SCHEDULE 14A
(Rule 14-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
-----------------
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
AVANEX CORPORATION
(Name of Registrant as Specified in Its Charter)
-----------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0- 11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
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[LOGO OF AVANEX CORPORATION]
40919 Encyclopedia Circle,
Fremont, California 94538
-----------------
Notice of Annual Meeting of Stockholders
to be held on October 19, 2001
-----------------
TO THE STOCKHOLDERS OF AVANEX CORPORATION:
NOTICE IS HEREBY GIVEN that the fiscal year 2001 Annual Meeting of
Stockholders ("the Annual Meeting") of AVANEX CORPORATION, a Delaware
corporation (the "Company"), will be held on Friday, October 19, 2001 at 10:00
a.m. local time at the Marriott Hotel, 46100 Landing Parkway, Fremont,
California 94538, telephone: (510) 413-3766 for the following purposes:
1. To elect two directors to hold office until the 2004 Annual Meeting
of Stockholders;
2. To ratify the selection of Ernst & Young LLP as independent auditors
of the Company for its fiscal year ending June 30, 2002; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on September 1, 2001,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Thomas G. LaWer
Thomas G. LaWer
Secretary
Fremont, California
September 17, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN
FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
[LOGO OF AVANEX CORPORATION]
40919 Encyclopedia Circle,
Fremont, California 94538
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PROXY STATEMENT
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For Annual Meeting of Stockholders
to be held on October 19, 2001
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Avanex Corporation, a Delaware corporation (the "Company"), for use at the
fiscal year 2001 Annual Meeting of Stockholders to be held on October 19, 2001,
at 10:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the Marriott
Hotel, 46100 Landing Parkway, Fremont, California 94538, telephone: (510)
413-3766. The Company intends to mail this proxy statement and accompanying
proxy card on or about September 17, 2001, to all stockholders entitled to vote
at the Annual Meeting.
Record Date, Voting and Outstanding Shares
Only holders of record of common stock at the close of business on September
1, 2001 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on September 1, 2001 the Company had outstanding and entitled
to vote 66,422,843 shares of common stock.
Each holder of record of common stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Except for Proposal 1, abstentions will be
counted towards the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in
determining whether a matter has been approved.
Quorum; Required Vote
The presence of the holders of a majority of the shares entitled to vote
generally at the Annual Meeting is necessary to constitute a quorum at the
Annual Meeting. Such holders are counted as present at the meeting if they (1)
are present in person at the Annual Meeting or (2) have properly submitted a
proxy card.
Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker "non-vote" are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum of shares
is present at a meeting; however, broker "non-votes" are not deemed to be
"votes cast." As a
1
result, broker "non-votes" are not included in the tabulation of the voting
results on the election of directors or issues requiring approval of a majority
of the votes cast and, therefore, do not have the effect of votes in opposition
in such tabulations. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 40919
Encyclopedia Circle, Fremont, California 94538, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by
attending the meeting and voting in person. Merely attending the meeting will
not, by itself, revoke a proxy.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of common stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company.
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is May 20, 2002. Pursuant to the Company's bylaws, a stockholder
intending to raise a proposal or a nomination for director that is not to be
included in such proxy statement and proxy at the Company's 2002 annual meeting
of stockholders must provide specified information about such proposal or
nomination to the Company by June 19, 2002.
2
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and Bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Only persons elected by a
majority of the remaining directors may fill vacancies on the Board of
Directors. A director elected by the Board of Directors to fill a vacancy
(including a vacancy created by an increase in the number of directors) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director or that director's successor is
elected and qualified.
The Board of Directors is presently composed of seven members. There are two
directors in the class whose term of office expires in 2001. The nominees for
election to this class are current directors of the Company. If elected at the
Annual Meeting, the nominees would serve until the 2004 annual meeting of
stockholders and until they or their successors are elected and have qualified,
or until each such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld or is not
voted against the election of such nominees, for the election of the nominees
named below. In the event that any nominee or the nominees should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee or nominees as
management may propose. The persons nominated for election have agreed to serve
if elected, and management has no reason to believe that the nominees will be
unable to serve.
Seth Neiman and Michael Goguen resigned from our Board of Directors in July
and August 2001 respectively and therefore neither Messrs Neiman nor Goguen
will stand for reelection. In August 2001, the Board of Directors amended the
Company's bylaws to reduce the number of authorized directors from nine to
seven.
Set forth below is biographical information for the two Class II directors
nominated for election to three year terms and for each Class I and Class III
director whose term of office as a director will continue after the Annual
Meeting.
Nominees for Election of Class II Directors for a Three-year Term Expiring at
the 2004 Annual Meeting
TODD BROOKS, age 40, has served on our board of directors since February
1998. Mr. Brooks has been a general partner at the Mayfield Fund, a venture
capital firm, since February 1999. From April 1995 to January 1999, Mr. Brooks
served as a managing principal with JAFCO America Ventures, a venture capital
firm. Mr. Brooks currently serves as a director of several private companies.
Mr. Brooks received a B.S. degree in Chemical Engineering from Texas A&M
University, graduate degrees in Electrical Engineering and Chemical Engineering
from the University of California at Berkeley and an M.B.A. degree from the
Harvard Business School.
3
VINTON CERF, age 58, has served on our board of directors since December
1999. Dr. Cerf has served as the Senior Vice President for Internet
Architecture and Technology for WorldCom (formerly MCI WorldCom Corporation), a
telecommunications company, since September 1998. From January 1996 to
September 1998, Dr. Cerf was the Senior Vice President for Internet
Architecture and Engineering at WorldCom (formerly MCI Communications
Corporation), a telecommunications company. Dr. Cerf is also a director of
Nuance Communications, a developer of voice recognition software. Dr. Cerf
received a B.S. degree in Mathematics from Stanford University, an M.S. degree
in Computer Science from the University of California, Los Angeles, and a Ph.D.
degree in Computer Science from the University of California, Los Angeles.
