selected by the Pledgor and delivered to the Trustee, to provide for payment in
full of the first eight scheduled interest payments due on the Notes (such
obligation, together with the obligation to repay the principal, premium, if
any, interest (including, Liquidated Damages (as defined in the Registration
Rights Agreement), if any), fees, expenses or otherwise on the Notes and under
the Indenture, this Agreement and any other transaction document related thereto
in the event that the Notes become due and payable prior to such time as the
first eight scheduled interest payments thereon shall have been paid in full,
being collectively referred to herein as the "Obligations");
WHEREAS, the Pledgor has established an account (the "Collateral
Account") with U.S. Bank National Association, at its office at 100 Wall Street,
16th Floor, New York, New York, 10005, Account No. 77146401, in the name of U.S.
Bank National Association, as Collateral
Agent for the benefit of the Trustee and Holders of the Notes and designated as
"USBANK COLL AGENT FOR FINISAR NOTES DUE 2010"; and
WHEREAS, it is a condition precedent to the purchase of the Notes by
the Initial Purchasers pursuant to the Purchase Agreement that the Pledgor
purchase the Pledged Securities (as defined below) and deposit such Pledged
Securities into the Collateral Account to be held therein subject to the terms
of this Pledge Agreement and shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Pledge
Agreement.
NOW, THEREFORE, in consideration of the premises herein contained, and
in order to induce the Initial Purchasers to purchase the Notes, the Pledgor,
the Trustee and the Collateral Agent hereby agree, for the benefit of the
Initial Purchasers and for the ratable benefit of the Holders, as follows:
SECTION 1. DEFINITIONS; APPOINTMENT; DEPOSIT AND INVESTMENT.
1.1 DEFINITIONS.
(a) Unless otherwise defined in this Pledge Agreement, terms defined or
referenced in the Indenture are used in this Pledge Agreement as such terms are
defined or referenced therein.
(b) Unless otherwise defined in the Indenture or in this Pledge
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") from time to
time and/or in Section 357.2 of the Treasury Regulations (as defined in Section
1.1(c)) are used in this Pledge Agreement as such terms are defined in such
Article 8 or 9 and/or such Section 357.2.
(c) In this Pledge Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined:
"Cash Equivalents" means, to the extent owned by the Pledgor free and
clear of all Liens other than Liens created hereunder, U.S. Government
Obligations.
"C.F.R." means U.S. Code of Federal Regulations.
"Closing Time" has the meaning specified in the Purchase Agreement.
"Collateral" has the meaning specified in Section 1.3 hereof.
"Collateral Account" has the meaning specified in the recitals of the
parties hereof.
"Collateral Agent" has the meaning specified in the recitals of the
parties hereto.
"Collateral Investments" has the meaning specified in Section 5 hereof.
"Entitlement holder" has the meaning specified in N.Y. Uniform
Commercial Code Section 8-102(a)(7) or in respect of any Book-entry Security,
the meaning specified for
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"Entitlement Holder" in 31 C.F.R. Section 357.2 or as applicable to such
Book-entry Security, the corresponding federal book-entry regulations.
"FRBMN" means Federal Reserve Bank of Minneapolis.
"FRBMN Account" means the FRBMN Member Securities Account maintained in
the name of the Collateral Agent by the FRBMN.
"FRBMN Member" means any Person that is eligible to maintain (and that
maintains) with the FRBMN one or more FRBMN Member Securities Accounts in such
Person's name.
"FRBMN Member Securities Account" means, in respect of any Person, the
Participant's Securities Account maintained in the name of such Person at the
FRBMN, to which account U.S. Government Obligations held for such Person are or
may be credited.
"Holders" has the meaning specified in the recitals of the parties
hereto.
"Notes" has the meaning specified in the recitals of the parties
hereof.
"N.Y. Uniform Commercial Code" has the meaning specified in Section
1.1(b).
"Obligations" has the meaning specified in the recitals of the parties
hereof.
"Initial Purchasers" has the meaning specified in the recitals of the
parties hereof.
"Purchase Agreement" has the meaning specified in the recitals of the
parties hereof.
"Pledged Securities" has the meaning specified in Section 1.3 hereof.
"Pledgor" has the meaning specified in the recitals of the parties
hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
dated October 15, 2003 by and between the Company and the Initial Purchasers.
"Securities intermediary" means a Person that is a "securities
intermediary" (as defined in N.Y. Uniform Commercial Code Section 8-102(a)(14))
and, in respect of any Book-entry Security, a "Securities Intermediary" (as
defined in 31 C.F.R. Section 357.2 or, as applicable to such Book-entry
Security, as defined in the corresponding federal book-entry regulations).
"Security" has the meaning specified in Section 8-102(a)(15) of the
N.Y. Uniform Commercial Code or, in respect of any Book-entry Security, has the
meaning specified for "Security" in 31 C.F.R. Section 357.2 (or as applicable to
such Book-entry Security, the corresponding federal book-entry regulations).
"Security entitlement" has the meaning specified in N.Y. Uniform
Commercial Code Section 8-102(a)(17) or, in respect of any Book-entry Security,
has the meaning specified for "Security Entitlement" in 31 C.F.R. Section 357.2
(or, as applicable to such Book-entry Security, the corresponding federal
book-entry regulations).
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"Settlement Date" means, as to any U.S. Government Obligations, the
date on which the purchase of such U.S. Government Obligations shall have been
settled.
"Termination Date" means the earlier of (a) the date of the payment in
full in cash of each of the first eight scheduled interest payments due on the
Notes under the terms of the Indenture and (b) the date of the payment in full
in cash of all obligations due and owing under this Pledge Agreement, the
Indenture and the Notes, in the event such obligations become due and payable
prior to the payment of the first eight scheduled interest payments on the
Notes.
"Treasury Regulations" means (a) the federal regulations contained in
31 C.F.R. Part 357 (including, without limitation, Section 357.2, Section 357.10
through Section 357.14 and Section 357.41 through Section 357.44 of 31 C.F.R.)
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time) the federal
regulations governing other U.S. Government Obligations.
"Trustee" has the meaning specified in the recitals of parties hereto.
"Uncertificated Security" has the meaning specified in Section
8-102(a)(18) of the N.Y. Uniform Commercial Code.
1.2 APPOINTMENT OF THE COLLATERAL AGENT. The Trustee hereby
appoints the Collateral Agent as Collateral Agent in accordance with the terms
and conditions set forth herein and the Collateral Agent hereby accepts such
appointment.
1.3 PLEDGE AND GRANT OF SECURITY INTEREST. As security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby
assigns and pledges to the Collateral Agent for the benefit of the Trustee and
the ratable benefit of the Holders and hereby grants to the Collateral Agent for
the benefit of the Trustee and for the ratable benefit of the Holders, a lien on
and first priority perfected security interest in all of the Pledgor's right,
title and interest in, to and under the following property: (a) the U.S.
Government Obligations identified by CUSIP No. in Part I of Schedule I to this
Pledge Agreement (the "Pledged Securities") and the certificates representing
the Pledged Securities (if any), the scheduled payments of principal and
interest thereon which will be sufficient to provide for payment in full of the
first eight scheduled interest payments due on the Notes, (b) the security
entitlements described in Part II of said Schedule I, with respect to the
financial assets described, the securities intermediary named, and the
securities account referred to therein, (c) the Collateral Account, all security
entitlements from time to time carried in the Collateral Account, all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing the Collateral Account, (d) all Collateral
Investments (as hereinafter defined) from time to time and all certificates and
instruments, if any, representing or evidencing the Collateral Investments, and
any and all security entitlements to the Collateral Investments, and any and all
related securities accounts in which any security entitlements to the Collateral
Investments is carried, (e) all notes, certificates of deposit, deposit
accounts, checks and other instruments, if any, from time to time hereafter
delivered to or otherwise possessed by the Collateral Agent for or on behalf of
the Pledgor and specifically designated by the Pledgor to be in substitution for
any or all of the then existing Collateral, (f) all interest, dividends, cash,
instruments and other property, if any, from time to
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time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the then existing Collateral and (g) all proceeds of any and
all of the foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a)-(f) of this Section
1.3) and, to the extent not otherwise included, all (i) payments under insurance
(whether or not the Trustee is the loss payee thereof) or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral and (ii) cash proceeds of any and all
of the foregoing Collateral (such property described in clauses (a) through (g)
of this Section 1.3 being collectively referred to herein as the "Collateral").
Without limiting the generality of the foregoing, this Pledge Agreement secures
the payment of all amounts that constitute part of the Obligations and would be
owed by the Pledgor to the Trustee under the Notes, the Indenture, this Pledge
Agreement and any other transaction documents related thereto but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Pledgor.
SECTION 2. ESTABLISHMENT AND MAINTENANCE OF COLLATERAL ACCOUNT.
(a) Prior to or concurrently with the execution and delivery
hereof, the Collateral Agent shall establish the Collateral Account on its books
as a separate account segregated from all other custodial or collateral accounts
at its office at 100 Wall Street, 16th Floor, New York, New York, 10005. The
Pledgor and the Collateral Agent will maintain the Collateral Account as a
securities account with the Collateral Agent in the State of New York. The
following provisions shall apply to the establishment and maintenance of the
Collateral Account:
(i) The Collateral Agent shall cause the Collateral
Account to be, and the Collateral Account shall be,
separate from all other accounts maintained by the
Collateral Agent.
(ii) The Collateral Agent shall, in accordance with all
applicable laws, have sole dominion and control over
the Collateral Account.
(iii) It shall be a term and condition of the Collateral
Account and the Pledgor irrevocably instructs the
Collateral Agent, notwithstanding any other term or
condition to the contrary in any other agreement,
that no amount (including interest on Collateral
Investments) shall be released to or for the account
of, or withdrawn by or for the account of, the
Pledgor or any other Person except as expressly
provided in this Pledge Agreement.
(b) On the Closing Time, the Pledgor shall transfer, or cause to
be transferred, to the Collateral Agent, the U.S. Government Obligations listed
on Schedule I hereto, by depositing, or causing to be deposited, all such U.S.
Government Obligations into the Collateral Account. The Collateral Account shall
be subject to such applicable laws, and such applicable regulations of the Board
of Governors of the Federal Reserve System and of any other appropriate banking
or governmental authority, as may now or hereafter be in effect.
(c) As soon as practicably possible after receipt of the U.S.
Government Obligations referred to in Section 2(b) (and not later than the
Business Day following the Closing Time), (i)
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the Collateral Agent shall credit such U.S. Government Obligations to the
Collateral Account as Collateral hereunder; and (ii) the Collateral Agent shall
ensure that, on the Settlement Date of such U.S. Government Obligations, the
FRBMN indicates by book-entry that those U.S. Government Obligations being
settled on such date are credited to the FRBMN Account.
(d) The Collateral Agent will, from time to time, reinvest the
proceeds of Collateral that may mature or be sold in such Collateral Investments
(in the name of the Collateral Agent) as it will be directed in writing by the
Pledgor, and cause such Collateral Investments to be credited to the Collateral
Account as Collateral hereunder. Any such proceeds that the Pledgor directs the
Collateral Agent in writing not to reinvest in Collateral Investments shall be
held in the Collateral Account.
SECTION 3. DELIVERY AND CONTROL OF COLLATERAL.
(a) All certificates or instruments representing or evidencing
Collateral shall be delivered to and held by or on behalf of the Collateral
Agent pursuant hereto and shall be in suitable form for transfer or delivery,
or, at the request of the Collateral Agent, shall be accompanied by duly
executed instruments of transfer or assignment in blank. In addition, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
(b) With respect to any Collateral that constitutes a security and
is not represented or evidenced by a certificate or instrument, the Pledgor
shall cause the issuer thereof either (i) to register the Collateral Agent as
the registered owner of such security or (ii) to agree in writing with the
Collateral Agent and the Pledgor that such issuer will comply with instructions
with respect to such security originated by the Collateral Agent without further
consent of the Pledgor, the terms of such agreement to be consistent with the
terms of this Agreement (if applicable).
(c) With respect to any Collateral that constitutes a security
entitlement, the Pledgor shall cause the securities intermediary with respect to
such security entitlement either (i) to identify in its records the Collateral
Agent as the entitlement holder of such security entitlement against such
securities intermediary or (ii) to agree in writing with the Pledgor and the
Collateral Agent that such securities intermediary will comply with entitlement
orders (that is, notifications communicated to such securities intermediary
directing transfer or redemption of the financial asset to which Pledgor has a
security entitlement) originated by the Collateral Agent without further consent
of the Pledgor, the terms of such agreement to be consistent with the terms of
this Agreement (if applicable).