The Board of Directors Recommends a Vote in Favor of the Named Nominees.
Class III Directors Continuing in Office Until the 2002 Annual Meeting
FEDERICO FAGGIN, age 59, has served on our board of directors since December
1999. Dr. Faggin has served as Chairman of the board of directors of Synaptics,
Inc., a creator of human interface technologies and products using neural
networks and mixed signal technologies, from January 1999 to the present. From
1986 to January 1999, Dr. Faggin served as a director, President and Chief
Executive Officer of Synaptics. Dr. Faggin is also a director of Integrated
Device Technology, Inc., a producer of integrated circuits, GlobeSpan Inc., a
producer of DSL integrated circuits, and several other private companies. Dr.
Faggin received a doctorate degree in Physics from the University of Padua,
Italy.
JOEL SMITH, age 55, has served on our board of directors since December
1999. Mr. Smith has been the dean of the Darla Moore School of Business of the
University of South Carolina from October 2000 to the present. Previously Mr.
Smith served as the President of Bank of America East, a financial institution,
from October 1998 to September 2000. From July 1991 to October 1998, Mr. Smith
served as President of Nations Bank Carolinas, a financial institution. Mr.
Smith served on the board of directors of Ansaldo Signal, N.V. from November
1996 to April 1999, and on the board of directors of Resource Bancshares
Mortgage Group, Inc. from January 2001 to the present. Mr. Smith received a
B.A. degree from the University of the South in Sewanee, Tennessee.
XIAOFAN (SIMON) CAO, age 38, one of our co-founders, has served as one of
our directors since October 1997 and as our Chief Technology Officer since
October 2000. Dr. Cao also accepted the office of Senior Vice President of
Business Development in August 2001. Before becoming our Chief Technology
Officer, Dr. Cao served as our Senior Vice President, Product Development from
June 1998 until October 2000. He was our President and Chief Executive Officer
from October 1997 to June 1998. From October 1996 to October 1997, Dr. Cao
served as Vice President, Sales and Marketing of Oplink Communications, Inc., a
producer of components and modules for fiber optic networks. From May 1992 to
September 1996, Dr. Cao was a Senior Technical Service Manager for E-Tek
Dynamics, Inc. (now a subsidiary of JDS Uniphase, Inc.), a producer of
components and modules for fiber optic networks. Dr. Cao received a B.S. degree
in Physics from Zhongshan University, China, M.S. degrees in Physics and
Electrical Engineering from the University of Southern California and Ph.D.
degrees in Physics and Electrical Engineering from the University of Southern
California.
Class I Directors Continuing in Office Until the 2003 Annual Meeting
WALTER ALESSANDRINI, age 54, has served as one of our directors and as our
Chairman of the Board since March 1999. Since July 2001, Dr. Alessandrini has
served as the Chairman of the Company. He also served as our Chief Executive
Officer from March 1999 through June 2001 and as our President from March 1999
until September 2000. Dr. Alessandrini was President and Chief Executive
Officer of Pirelli Cables and Systems North America LLC, a manufacturer of
cables and communications systems, from November 1996 to March 1999. From
November 1994 to November 1996, he was President and Chief Executive Officer of
Ansaldo Signal NV., a manufacturer of rail transportation signaling and control
systems. Dr. Alessandrini received a doctorate degree in Mechanical Engineering
from the University of Genoa, Italy.
4
PAUL ENGLE, 55, has served on our board of directors since February 2001.
Mr. Engle became President and CEO of Avanex in July 2001. Mr. Engle joined
Avanex in September 2000 as President and Chief Operating Officer. Prior to
joining Avanex, Mr. Engle was Vice President and General Manager, from November
1999 to September 2000, of the Fiber Optic Communications Division of Agilent
Technologies, Inc., a communications infrastructure company. Mr. Engle served
as a general manager of fiber optic components at Hewlett-Packard Company, a
provider of computing and imaging solutions, from 1993 to November 1999. Mr.
Engle holds a degree in Physics and Mathematics from Pan American University
and a M.B.A. from the University of Dallas.
Board Committees and Meetings
During the fiscal year ended June 30, 2001 the Board of Directors held four
meetings and, in addition, took certain actions by written consent. The Board
of Directors has an Audit Committee, a Compensation Committee and an Option
Committee.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors; reviews the results and scope
of the audit and other professional services provided by our independent
auditors; reviews the independence of the independent auditors; and reviews and
evaluates our internal control functions. The Audit Committee is composed of
three non-employee directors: Dr. Faggin, Mr. Smith and Dr. Cerf who replaced
Mr. Reyes on the Audit Committee in January 2001. During the fiscal year ended
June 30, 2001 the Audit Committee held four meetings. The actions of the Audit
Committee are further outlined in the Section entitled "Report of the Audit
Committee."
The Compensation Committee reviews and approves the compensation and
benefits for our officers and directors, including cash and equity compensation
and loans and establishes and reviews general policies relating to the
compensation and benefits of our employees. The Compensation Committee was
composed of three non-employee directors: Messrs. Brooks, Goguen and Neiman. It
met two times during the fiscal year ended June 30, 2001 and, in addition, took
certain actions by written consent.
The Option Committee was established by the Company's Board of Directors to
grant, on behalf of the Board, to employees other than officers and directors,
options to purchase common stock of the Company, pursuant to guidelines for the
size of grants to particular levels of employees established by the Company and
approved by the Compensation Committee of the Board of Directors. During fiscal
year 2001 the Option Committee was comprised solely of Dr. Alessandrini. The
Option Committee fulfilled all of its duties through actions by written consent
and did not meet during the fiscal year ended June 30, 2001.
During the fiscal year ended June 30, 2001, each Board member attended 75%
or more of the aggregate of the meetings of the Board of Directors and of the
committees on which he served, held during the period for which he was a
director or committee member, respectively.