(d) With respect to any Collateral that constitutes a securities
account, the Pledgor will comply with subsection (c) of this Section 3 with
respect to all security entitlements carried in such securities account.
(e) Concurrently with the execution and delivery of this Pledge
Agreement, the Collateral Agent is delivering to the Pledgor and the Initial
Purchasers a duly executed certificate, in the form of Exhibit A hereto, of an
officer of the Collateral Agent.
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(f) Pledgor hereby irrevocably authorizes the Collateral Agent at
any time and from time to time to file in the Office of the Secretary of State
of Delaware and any other filing office in the United States any initial
financing statements and amendments thereto that (a) contain a description of
collateral of an equal or lesser scope as the Collateral described in this
Pledge Agreement, but such description may contain greater detail than is
contained in this Pledge Agreement, and (b) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code as in effect in
any applicable jurisdiction for the sufficiency or filing office acceptance of
any financing statement or amendment therein, including whether the Pledgor is
an organization, the type of organization and any organization identification
number issued to the Pledgor. The Pledgor agrees to furnish any such information
to the Collateral Agent promptly upon request. The Pledgor also ratifies its
authorization for the Collateral Agent to have filed in any Uniform Commercial
Code jurisdiction any initial financing statements or amendments thereto if
filed prior to the date hereof. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
SECTION 4. DELIVERY OF COLLATERAL OTHER THAN U.S. GOVERNMENT
OBLIGATIONS.
(a) Collateral consisting of cash will be deemed to be delivered
to the Collateral Agent (such that the Collateral Agent will have an enforceable
lien and security interest thereon and therein) when it has been (and for so
long as it shall remain) deposited in or credited to the Collateral Account.
(b) Collateral consisting of uncertificated securities (other than
U.S. Government Obligations) will be deemed delivered to the Collateral Agent
when the Collateral Agent (A) shall indicate by book entry that such securities
have been credited to the Collateral Account or (B) shall receive such security
(or a financial asset based on such security) for the Collateral Account from or
at the direction of the Pledgor, and shall accept such security (or such
financial asset) for credit to the Collateral Account.
(c) Collateral consisting of securities, and represented or
evidenced by certificates or instruments (other than U.S. Government
Obligations), will be deemed delivered to the Collateral Agent when all such
certificates or instruments representing or evidencing the Collateral,
including, without limitation, amounts invested as provided in Section 5, shall
be delivered to the Collateral Agent and held by or on behalf of the Collateral
Agent pursuant hereto and shall be in registered form and specially indorsed to
the Collateral Agent by an effective indorsement, all in form and substance
sufficient to convey a valid security interest in such Collateral to the
Collateral Agent or shall be credited to the Collateral Account.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL ACCOUNT. The
Collateral Agent shall advise the Pledgor if, at any time, any amounts shall
exist in the Collateral Account uninvested, and if directed in writing by the
Pledgor, the Collateral Agent will, subject to the provisions of Section 6 and
Section 13,
(a) invest such amounts on deposit in the Collateral Account in
such Cash Equivalents in the name of the Collateral Agent as the Pledgor may
select, and
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(b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents in the name of the
Collateral Agent, as the Pledgor may select (the Cash Equivalents referred to in
clauses (a) and (b) above, together with the Pledged Securities, being
collectively referred to herein as "Collateral Investments"); provided, however,
that the amount in cash and Pledged Securities on deposit in the Collateral
Account, collectively, at any time during the term of this Pledge Agreement, is
sufficient to provide for the payment in full of the remaining interest payments
at such time on the Notes up to and including the eighth scheduled interest
payment. Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the Collateral
Account. Except as otherwise provided in Sections 11 and 12, the Collateral
Agent shall not be liable for any loss in the investment or reinvestment of
amounts held in the Collateral Account. The Collateral Agent is not at any time
under any duty to advise or make any recommendation for the purchase, sale,
retention or disposition of the Collateral Investments.
SECTION 6. DISBURSEMENTS. The Collateral Agent shall hold the
Collateral in the Collateral Account and release the same, or a portion thereof,
only as follows:
(a) Prior to each of the first eight scheduled interest payments
on the Notes, the Collateral Agent shall release from the Collateral Account and
pay to the Trustee for the benefit of, and payment to, the Holders of the Notes
in accordance with the provisions of the Indenture an amount sufficient to pay
the interest due on the Notes on such interest payment date and will take any
action necessary to provide for the payment of the interest on the Notes to the
Holders in accordance with the payment provisions of the Indenture from (and to
the extent of) proceeds of the Collateral in the Collateral Account. Nothing in
this Section 6 shall affect the Collateral Agent's rights to apply the
Collateral to the payments of amounts due on the Notes upon acceleration
thereof.
(b) If, prior to the date on which the eighth scheduled interest
payment on the Notes is due:
(i) an Event of Default under the Notes occurs and is
continuing and
(ii) the Trustee or the Holders of 25% in aggregate
principal amount of the Notes accelerate the Notes by
declaring the principal amount of the Notes to be
immediately due and payable in accordance with the
provisions of the Indenture, except for the
occurrence and continuance of an Event of Default
under Section 6.01(6) and (7) of the Indenture, upon
which the Notes will be accelerated automatically
pursuant to the Indenture,
then the Collateral Agent shall promptly, subject to applicable bankruptcy laws,
release the proceeds from the Collateral Account and pay to the Trustee for the
benefit of, and payment to, the Holders of the Notes in accordance with the
provisions of the Indenture. Distributions from the Collateral Account shall be
applied, for the ratable benefit of the Holders, as follows:
(x) first, to any accrued and unpaid interest on the
Notes and
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(y) second, to the extent available, to the repayment of
the remaining Obligations, including the principal
amount of the Notes.
Any surplus of such proceeds held by the Collateral Agent and remaining
after payment in full of all of the Obligations shall be paid over to the
Pledgor.
(c) In the event that the Collateral held in the Collateral
Account is less than 100% of the amount sufficient, in the written opinion of
Ernst & Young LLP or another nationally recognized firm of independent public
accountants selected by the Pledgor, to provide for payment in full of the first
eight scheduled interest payments due on the Notes (or, in the event an interest
payment or payments have been made, an amount sufficient to provide for payment
in full of all interest payments remaining, up to and including the eighth
scheduled interest payment), the Pledgor shall deposit cash into the Collateral
Account in the amount of such deficiency.