5
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending June 30, 2002 and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has
audited the Company's financial statements since the Company's inception.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year
if they determine that such a change would be in the best interests of the
Company and its stockholders.
The Board of Directors Recommends a Vote in Favor of Proposal 2.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Ernst & Young LLP. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
Fee Disclosure
Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for the audit of the Company's annual financial statements
for the year ended June 30, 2001 and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for that
year were $380,000.
Financial Information Systems Design and Implementation Fees. The aggregate
fees billed by Ernst & Young LLP for professional services rendered for
information technology services design and implementation for the year ended
June 30, 2001 were $0.
All Other Fees. The aggregate fees billed by Ernst & Young LLP for services
rendered to the Company, other than services described above, for the year
ended June 30, 2001 were $403,000. Other services include fees for business
acquisitions, accounting consulting, SEC registration statements and tax
consulting.
6
EXECUTIVE OFFICERS
Our executive officers as of June 30, 2001 were as follows:
Name Age Position
---- --- --------
Walter Alessandrini... 55 Chief Executive Officer, and Director
Paul Engle............ 55 President and Chief Operating Officer and Director
Simon (Xiaofan) Cao... 38 Chief Technology Officer and Director
Giovanni Barbarossa... 39 Vice President, Product Development
Brett Casebolt........ 28 Vice President, Business Development
Jessy Chao............ 34 Vice President, Finance and Chief Financial Officer
Anthony Florence...... 58 Vice President, Corporate Marketing and External Relations
Paul (Shi-Qi) Jiang... 43 Senior Vice President, Manufacturing and Vendor Management
Charles (Xiaoping) Mao 42 Senior Vice President, Sales and Marketing
James Pickering III... 60 Vice President, Quality
Margaret Quinn........ 48 Vice President, Human Resources and Administration
Biographical information about Dr. Alessandrini is included under the
caption "Directors Continuing in Office Until the 2003 Annual Meeting".
Biographical information about Mr. Engle is included under the caption
"Directors Continuing in Office Until the 2003 Annual Meeting".
Biographical information about Dr. Cao is included under the caption
"Directors Continuing in Office Until the 2002 Annual Meeting".
GIOVANNI BARBAROSSA has served as our Vice President of Product Development
from May 2001 to the present. Prior to being promoted to Vice President of
Product Development, Dr. Barbarossa was director of Research and Development
from February 2000 until May 2001. Dr. Barbarossa joined Avanex from Agilent
Technologies, Inc., a communications infrastructure company, where he was
employed from 1999 to February 2000 as a Project Manager in the Optical
Networking Division. From 1995 until 1999, he was a Team Leader in Product
Development, in the Optical Application Specific Integrated Circuits Department
of Lucent Technologies, a developer and manufacturer of communications
products. Dr. Barbarossa received his Ph.D. degree in Electronics Engineering
from the University of Glasgow and a B.S. degree in Electrical Engineering from
the University of Bari, Italy.
BRETT CASEBOLT served as our Vice President, Business Development from March
2000 to July 2001. Mr. Casebolt was Director of Business Development for the
Company from January 2000 to March 2000. Mr. Casebolt was an associate at the
investment banking firms of Morgan Stanley Dean Witter, from June 1999 to
January 2000, and Dain Rauscher Wessels from September 1995 to June 1999. Mr.
Casebolt received B.A. and B.S. degrees in Finance from Drake University. Mr.
Casebolt resigned from Avanex in July 2001.
JESSY CHAO, one of our co-founders, has served as our Vice President,
Finance and Chief Financial Officer since October 1999. He was our Director of
Finance and Business Operations from February 1998 to October 1999. Mr. Chao
was the Accounting and Finance Manager for E-Tek Dynamics, Inc. (now JDS
Uniphase), a producer of components and modules for fiber optic networks, from
September 1992 to January 1998. Mr. Chao received a B.S. degree in Accounting
from San Jose State University.
ANTHONY FLORENCE has served as our Vice President, Corporate Marketing and
External Relations since November 1999. Mr. Florence was Vice President,
Corporate and Investor Relations, and Office of the Chairman at Ansaldo Signal
N.V., a company involved in the global signaling, automation and control
systems industry, from November 1996 to November 1999. From November 1993 to
November 1996, Mr. Florence served as Vice
7
President, Corporate Planning, Marketing and Investor Relations for Union
Switch & Signal Inc., a company involved in the global signaling, automation
and control systems industry. Mr. Florence received a B.A. degree in English
from Wheeling College and an M.A. degree in English from the University of
Dayton.
PAUL JIANG, one of our co-founders, has served as our Senior Vice President,
Manufacturing and Vendor Management since October 2000 and our Vice President,
Manufacturing and Vendor Management from February 1998 until October 2000. Mr.
Jiang was a Senior Manager at E-Tek Dynamics, Inc. (now JDS Uniphase), a
producer of components and modules for fiber optic networks, from January 1994
to January 1998. Mr. Jiang received a B.S. degree in Optics from University of
La Verne.
CHARLES MAO has served as our Senior Vice President, Sales and Marketing
since March 2001 and was our Vice President, Product Marketing and Applications
Strategy from May 2000 until March 2001. Dr. Mao was Senior Director of
Applications Strategy for the Company from October 1999 to May 2000 and
Director of Systems Engineering for the Company from February 1999 to October
1999. Prior to joining the Company, Dr. Mao was a Senior Engineer for MCI
WorldCom Corporation (now WorldCom), a communications service provider, from
May 1995 to February 1999. Dr. Mao received his M.S. and Ph.D. degrees in
Electrical Engineering from Polytechnic University and a B.S.E.E. degree in
Microwave Communications from Nanjing University of Posts and
Telecommunications.
JAMES PICKERING has served as our Vice President, Quality since September
1999. Mr. Pickering was Vice President, Quality at Etec Systems, Inc., a
manufacturer of semiconductor mask-making equipment, from March 1997 to
September 1999. From December 1989 to March 1997, he was Vice President,
Customer Satisfaction at Union Switch & Signal Inc., a company involved in the
global signaling, automation and control systems industry. Mr. Pickering
received a B.S. degree in Industrial Technology from Northeastern University
and an M.B.A. degree from Babson College.
MARGARET QUINN has served as our Vice President, Human Resources and
Administration since October 1999. Ms. Quinn was a principal at HRMQ, a human
resources consulting company, from January 1999 to October 1999. From August
1997 to January 1999, she was Director of International Customer Support at
Nellcor Puritan Bennett Incorporated, a manufacturer of respiratory monitoring
systems. Ms. Quinn served as a human resources consultant at Nellcor Puritan
Bennett from October 1996 to August 1997. Prior to that, Ms. Quinn served as
the Director of Human Resources for Cyrix Corporation, a manufacturer of
microprocessors, from April 1992 to May 1996. Ms. Quinn received a B.A. degree
in Spanish Literature from Mills College.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of June 30, 2001 by:
. each stockholder who is known by us to own beneficially more than 5% of
our common stock;
. each of our named executive officers;
. each of our directors; and
. all of our directors and named executive officers as a group.
Unless otherwise indicated or pursuant to applicable community property
laws, to our knowledge, all persons listed below have sole voting and
investment power with respect to their shares of our common stock. This table
also includes shares beneficially owned by a spouse as community property as of
June 30, 2001. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission.
8
Applicable percentage ownership is based on 65,310,883 shares of common stock
outstanding as of June 30, 2001, together with options for that stockholder
that are currently exercisable or exercisable within 60 days of June 30, 2001.
In computing the number and percentage of shares beneficially owned by a
person, shares of common stock subject to options currently exercisable, or
exercisable within 60 days of June 30, 2001 are counted as outstanding, while
these shares are not counted as outstanding for computing the percentage
ownership of any other person. As of June 30, 2001, other than Paul Engle and
Charles Mao, and all outside directors, no individual listed in the table below
owned any options or warrants to purchase any of our common stock. Some of the
shares held by our executive officers are subject to our right of repurchase.
Shares
Issuable
Pursuant
to Options Shares Beneficially
Exercisable Owned (Including the
within Number of Shares in
60 days of the First Column)
June 30, --------------------
Principal Stockholders, Directors and Named Executive Officers 2001 Number Percent
-------------------------------------------------------------- ----------- ---------- -------
Capital Group International............................................... -- 6,530,980 10.00
11100 Santa Monica Boulevard
15th Floor
Los Angeles, California 90025
Walter Alessandrini(1).................................................... -- 5,090,148 7.79
Paul Engle................................................................ -- 85,000 *
Simon Cao(2).............................................................. -- 3,540,344 5.42
Seth Neiman............................................................... -- -- *
Michael Goguen............................................................ -- 110,265 *
Todd Brooks............................................................... -- -- --
Vint Cerf................................................................. 10,000 12,292 *
Federico Faggin(3)........................................................ -- 41,200 *
Joel Smith(4)............................................................. -- 41,200 *
Paul Jiang(5)............................................................. -- 1,194,213 1.83
Charles Mao............................................................... 143,436 243,436 *
All named executive officers and directors as a group (11 persons)........ 153,436 10,358,098 15.82
--------
* Represents beneficial ownership of less than one percent of the outstanding
common stock.
(1) Represents 4,645,448 shares held by Mr. Alessandrini individually; 221,600
shares held by the Walter Alessandrini Annuity Trust u/i dtd November 22,
1999, of which Mr. Alessandrini is trustee and has voting and dispositive
power over; 221,600 shares held by the Anna Rita Alessandrini Annuity Trust
u/i dtd November 22, 1999, of which Mr. Alessandrini is trustee and has
voting and dispositive power over and 1,500 shares held by the Laura
Graziani Trust 1999 u/I dtd December 2, 1999, of which Dr. Alessandrini is
a trustee and has voting and dispositive power over.
(2) Represents 3,350,226 shares held by Mr. Cao individually and 190,118 shares
owned by his spouse.
(3) Represents 40,000 shares held by Mr. Faggin individually and 1,200 shares
owned by his spouse.
(4) Represents 40,000 shares held by Mr. Smith individually and 1,200 shares
owned by his spouse.
(5) Represents 1,066,713 shares held by Mr. Jiang individually and 127,500
shares held by the E. W. Z. Jiang Trust 1999 u/i dtd October 22, 1999 of
which he is a trustee and has voting and dispositive power over.
9
CERTAIN TRANSACTIONS
Restricted Stock and Option Grants to Certain Officers
On July 25, 2000, Aspen Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of the Company, acquired substantially all of the
assets of Holographix Inc. (the "Target"). Prior to the consummation of this
acquisition, Mr. Kinard, the Company's Vice President and General Counsel at
the time, Ms.Quinn, the Company's Vice President, Human Resources and
Administration, and Mr. Mao, the Company's Vice President, Product Marketing
and Applications Strategy at the time, were granted options to purchase shares
of the Target's common stock under the Target's 2000 Stock Option Plan, as
amended. Upon the closing of the acquisition, these shares converted into
options to purchase the Company's common stock pursuant to the terms of the
asset purchase agreement. Following the conversion Mr. Kinard held an option to
purchase 45,000 shares of the Company's common stock with an exercise price of
$6.46 per share, Ms. Quinn held an option to purchase 20,000 shares of the
Company's common stock with an exercise price of $6.46 per share and Mr. Mao
held an option to purchase 10,000 shares of the Company's common stock with an
exercise price of $6.46 per share.