(d) In the event that the Collateral held in the Collateral
Account exceeds 100% of the amount sufficient, in the opinion of Ernst & Young
LLP or another nationally recognized firm of independent public accountants
selected by the Pledgor, to provide for payment in full of the first eight
scheduled interest payments due on the Notes (or, in the event an interest
payment or payments have been made, an amount sufficient to provide for payment
in full of all interest payments remaining, up to and including the eighth
scheduled interest payment), the Collateral Agent shall release to the Pledgor,
at the Pledgor's written request, accompanied by a written opinion prepared by
Ernst & Young LLP or such other nationally recognized firm of independent public
accountants, any such excess Collateral.
(e) Upon the release of any Collateral from the Collateral
Account, in accordance with the terms of this Pledge Agreement, the security
interest and lien evidenced by this Pledge Agreement in such released Collateral
will automatically terminate and be of no further force and effect; provided
that the foregoing shall not affect the security interest and lien on any
Collateral not so released.
(f) Except as expressly provided in this Section 6, nothing
contained in this Pledge Agreement shall (i) afford the Pledgor any right to
issue entitlement orders with respect to any security entitlement to the Pledged
Securities or Collateral Investments or any securities account in which any such
security entitlement may be carried, or otherwise afford the Pledgor control of
any such security entitlement or (ii) otherwise give rise to any rights of the
Pledgor with respect to the Collateral Investments, any security entitlement
thereto or any securities account in which any such security entitlement may be
carried, other than the Pledgor's rights under this Pledge Agreement as the
beneficial owner of Collateral pledged to and subject to the exclusive dominion
and control (including, without limitation, securities control) of the
Collateral Agent in its capacity as such (and not as a securities intermediary).
The Pledgor acknowledges, confirms and agrees that the Collateral Agent holds a
first priority perfected security interest, lien and security entitlement to the
Collateral Investments solely as collateral agent for the Trustee and the
Holders and not as a securities intermediary for the Pledgor.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants, as of the date hereof, that:
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(a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge Agreement will
not contravene any provision of applicable law or the certificate of
incorporation, bylaws or equivalent organizational instruments of the Pledgor or
any material agreement or other material instrument binding upon the Pledgor or
any of its subsidiaries or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on any assets
of the Pledgor, except for the lien and security interests granted under this
Pledge Agreement; no consent, approval, authorization or order of, or
qualification with, and no notice to or filing with, any governmental body or
agency or other third party is required (i) for the performance by the Pledgor
of its obligations under this Pledge Agreement, (ii) for the pledge by the
Pledgor of the Collateral pursuant to this Pledge Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor or (iii) for
the perfection or maintenance of the pledge, assignment and security interest
created hereby (including the first priority nature of such pledge, assignment
or security interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code of applicable jurisdictions which
financing statements have been delivered pursuant to Section 3(f) hereof, or
(iv) except for any such consents, approvals, authorizations or orders required
to be obtained by the Collateral Agent (or the Holders) for reasons other than
the consummation of this transaction, for the exercise by the Collateral Agent
of the rights provided for in this Pledge Agreement or the remedies in respect
of the Collateral pursuant to this Pledge Agreement.
(b) The Pledgor is the legal and beneficial owner of the
Collateral, free and clear of any Lien or claims of any Person (except for the
lien and security interests granted under this Pledge Agreement). No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any public office other than the financing
statements, if any, to be filed pursuant to this Pledge Agreement.
(c) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and (assuming the due authorization and
valid execution and delivery of this Pledge Agreement by each of the Trustee and
the Collateral Agent and enforceability of the Pledge Agreement against each of
the Trustee and the Collateral Agent in accordance with its terms) constitutes a
valid and binding agreement of the Pledgor, enforceable against the Pledgor in
accordance with its terms, except as (i) the enforceability hereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or affecting the rights or remedies of creditors generally, (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability and the discretion of the court before which any
proceeding therefor may be brought, (iii) the exculpation provisions and rights
to indemnification hereunder may be limited by U.S. federal and state securities
laws and public policy considerations and (iv) the waiver of rights and defenses
contained in Section 13(b), Section 18.10 and Section 18.14 hereof may be
limited by applicable law.
(d) Upon the delivery to the Collateral Agent of the Collateral in
accordance with the terms hereof and the filing of the financing statements
referred to in Section 3(f) hereof, the pledge of and grant of a security
interest in the Collateral securing the payment of the Obligations for the
benefit of the Trustee and the Holders will constitute a valid, first priority,
perfected security interest in such Collateral (except, with respect to
proceeds, only to the extent
10
permitted by Section 9-315 of the N.Y. Uniform Commercial Code), enforceable as
such against all creditors of the Pledgor and any persons purporting to purchase
any of the Collateral from the Pledgor other than as permitted by the Indenture.
Upon filing of the financing statements described in Section 3(f) hereof, all
filings and other actions necessary or desirable to perfect and protect such
security interest will have been duly taken.
(e) There are no legal or governmental proceedings pending or, to
the best of the Pledgor's knowledge, threatened to which the Pledgor or any of
its subsidiaries is a party or to which any of the properties of the Pledgor or
any of its subsidiaries is subject that would materially adversely affect the
power or ability of the Pledgor to perform its obligations under this Pledge
Agreement or to consummate the transactions contemplated hereby.
(f) The pledge of the Collateral pursuant to this Pledge Agreement
is not prohibited by law or governmental regulation (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System) applicable to the Pledgor.
(g) No Event of Default exists.
(h) The Pledgor is a corporation duly organized and validly
existing under the laws of the State of Delaware. The Pledgor's name as it
appears in official filings in the State of Delaware is FINISAR CORPORATION. The
Pledgor's organizational identification number issued by the State of Delaware
is 3090879.
SECTION 8. FURTHER ASSURANCES. The Pledgor will, promptly upon the
request by the Collateral Agent (which request the Collateral Agent may submit
at the direction of the Holders of a majority in aggregate principal amount of
the Notes then outstanding), execute and deliver or cause to be executed and
delivered, or use its reasonable best efforts to procure, all assignments,
instruments and other documents, deliver any instruments to the Collateral Agent
and take any other actions that are necessary or desirable to perfect, continue
the perfection of, or protect the first priority of the Collateral Agent's
security interest in and to the Collateral, to protect the Collateral against
the rights, claims or interests of third persons (other than any such rights,
claims or interests created by or arising through the Collateral Agent) or to
effect the purposes of this Pledge Agreement. Without limiting the generality of
the foregoing, the Pledgor will, if any Collateral shall be evidenced by a
promissory note or other instrument, deliver to the Collateral Agent in pledge
hereunder such note or instrument duly indorsed and accompanied by duly executed
instruments of transfer or assignment; and execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as the Collateral Agent may reasonably request,
in order to perfect and preserve the pledge, assignment and first priority
perfected security interest granted or purported to be granted hereby. The
Pledgor will promptly pay all costs incurred in connection with any of the
foregoing within 45 days of receipt of an invoice therefor. The Pledgor also
agrees, whether or not requested by the Collateral Agent, to use its reasonable
best efforts to perfect or continue the perfection of, or to protect the first
priority of, the Collateral Agent's security interest in and to the Collateral,
and to protect the Collateral against the rights, claims or interests of third
persons (other than any such rights, claims or interests created by or arising
through the Collateral Agent).
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SECTION 9. COVENANTS. The Pledgor covenants and agrees with the
Collateral Agent, Trustee and the Holders that from and after the date of this
Pledge Agreement until the Termination Date:
(a) it will not (i) (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral nor (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral (except for the liens and security interests granted under
this Pledge Agreement and any Lien created by or arising through the Collateral
Agent) and at all times will be the sole beneficial owner of the Collateral;
(b) it will not (i) enter into any agreement or understanding that
restricts or inhibits or purports to restrict or inhibit the Trustee's or the
Collateral Agent's rights or remedies hereunder, including, without limitation,
the Collateral Agent's right to sell or otherwise dispose of the Collateral or
(ii) fail to pay or discharge any tax, assessment or levy of any nature with
respect to its beneficial interest in the Collateral not later than three
Business Days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to the Collateral;
(c) it will maintain its jurisdiction of organization in the State
of Delaware, or upon 30 days' prior written notice to the Collateral Agent, in
another jurisdiction where all actions required by Sections 3(f) and 8 have been
taken with respect to the Collateral; and
(d) it will not, and acknowledges that it is not authorized to,
file any financing statement or amendment or termination statement with respect
to any financing statement in favor of the Collateral Agent without the prior
written consent of Collateral Agent and agrees that it will not do so without
the prior written consent of Collateral Agent, subject to the Pledgor's rights
under Section 9-509(d)(2) of the N.Y. Uniform Commercial Code.
SECTION 10. POWER OF ATTORNEY; AGENT MAY PERFORM.
(a) Subject to the terms of this Pledge Agreement, the Pledgor
hereby appoints and constitutes the Collateral Agent as the Pledgor's
attorney-in-fact (with full power of substitution) to exercise to the fullest
extent permitted by law all of the following powers upon and at any time after
the occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any purchaser
thereof;
(iii) giving of any notices or recording of any Liens
hereof; and
(iv) paying or discharging taxes or Liens levied or placed
upon the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole
reasonable discretion, and such payments made by the
Collateral Agent to become part of the Obligations
secured hereby, due and payable immediately upon
demand. The Collateral Agent's authority under this
Section 10 shall include, without limitation, the
authority to endorse and negotiate any checks or
instruments representing proceeds of Collateral in
the name of
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the Pledgor, execute and give receipt for any
certificate of ownership or any document constituting
Collateral, transfer title to any item of Collateral,
sign the Pledgor's name on all financing statements
(to the extent permitted by applicable law) or any
other documents necessary or appropriate to preserve,
protect or perfect the security interest in the
Collateral and to file the same, prepare, file and
sign the Pledgor's name on any notice of Lien (to the
extent permitted by applicable law), and to take any
other actions arising from or necessarily incident to
the powers granted to the Trustee or the Collateral
Agent in this Pledge Agreement. This power of
attorney is coupled with an interest and is
irrevocable by the Pledgor.
(b) If the Pledgor fails to perform any agreement contained
herein, the Collateral Agent may, but is not obligated to, after providing to
the Pledgor notice of such failure and five Business Days to effect such
performance, itself perform, or cause performance of, such agreement, and the
expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Pledgor under Section 14.
SECTION 11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the security interest of the Collateral Agent for the
benefit of the Trustee and the Holders in and to the Collateral granted hereby
and shall not be interpreted to, and shall not impose any duties on, the
Collateral Agent in connection therewith other than those expressly provided
herein or imposed under applicable law. Except as provided by applicable law or
by the Indenture, the Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords similar property held by the Collateral Agent
for similar accounts, it being understood that the Collateral Agent in its
capacity as such
(a) may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon and
(b) shall not have any responsibility for
(i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities or other matters
relative to any Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge
of such matters,
(ii) taking any necessary steps for the existence,
enforceability or perfection of any security interest
of the Collateral Agent or to preserve rights against
any parties with respect to any Collateral or
(iii) except as otherwise set forth in Section 5, investing
or reinvesting any of the Collateral, provided,
however, that in the case of clause (a) and clause
(b) of this sentence, nothing contained in this
Pledge Agreement shall
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relieve the Collateral Agent of any responsibilities
as a securities intermediary under applicable law.
In no event shall the Collateral Agent be liable for the existence,
validity, enforceability or perfection of any security interest of the
Collateral Agent, or for special indirect or consequential damages or lost
profits or loss of business, arising in connection with this Agreement.
SECTION 12. INDEMNITY. The Pledgor shall fully indemnify, hold harmless
and defend the Collateral Agent and its directors and officers from and against
any and all claims, losses, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs, and
reasonable legal fees, expenses, and damages arising from the Collateral Agent's
appointment and performance as Collateral Agent under this Pledge Agreement,
except to the extent that such claim, action, obligation, liability or expense
is directly caused by the bad faith, gross negligence or willful misconduct of
such indemnified person. The provisions of this Section 12 shall survive
termination of this Pledge Agreement and the resignation and removal of the
Collateral Agent.