On September 19, 2000, Mr. Engle was provided a grant of 50,000 shares of
restricted stock. In addition to the restricted grant, on September 19, 2000,
Mr. Engle was also granted an option to purchase 500,000 shares of common stock
at an exercise price of $122.00 per share. On February 14, 2001, Mr. Engle was
granted an option to purchase 250,000 shares of common stock. The exercise
price of the grant was $36.31. On February 14, 2001, Mr. Engle was provided a
grant of 40,000 shares of restricted stock. On April 30, 2001, Mr. Engle was
granted an option to purchase 1,600,000 shares of common stock. The exercise
price of the grant was $13.19. The options and restricted stock were granted
pursuant to the 1998 Stock Plan, as amended (the "1998 Stock Plan"). On August
16, 2001, Mr. Engle received a grant of 1,000,000 shares of restricted stock.
On March 19, 2001, and on April 30, 2001, Giovanni Barbarossa received
options to purchase 15,995 and 15,995 shares of common stock and the exercise
prices of the grants were $15.63 and $13.19 respectively. The options were
granted pursuant to the 1998 Stock Plan.
On March 30, 2001, Mr. Casebolt received an option to purchase 167,000
shares of common stock. The exercise price of the grant was $13.00. The options
were granted pursuant to the 1998 Stock Plan.
On April 17, 2001, Dr. Charles Mao received an option to purchase 100,000
shares of common stock. The exercise price of the grant was $13.69. The options
were granted pursuant to the 1998 Stock Plan.
Loans to Executive Officers
Walter Alessandrini. In April 1999, in connection with Walter Alessandrini's
purchase of 5,215,589 shares of our common stock, we loaned Dr. Alessandrini
$278,165 under a secured full recourse promissory note with an annual interest
rate of 4.99% compounded semi-annually. Principal and interest on the note
become due and payable on April 30, 2003. The note also provides that we may
accelerate payment of the amounts outstanding under the loan in the event he
ceases to be an employee or consultant of ours.
In April 1999, in connection with his purchase of a home, we loaned Dr.
Alessandrini $300,000 under a secured full recourse loan with an annual
interest rate of 4.9%. Principal and interest on this note become due and
payable on the earlier of six months from that date on which he can sell shares
of our common stock for an amount equal to the principal and interest owed on
the note, or the termination of his employment with us. Dr. Alessandrini fully
repaid us for this loan, including all principal and accrued interest, totaling
$316,007.
In October 1999, in connection with Dr. Alessandrini's purchase of 521,559
shares of our common stock, we loaned Dr. Alessandrini $201,669 pursuant to a
secured full recourse promissory note which has an annual interest rate of
6.02% compounded semi-annually. Principal and interest on the note become due
and payable on
10
October 31, 2003. The note also provides that we may accelerate payment of the
amounts outstanding under the loan in the event he ceases to be an employee or
consultant of ours. The largest amount of principal and accrued interest
outstanding on all of Dr. Alessandrini's loans during the fiscal year ended
June 30, 2001 was $506,935.29. Dr. Alessandrini repaid the loans' principal and
all accrued interest in full during the fiscal year ended June 30, 2001.
Simon Cao. In August 1999, in connection with Simon Cao's purchase of
900,000 shares of our common stock, we loaned Dr. Cao $90,000 under a secured
full recourse promissory note with an annual interest rate of 5.96% compounded
semi-annually. Principal and interest on the note were to become due and
payable on August 4, 2003. The note also provides that we may accelerate
payment of the amounts outstanding under the loan in the event he ceases to be
an employee or consultant of ours. In August 1999, in consideration for his
continued employment with us, we agreed to forgive 25% of the principal and
accrued interest under the note on each one-year anniversary of August 4, 1999
for so long as Dr. Cao remains our employee as of each anniversary.
In October 1999, in connection with Dr. Cao's purchase of 1,020,726 shares
of our common stock, we loaned Dr. Cao $394,681 under a secured full recourse
promissory note with an annual interest rate of 6.02% compounded semi-annually.
Principal and interest on the note become due and payable on October 12, 2003.
The note also provides that we may accelerate payment of the amounts
outstanding under the loan in the event he ceases to be an employee or
consultant of ours. The largest amount of principal and accrued interest
outstanding on all of Dr. Cao's loans during the fiscal year ended June 30,
2001 was $509,737. The aggregate amount outstanding on June 30, 2001 for all of
Dr. Cao's loans was $508,402.
Paul Jiang. In July 1999, in connection with Paul Jiang's purchase of
450,000 shares of our common stock, we loaned Mr. Jiang $11,700 under a secured
full recourse promissory note with an annual interest rate of 5.69% compounded
semi-annually. Principal and interest on the note were to become due and
payable on July 22, 2003. The note also provides that we may accelerate payment
of the amounts outstanding under the loan in the event he ceases to be an
employee or consultant of ours. In July 1999, in consideration for his
continued employment with us, we agreed to forgive 25% of the principal and
accrued interest under the note on each one-year anniversary of July 22, 1999
for so long as Mr. Jiang remains our employee as of each anniversary.
In November 1999, in connection with Mr. Jiang's purchase of 150,000 shares
of our common stock, we loaned Mr. Jiang $400,000 under a secured full recourse
promissory note with an annual interest rate of 6.2% compounded semi-annually.
Principal and interest on the note become due and payable on November 26, 2004.
The note also provides that we may accelerate payment of the amounts
outstanding under the loan in the event he ceases to be an employee or
consultant of ours. The largest amount of principal and accrued interest
outstanding on all of Mr. Jiang's loans during the fiscal year ended June 30,
2001 was $450,308 as of June 30, 2001.
Peter Maguire. In August 1999, in connection with Peter Maguire's purchase
of 825,000 shares of our common stock, we loaned him $82,500 under a secured
full recourse promissory note with an annual interest rate of 5.96% compounded
semi-annually. Principal and interest on the note become due and payable on
August 4, 2003. The note also provides that we may accelerate payment of the
amounts outstanding under the loan in the event he ceases to be an employee or
consultant of ours. The largest amount of principal and accrued interest
outstanding on Mr. Maguire's loan during the fiscal year ended June 30, 2001
was 87,699.90. Mr. Maguire repaid the loan's principle and all accrued interest
in full during the fiscal year ended June 30, 2001. Mr. Maquire resigned from
the Company during the fiscal year ending June 30, 2001. At the time of Mr.