SECTION 13. REMEDIES UPON EVENT OF DEFAULT. Subject to Section 6(b), if
any Event of Default under the Indenture shall have occurred and be continuing
and the Notes shall have been accelerated in accordance with the provisions of
the Indenture:
(a) The Trustee, the Collateral Agent and the Holders shall have,
in addition to all other rights given by law or by this Pledge Agreement or the
Indenture, all of the rights and remedies with respect to the Collateral of a
secured party upon default under the N.Y. Uniform Commercial Code (whether or
not the N.Y. Uniform Commercial Code applies to the affected Collateral) at that
time. In addition, with respect to any Collateral that shall then be in or shall
thereafter come into the possession or custody of the Collateral Agent, the
Collateral Agent may and, at the written direction of the Trustee or the Holders
of a majority in aggregate principal amount of the Notes then outstanding, shall
appoint a broker or other expert to sell or cause the same to be sold at any
broker's board or at public or private sale, in one or more sales or lots, at
such price or prices such broker or other expert may deem commercially
reasonable, for cash or on credit or for future delivery, without assumption of
any credit risk. The purchaser of any or all Collateral so sold shall thereafter
hold the same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through the Pledgor. Unless any of the Collateral
threatens, in the reasonable judgment of the Collateral Agent, to decline
speedily in value, the Collateral Agent will give the Pledgor reasonable notice
of the time and place of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any sale of the
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Collateral shall be deemed to
be commercially reasonable. Any requirements of reasonable notice shall be met
if notice of the time and place of any public sale or the time after which any
private sale is to be made is given to the Pledgor as provided in Section 17.1
hereof at least ten (10) days before the time of the sale or disposition. The
Collateral Agent or any Holder may, in its own name or in the name of a designee
or nominee, buy any of the Collateral at any public sale and, if permitted by
applicable law, at any private sale. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale
14
having been given. The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. All expenses (including court costs and reasonable attorneys'
fees, expenses and disbursements) of, or incident to, the enforcement of any of
the provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral.
(b) The Pledgor further agrees to use its reasonable best efforts
to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this Section
13 valid and binding and in compliance with any and all other applicable
requirements of law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 13 will cause irreparable injury to the
Trustee and the Holders, that the Trustee and the Holders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 13 shall be specifically enforceable
against the Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred.
(c) All cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent or the
Trustee pursuant to Section 14) by the Collateral Agent for the ratable benefit
of the Holders first against any accrued and unpaid interest on the Notes and
thereafter against the remaining Obligations. Any surplus of such cash or cash
proceeds held by the Collateral Agent and remaining after payment in full of all
of the Obligations shall be paid over to the Pledgor.
(d) The Collateral Agent may, but is not obligated to, exercise
any and all rights and remedies of the Pledgor in respect of the Collateral.
(e) Subject to and in accordance with the terms of this Pledge
Agreement, all payments received by the Pledgor in respect of the Collateral
shall be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over to
the Collateral Agent in the same form as so received (with any necessary
indorsement).
(f) The Collateral Agent may, without notice to the Pledgor except
as required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Obligations against the Collateral
Account or any part thereof.
(g) The Pledgor shall cease to be entitled to direct the
investment of amounts held in the Collateral Account under Section 5 hereof and
the Collateral Agent shall not accept any direction from the Pledgor to invest
amounts held in the Collateral Account.
SECTION 14. FEES AND EXPENSES. Pledgor agrees to pay to Collateral
Agent the fees as may be agreed upon from time to time in writing. The Pledgor
will upon demand pay to the Trustee and the Collateral Agent the amount of any
and all expenses, including, without
15
limitation, the reasonable fees, expenses and disbursements of counsel, experts
and agents retained by the Trustee and the Collateral Agent, that the Trustee
and the Collateral Agent may incur in connection with
(a) the review, negotiation and administration of this Pledge
Agreement,
(b) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral,
(c) the exercise or enforcement of any of the rights of the
Collateral Agent, the Trustee and the Holders hereunder or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Trustee and the Holders and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral for all or any of the Obligations;
(d) any change, restructuring or termination of the corporate
structure or the existence of the Pledgor or any of its subsidiaries;
(e) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Pledgor in respect of the Obligations or of this Pledge
Agreement; or
(f) any manner of application of other collateral, or proceeds
thereof, to all or any item of the Obligations, or any manner of sale or other
disposition of any item of Collateral for all or any of the Obligations.
SECTION 16. COLLATERAL AGENT'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. The Collateral Agent (in its capacity as securities intermediary)
represents and warrants that it is as of the date hereof, and it agrees that for
so long as it maintains the Collateral Account and acts as the securities
intermediary pursuant to this Pledge Agreement it shall be a securities
intermediary and a FRBMN Member. In furtherance of the foregoing, the Collateral
Agent (in its capacity as securities intermediary) hereby:
16
(a) represents and warrants that it is a commercial bank that in
the ordinary course of its business maintains securities accounts for others and
is acting in that capacity hereunder and with respect to the Collateral Account;
(b) represents and warrants that it maintains the FRBMN Account
with the FRBMN;
(c) agrees that the Collateral Account shall be an account to
which financial assets may be credited, and undertakes to treat the Collateral
Agent (in its capacity as such) as entitled to exercise rights that comprise
(and entitled to the benefits of) such financial assets, and entitled to
exercise the rights of an entitlement holder in the manner contemplated by the
N.Y. Uniform Commercial Code;
(d) hereby represents that, subject to applicable law, it has not
granted, and covenants that so long as it acts as a securities intermediary
hereunder it shall not grant, control (including without limitation, securities
control) over or with respect to any Collateral credited to any Collateral
Account from time to time to any other Person other than the Collateral Agent
(in its capacity as such);
(e) covenants that it shall not, subject to applicable law,
knowingly take any action inconsistent with, and represents and covenants that
it is not and so long as this Pledge Agreement remains in effect will not
knowingly become, party to any agreement the terms of which are inconsistent
with, the provisions of this Pledge Agreement;
(f) agrees that any item of property credited to the Collateral
Account shall be treated as a financial asset;
(g) agrees that any item of Collateral credited to the Collateral
Account shall not be subject to any security interest, Lien or right of set-off
in favor of it as securities intermediary, except as may be expressly permitted
under the Indenture and this Pledge Agreement;
(h) agrees to maintain the Collateral Account and maintain
appropriate books and records in respect thereof in accordance with its usual
procedures and subject to the terms of this Pledge Agreement;
(i) agrees that, with respect to any Collateral that constitutes a
security entitlement, it shall comply with the provisions of Section 3(c)(i) or
(ii) of this Pledge Agreement and, with respect to any Collateral that
constitutes a securities account, it shall comply with the provisions of Section
3(c)(i) or (ii) of this Pledge Agreement with respect to all security
entitlements carried in such securities account; and
(j) agrees that if its jurisdiction as securities intermediary
shall change from that jurisdiction specified in Section 17, it will promptly
notify the Trustee of such change and of such new jurisdiction.
17
SECTION 17. COLLATERAL AGENT'S JURISDICTION AS SECURITIES INTERMEDIARY.
The parties hereby agree that the Collateral Agent's jurisdiction as securities
intermediary for purposes of Section 8-110(e) of the N.Y. Uniform Commercial
Code and Section 357.11 of the Treasury Regulations or the corresponding U.S.
federal regulations as they pertain to this Pledge Agreement, the Collateral
Account and the security entitlements relating thereto, shall be the State of
New York.
SECTION 18. MISCELLANEOUS PROVISIONS.
18.1 Notices. Any notice, approval, direction, consent or other
communication shall be sufficiently given if in writing and delivered in person
or mailed by first class mail, commercial courier service or telecopier
communication, addressed as follows:
if to the Pledgor:
Finisar Corporation
1308 Moffett Park Drive
Sunnyvale, California 94089
Attention: Chief Financial Officer
Telecopier No.: (408) 541-4154
if to the Collateral Agent:
U.S. Bank National Association
100 Wall Street, 16th Floor
New York, New York 10005
Attention: Adam Berman
Telecopier No.: (212) 809-5459
if to the Trustee:
U.S. Bank Trust National Association
100 Wall Street, 16th Floor
New York, New York 10005
Attention: Adam Berman
Telecopier No.: (212) 809-5459
or, as to any such party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with the
terms of this Section. All such notices and other communications shall be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
three Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt is confirmed, if telecopied; and on the next Business Day
if timely delivered to an air courier guaranteeing overnight delivery.
18.2 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Pledge
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
18
18.3 SEVERABILITY. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
18.4 HEADINGS. The headings in this Pledge Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
18.5 COUNTERPART ORIGINALS. This Pledge Agreement may be signed in
two or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
18.6 BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Pledge Agreement.
18.7 AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of
any provision of this Pledge Agreement and any consent to any departure by the
Pledgor, the Trustee or the Collateral Agent or from any provision of this
Pledge Agreement shall be effective only if made or duly given in compliance
with all of the terms and provisions of the Indenture, and none of the Trustee,
the Collateral Agent, the Pledgor, or any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Trustee, the
Pledgor, the Collateral Agent or any Holder to exercise, or delay in exercising,
any right, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee, the Pledgor, the Collateral Agent or any Holder of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Trustee, the Pledgor, the Collateral Agent or such
Holder would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
18.8 CONTINUING SECURITY INTEREST; TERMINATION.
(a) This Pledge Agreement shall create a continuing first priority
perfected security interest in and to the Collateral and shall, unless otherwise
provided in the Indenture or in this Pledge Agreement, remain in full force and
effect until the Termination Date. This Pledge Agreement shall be binding upon
the parties hereto and their respective transferees, successors and assigns, and
shall inure, together with the rights and remedies of the Trustee and the
Collateral Agent hereunder, to the benefit of the Trustee, the Collateral Agent,
the Pledgor, the Holders and their respective successors, transferees and
assigns.
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(b) Upon the Termination Date, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Pledgor. At such time, the Collateral Agent shall, in accordance
with the Pledgor's instructions, promptly reassign and redeliver to the Pledgor
all of the Collateral hereunder that has not been sold, disposed of, retained or
applied by the Collateral Agent in accordance with the terms of this Pledge
Agreement and the Indenture and execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such termination.
Such reassignment and redelivery shall be without warranty by or recourse to the
Collateral Agent or the Trustee in its capacity as such, except as to the
absence of any Liens on the Collateral created by or arising through the
Collateral Agent or the Trustee, and shall be at the reasonable expense of the
Pledgor.
18.9 SURVIVAL PROVISIONS. All representations, warranties and
covenants contained herein shall survive the execution and delivery of this
Pledge Agreement, and shall terminate only upon the termination of this Pledge
Agreement. The obligations of the Pledgor under Sections 12 and 14 hereof and
the obligations of the Collateral Agent under Section 18.8(b) hereof shall
survive the termination of this Pledge Agreement.
18.10 WAIVERS. The Pledgor waives presentment and demand for payment
of any of the Obligations, protest and notice of dishonor or default with
respect to any of the Obligations, and all other notices to which the Pledgor
might otherwise be entitled, except as otherwise expressly provided herein or in
the Indenture.
18.11 AUTHORITY OF THE COLLATERAL AGENT.
(a) The Collateral Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incident thereto.
The Collateral Agent may perform any of its duties hereunder or in connection
with the Collateral by or through agents or attorneys, shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder and shall be entitled to retain counsel and to act
in reliance upon the advice of counsel concerning all such matters. Except as
otherwise expressly provided in this Pledge Agreement or the Indenture, neither
the Collateral Agent nor any director, officer, employee, attorney or agent of
the Collateral Agent shall be liable to the Pledgor for any action taken or
omitted to be taken by the Collateral Agent, in its capacity as Collateral
Agent, hereunder, except for its own bad faith, gross negligence or willful
misconduct, and the Collateral Agent shall not be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents shall be entitled to rely conclusively on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons. The
Collateral Agent shall have no duty to cause any financing statement or
continuation statement to be filed in respect of the Collateral.
(b) The Pledgor acknowledges that the rights and responsibilities
of the Collateral Agent under this Pledge Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Pledge Agreement
20
shall, as between the Collateral Agent and the Holders, be governed by the
Indenture and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Collateral Agent and the Pledgor,
the Collateral Agent shall be conclusively presumed to be acting as agent for
the Trustee and the Holders with full and valid authority so to act or refrain
from acting, and the Pledgor shall not be obligated or entitled to make any
inquiry respecting such authority.
18.12 FINAL EXPRESSION. This Pledge Agreement, together with the
Indenture and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Pledge Agreement and is intended as
a complete and exclusive statement of the terms and conditions thereof.
18.13 RIGHTS OF HOLDERS. No Holder shall have any independent rights
hereunder other than those rights granted to individual Holders pursuant to
Sections 6.05, 6.06 and 6.07 of the Indenture; provided that nothing in this
subsection shall limit any rights granted to the Trustee under the Notes or the
Indenture.