Maguire's resignation, he was the Company's Vice President of Sales.
Jessy Chao. In November 1999, in connection with Jessy Chao's purchase of
150,000 shares of our common stock, we loaned Mr. Chao $400,000 under a secured
full recourse promissory note with an annual interest rate of 6.2% compounded
semi-annually. Principal and interest on the note become due and payable on
November 26, 2004. The note also provides that we may accelerate payment of the
amounts outstanding under the loan in the event he ceases to be an employee or
consultant of ours. The largest amount of principal and accrued interest
outstanding on Mr. Chao's loans during the fiscal year ended June 30, 2001 was
$441,053.11 on June 30, 2001.
11
James Pickering. In October 1999, in connection with James Pickering's
purchase of 263,880 shares of our common stock, we loaned him $102,034 under a
secured full recourse promissory note with an annual interest rate of 5.54%
compounded semi-annually. Principal and interest on the note become due and
payable on October 1, 2004. The note also provides that we may accelerate
payment of the amounts outstanding under the loan in the event he ceases to be
an employee or consultant of ours. The largest amount of principal and accrued
interest outstanding on Mr. Pickering's loan during the fiscal year ended June
30, 2001 was $112,300.37 on June 30, 2001.
Anthony Florence. In November 1999, in connection with Anthony Florence's
purchase of 195,000 shares of our common stock, we loaned him $455,000 under a
secured full recourse promissory note with an annual interest rate of 5.99%
compounded semi-annually. Principal and interest on the note become due and
payable on November 19, 2004. The note also provides that we may accelerate
payment of the amounts outstanding under the loan in the event he ceases to be
an employee or consultant of ours.
In November 1999, in connection with Anthony Florence's employment offer, we
loaned Mr. Florence $125,000 under an unsecured full recourse promissory note
with an annual interest rate of 5.57%. Principal and interest on the note
become due and payable on the earliest of six months from that date on which he
can sell shares of our common stock for an amount equal to the principal and
interest owed on the note, or May 19, 2001, or the termination of Mr.
Florence's employment with us. Mr. Florence repaid the loan's principle and all
accrued interest in full during the fiscal year ended June 30, 2001. The
largest amount of principal and accrued interest outstanding on Mr. Florence's
loans during the fiscal year ended June 30, 2001 was $615,508.04 and the amount
outstanding on June 30, 2001 was $235,509.
Margaret Quinn. In October 1999, in connection with Margaret Quinn's
purchase of 135,000 shares of our common stock, we loaned her $52,200 under a
secured full recourse promissory note with an annual interest rate of 6.02%
compounded semi-annually. Principal and interest on the note become due and
payable on October 8, 2004. The note also provides that we may accelerate
payment of the amounts outstanding under the loan in the event she ceases to be
an employee or consultant of ours. The largest amount of principal and accrued
interest outstanding on Ms Quinn's loan during the fiscal year ended June 30,
2001 was $57,859.05 on June 30, 2001.
Brian Kinard. In October 1999, in connection with Brian Kinard's purchase of
150,000 shares of our common stock, we loaned him $150,000 under a secured full
recourse promissory note with an annual interest rate of 6.02% compounded
semi-annually. Principal and interest on the note become due and payable on
October 22, 2004. The note also provides that we may accelerate payment of the
amounts outstanding under the loan in the event he ceases to be an employee or
consultant of ours. The largest amount of principal and accrued interest
outstanding on Mr. Kinard's loan during the fiscal year ended June 30, 2001 was
$159,178.414. Mr. Kinard repaid the loan's principle and all accrued interest
in full during the fiscal year ended June 30, 2001. Mr. Kinard resigned from
the Company in April 2001. At the time of Mr. Kinard's resignation, he was the
Company's Vice President, Legal and General Counsel.
Brett Casebolt. In January 2000, in connection with Brett Casebolt's
purchase of 195,000 shares of our common stock, we loaned him $2,535,000 under
a secured full recourse promissory note with an annual interest rate of 6.21%
compounded semi-annually. Principal and interest on the note become due and
payable on January 31, 2005. The note also provides that we may accelerate
payment of the amounts outstanding under the loan in the event he ceases to be
an employee or consultant of ours. The largest amount of principal and accrued
interest outstanding on Mr. Casebolt's loan during the fiscal year ended June
30, 2001 was $2,713,665.86 and the balance on June 30, 2001 was $381,996. Mr.
Casebolt resigned from the Company in July 2001. At the time of Mr. Casebolt's
resignation, he was the Company's Vice President, Business Development.
Paul Engle. In September 2000, in connection with Mr. Engle's acceptance of
employment, we loaned Mr. Engle $150,000. The loan was an unsecured loan
payable in full plus interest at the earlier of one-year or termination of
employment. The largest amount of principal and accrued interest outstanding on
Mr. Engle's loan during the fiscal year ended June 30, 2001 was $157,530 on
June 30, 2001.
12
Stock Option Grants to Certain Directors
In October 2000, we granted to each of Todd Brooks, Seth Neiman, Vint Cerf,
Federico Faggin, Michael Goguen, Gregory Reyes, Jr. and Joel Smith options to
purchase 10,000 shares of our common stock at $115.81 per share. These options
were granted under our 1999 Director Option Plan. Each of these options vests
100% after one year. These options give each director the right to exercise the
option after the options have vested.
Other Transactions
Dr. Cerf is both the Company's director and Senior Vice President of
Internet Architecture and Technology for WorldCom, Inc. (formerly MCI WORLDCOM,
Inc.). WorldCom is a major customer of the Company and accounted for 35% of our
revenue in the fiscal year and 92% of our revenue in fiscal year 2000.
In March 2001, Avanex repurchased 167,000 shares of Avanex stock owned by
Brett Casebolt for $14.00 per share. Mr. Casebolt applied the proceeds from the
sale of the shares to the Company to pay off the related portion of his loan to
the Company including the related accrued interest.
We believe that the foregoing transactions were in our best interest. As a
matter of policy the transactions were, and all future transactions between us
and any of our officers, directors or principal stockholders will be, approved
by a majority of the independent and disinterested members of a committee of
the Board of Directors, will be on terms no less favorable to us than could be
obtained from unaffiliated third parties and will be in connection with bona
fide business purposes.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 2001, all Section
16(a) filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with, except each of Sequoia
Capital VII, Simon Cao and Mike Goguen were delinquent in reporting several
transactions in a timely manner which delinquencies were subsequently corrected
by each filing a Change in Beneficial Ownership on Form 4 for these entity and
persons reporting all of these transactions.
EXECUTIVE COMPENSATION
Compensation of Directors
Directors who are also executive officers do not receive any additional
compensation for serving as members of the Board of Directors or any committee
of the Board of Directors. During the last fiscal year, Todd Brooks, Seth
Neiman, Michael Goguen, Vint Cerf, Federico Faggin, Gregory Reyes, Jr. and Joel
Smith received their annual stock option grant to purchase 10,000 shares of
Avanex common stock at an exercise price of $115.81 per share. Any future
non-employee directors elected to the Board will receive an option to purchase
40,000 shares of common stock, and all non-employee directors who served for at
least six months will receive an option to purchase 10,000 shares of common
stock under our 1999 Director Option Plan on the date of the annual
stockholders meeting. Each initial stock option grant of 40,000 shares will
vest as to 10,000 shares per year on the anniversary of the grant date of the
stock option and each subsequent grant of 10,000 shares will fully vest on the
first anniversary of its grant date. The members of the Board of Directors are
also eligible for reimbursement for their expenses incurred in connection with
attendance at Board meetings in accordance with Company policy.
During the fiscal year ended June 30, 2001, the Company granted options
under our Director Option Plan covering 70,000 shares to seven non-employee
directors of the Company, at an exercise price per share of $115.81. In
determining the fair market value of our common stock, we use the closing sales
price of our stock on the Nasdaq National Market for the day prior to the grant
date.
14
Executive Compensation
The following table sets forth information for the three years ended June
30, 2001 the compensation of our chief executive officer and each of our four
most highly-compensated executive officers and a former officer who would have
been one of the four most highly compensated officers but for his termination
during the fiscal year ended June 30, 2001 (the "Named Officers"):
Long-Term
Annual Compensation Compensation Awards
----------------------------------------- -------------------------
Other Number of
Restricted Shares
Other Annual Stock Underlying
Name and Principal/Position Year Salary Bonus Compensation Awards Options
--------------------------- ---- -------- -------- ------------ ---------- ----------
Walter Alessandrini........ 2001 $310,172 $112,500 -- -- --
Chief Executive Officer 2000 275,000 150,000 -- --(1) --
1999 74,038(2) 37,500(2) $ 26,604(3) --(4) --
Paul Engle................. 2001 269,240 87,500 -- $8,025,535(5) 2,350,000
President(6) and Chief
Operating Officer
Simon Cao.................. 2001 199,052 -- -- -- --
Chief Technical Officer 2000 169,244 -- -- --(7) --
1999 169,244 -- -- -- --
Charles Xiapong Mao........ 2001 156,159 -- -- -- 110,000
Sr. Vice President, Sales 2000 138,707 -- -- -- 225,000
and Marketing 1999 63,844(8) -- -- -- 675,000
Paul Jiang................. 2001 173,585 -- -- -- --
Senior Vice President, 2000 138,706 -- -- --(9) --
Manufacturing and Vendor 1999 125,381 -- -- -- --
Management -- -- -- --
Peter Maguire(11).......... 2001 139,648 -- 570,589 -- --
Vice President, Worldwide 2000 165,006 -- 218,507 --(11) --
Sales 1999 1,904(10) 100,000(10) -- -- --
--------
(1) In October 1999, Dr. Alessandrini purchased 521,559 shares of restricted
stock at $0.39 per share (the fair market value on the day of exercise).
These shares are subject to our right of repurchase that lapses over four
years and lapsed as to one-fourth of his shares on March 22, 2000, with
the repurchase right lapsing ratably monthly after that date. Dividends,
if any, paid on this stock will be subject to the same escrow restrictions
as the underlying shares.
(2) Dr. Alessandrini joined us in March 1999. At the time, he was compensated
at an annual salary of $275,000 with an annual performance-based bonus of
$150,000, which was paid pro rata for the period from March 22, 1999
through June 30, 1999.
(3) Represents relocation expenses paid to Dr. Alessandrini through June 30,
1999.
(4) In April 1999, Dr. Alessandrini purchased 5,215,589 shares of restricted
stock at $0.05 per share (the fair market value on the day of exercise).
These shares are subject to our right of repurchase that lapses over four
years and lapsed as to one-fourth of his shares on March 22, 2000, with
the repurchase right lapsing ratably monthly after that date. As of June
30, 2001, Dr. Alessandrini held an aggregate of 2,510,001 shares of
restricted common stock, which had an aggregate fair market value of
$24,347,010. Dividends, if any, paid on this stock will be paid to Dr.
Alessandrini.
(5) Mr. Engle was granted 50,000 shares of restricted stock in September 2000.
These shares are subject to our right of repurchase which lapses over four
years with the right to repurchase on the first 25% lapsing on August 19,
2001 and our right to repurchase on the remaining shares lapsing quarterly
as to 6.25% of the
15
shares. Mr. Engle purchased at par value an additional 40,000 shares of
restricted stock in February 2001. These shares are subject to our right of
repurchase, which right lapses as to 12.5% each quarter. As of June 30,
2001, Mr. Engle had 85,000 shares of restricted stock with a value of
$824,500. Dividends, if any, paid on this stock will be paid to Mr. Engle.