18.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND, EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK, ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT AND THE HOLDERS IN
CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31 C.F.R.
SECTIONS 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT)
SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN AND THE MATTERS
IDENTIFIED IN SECTION 9305(a)(3) OF THE N.Y. UNIFORM COMMERCIAL CODE WILL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF PROCESS IN ANY
SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS
BROUGHT UNDER THE U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL
OR STATE COURT LOCATED IN THE CITY OF NEW YORK (EACH A "NEW YORK COURT") AND
CONSENTS THAT ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
SHALL
21
BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE PLEDGOR AT
THE ADDRESS INDICATED IN SECTION 18.1. EACH OF THE PARTIES HERETO SUBMITS TO THE
JURISDICTION OF ANY NEW YORK COURT AND TO THE COURTS OF ITS CORPORATE DOMICILE
WITH RESPECT TO ANY ACTIONS BROUGHT AGAINST IT AS DEFENDANT IN ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT
AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND EACH OF THE
PARTIES HERETO WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LAYING OF VENUE,
INCLUDING ANY PLEADING OF FORUM NON CONVENIENS, WITH RESPECT TO ANY SUCH ACTION
AND WAIVES ANY RIGHT TO WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE OF
RESIDENCE OR DOMICILE.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS
THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE COLLATERAL
AGENT IN ITS CAPACITY AS COLLATERAL AGENT SHALL HAVE ANY LIABILITY TO THE
PLEDGOR (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE TRUSTEE OR SUCH HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE
THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT OR SUCH
HOLDERS, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE, THE COLLATERAL AGENT
OR ANY HOLDER IN CONNECTION WITH ANY JUDICIAL
22
PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO
THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF
THE TRUSTEE, THE COLLATERAL AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION,
THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR,
ON THE ONE HAND, AND THE TRUSTEE, THE COLLATERAL AGENT AND/OR THE HOLDERS, ON
THE OTHER HAND.
18.15 EFFECTIVENESS. This Pledge Agreement shall become effective
upon the effectiveness of the Indenture.
23
IN WITNESS WHEREOF, the Pledgor, the Trustee and the Collateral Agent
have each caused this Pledge Agreement to be duly executed and delivered as of
the date first above written.
Pledgor:
FINISAR CORPORATION
By: /s/ Jerry S. Rawls
------------------------------------------
Name: Jerry S. Rawls
Title: President & Chief Executive Officer
Trustee:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Adam Berman
--------------------------------------------
Name: Adam Berman
Title: Assistant Vice President
Collateral Agent:
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Adam Berman
--------------------------------------------
Name: Adam Berman
Title: Assistant Vice President
SCHEDULE I
PART I
PLEDGED SECURITIES
Original
Description of Principal Cost at Closing
Debt CUSIP No(s). Final Maturity Amount Time
- -------------- -------------- -------------- ------------- ---------------
Treasury SP 912820BH9 2/15/04 $1,875,000.00 $1,869,693.75
Treasury SP 912820BK2 8/15/04 $1,875,000.00 $1,859,456.25
Treasury SP 912820BM8 2/15/05 $1,875,000.00 $1,845,787.50
Treasury SP 912803AG8 8/15/05 $1,875,000.00 $1,824,300.00
Treasury SP 912803AJ2 2/15/06 $1,875,000.00 $1,802,362.50
Treasury S 912833CQ1 8/15/06 $1,875,000.00 $1,768,200.00
Treasury SP 912820BW6 2/15/07 $1,875,000.00 $1,735,050.00
Treasury SP 912820CA3 8/15/07 $1,875,000.00 $1,698,187.50
PART II
SECURITIES ENTITLEMENTS
Issuer of Description of Securities Intermediary Securities Account
Financial Asset Financial Asset (Name and Address) (Number and Location)
- --------------- --------------- ----------------------- ---------------------
U.S. Government
Account No.
U.S. Government
Account No.
U.S. Government
Account No.
U.S. Government
Account No.
U.S. Government
Account No.
U.S. Government
Account No.
I-1
EXHIBIT A
U.S. BANK NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
Pursuant to Section 3(e) of the Collateral Pledge and Security
Agreement (the "Pledge Agreement") dated as of October 15, 2003, among Finisar
Corporation, a Delaware corporation (the "Pledgor"), U.S. Bank Trust National
Association, a national banking association, as trustee (the "Trustee") for the
holders of the $150 million aggregate principal amount of 2 1/2% Convertible
Subordinated Notes due 2010 of the Pledgor (the "Notes"), which amount includes
$20 million aggregate principal amount of Notes as to which the Initial
Purchasers have exercised their option set forth in Section 2(b) of the Purchase
Agreement, and U.S. Bank National Association, a national banking association,
as collateral agent and securities intermediary (the "Collateral Agent"), the
undersigned officer of the Collateral Agent, on behalf of the Collateral Agent,
makes the following certifications to the Pledgor and the Initial Purchasers.
Capitalized terms used and not defined in this Officer's Certificate have the
meanings set forth or referred to in the Pledge Agreement.
1. Substantially contemporaneously with the execution and
delivery of this Officer's Certificate, the Collateral Agent has acquired its
security entitlement to the Pledged Securities or through a "securities account"
(as defined in Section 8-501(a) of the N.Y. Uniform Commercial Code) maintained
by the Collateral Agent, for value and without notice of any adverse claim
thereto. Without limiting the generality of the foregoing, the Collateral
Account, the Pledged Securities and the other Collateral are not, and the
Collateral Agent's security entitlement to the Collateral is not, to the actual
knowledge of the corporate trust officer having responsibility for the
administration of the Pledge Agreement on behalf of the Collateral Agent,
subject to any Lien granted by or to or arising through or in favor of any
securities intermediary (including, without limitation, U.S. Bank National
Association or the Federal Reserve Bank of Minneapolis) through which the
Collateral Agent derives its security entitlement to the Collateral.
2. The Collateral Agent has not knowingly caused or permitted the
Collateral Account or its security entitlement thereto to become subject to any
Lien created by or arising through the Collateral Agent.
A-1
IN WITNESS WHEREOF, the undersigned officer has executed this Officer's
Certificate on behalf of U.S. Bank National Association, as Collateral Agent
this ___ day of _______, 2003.
U.S. BANK NATIONAL ASSOCIATION, as
Collateral Agent
By:____________________________________
Name:
Title:
A-2
B-I-1