(6) Mr. Engle was hired in September 2000 as the President and Chief Operating
Officer. He took over the duties of President from Mr. Alessandrini. Mr.
Engle was not an employee of ours in fiscal years 1999 and 2000. He was
compensated at an annual rate of $350,000 from the commencement of his
employment with an annual performance-based bonus of $175,000. Mr. Engle
received a pro rata portion of the annual bonus for the period from
September 19, 2000 to June 30, 2001.
(7) In August 1999, Dr. Cao purchased 900,000 shares of restricted stock at
$0.10 per share (the fair market value on the day of exercise). These
shares are subject to our right of repurchase that lapses over four years
and lapsed as to one-fourth of his shares on June 17, 2000, with the
repurchase right lapsing ratably monthly after that date. In addition, on
October 1999, Dr. Cao purchased 1,020,726 shares of restricted stock at
$0.39 per share. These shares are subject to our right of repurchase that
lapses over four years and lapses as to one-fourth of his shares on
October 8, 2000, with the repurchase right lapsing ratably monthly after
that date. As of June 30, 2001, Dr. Cao held an aggregate of 1,045,423
shares of restricted common stock, which had an aggregate fair market
value of $10,140,603. Dividends, if any, paid on this stock will be paid
to Dr. Cao.
(8) Dr. Mao joined us in February 1999. At the time, he was compensated at an
annual salary of $120,000.
(9) In July 1999, Mr. Jiang purchased 450,000 shares of restricted stock at
$0.03 per share (the fair market value on the day of exercise). These
shares are subject to our right of repurchase that lapses over four years
and lapsed as to one-fourth of his shares on February 8, 1999, with the
repurchase right lapsing ratably monthly after that date. In addition, on
November 1999, Mr. Jiang purchased 150,000 shares of restricted stock at
$2.67 per share. These shares are subject to our right of repurchase that
lapses over four years and lapses as to one-fourth of his shares on
November 23, 2000, with the repurchase right lapsing ratably monthly after
that date. As of June 30, 2001, Mr. Jiang held an aggregate of 465,625
shares of restricted common stock, which had an aggregate fair market
value of $4,516,563. Dividends, if any, paid on this stock will be paid to
Mr. Jiang.
(10) Mr. Maguire resigned from the Company in February 2001. He is included in
the table because he would have been one of our most highly compensated
officers during the fiscal year had he remained employed by us until the
end of the fiscal year. Mr. Maguire joined us on June 28, 1999 and
received $1,904 in salary during the fiscal year ended June 30, 1999. He
was compensated at an annual salary of $165,000 until his resignation in
February 2001. In connection with the start of his employment with us, he
received a $100,000 bonus.
(11) In August 1999, Mr. Maguire exercised an option to purchase 825,000 shares
of stock at $0.10 per share (the fair market value on the day of
exercise), subject to our right to repurchase any unvested shares in the
event of the termination of his employment. These shares vest over four
years with one-fourth of his shares having vested on June 28, 2000 and the
remaining shares vesting ratably monthly thereafter. As of June 30, 2001,
Mr. Maguire did not hold any shares of restricted common stock.
16
Option Grants in Last Year
The following table sets forth, as to the Named Officers, information
concerning stock options granted during the year ended June 30, 2001.
Individual Grants
--------------------------------------------
Potential Realizable Value
Number of % of Total at Assumed Rates of
Shares Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term(4)
Options Employees Price Per Expiration --------------------------
Name Granted(1) in Year(2) Share Date(3) 5% 10%
---- ---------- ---------- --------- ---------- ----------- -----------
Walter Alessandrini -- -- -- -- -- --
Paul Engle......... 500,000(5) 9.14% $122.00 9/18/2010 $38,362,572 $97,218,290
250,000(5) 4.57 36.31 2/13/2011 5,708,791 14,467,197
1,600,000(6) 29.26 13.19 4/29/2011 13,272,192 33,634,341
Simon Cao.......... -- -- -- -- -- --
Charles Mao........ 10,000(7) 0.18 6.46 7/23/2011 105,227 167,556
100,000(8) 1.83 13.69 4/29/2011 860,957 2,181,833
Paul Jiang......... -- -- -- -- -- --
Peter Maguire...... -- -- -- -- -- --
--------
(1) The options in this table are incentive stock options or nonstatutory stock
options, except as otherwise provided, granted under the 1998 Stock Plan
and have exercise prices equal to the fair market value on the date of
grant.
(2) The Company granted (or assumed) options to purchase 5,468,725 shares of
Common Stock in fiscal year 2001.
(3) The options in this table may terminate before their expiration upon the
termination of optionee's status as an employee or consultant or upon the
optionee's disability or death.
(4) Under rules promulgated by the SEC, the amounts in these two columns
represent the hypothetical gain or "option spread" that would exist for the
options in this table based on assumed stock price appreciation from the
date of grant until the end of such options' ten-year term at assumed
annual rates of 5% and 10%. Annual compounding results in total
appreciation of 67% (at 5% per year) and 159% (at 10% per year). If the
price of the Company's Common Stock were to increase at such rates from the
price at June 29, 2001 ($9.70 per share) over the next 10 years, the
resulting stock price at 5% and 10% appreciation would be $15.81 and $25.16
per share, respectively. The 5% and 10% assumed annual rates of
appreciation are specified in SEC rules and do not represent the Company's
estimate or projection of future stock price growth. The Company does not
necessarily agree that this method can properly determine the value of an
option and there can be no assurance that the potential realizable values
shown in this table will be achieved.
(5) The option vests over four years with 25% vesting on the first anniversary
of Mr. Engle's commencement of employment and 1/48 vesting each month
thereafter. Upon a change of control or termination of employment there are
additional accelerated vesting provisions.
(6) The option vests over four years with 15% vesting six months after the
grant date and 1/42 of the remaining shares vesting each month thereafter.
Upon a change of control or termination of employment there are additional
accelerated vesting provisions.
(7) The option was fully vested on the date of grant. The option was assumed in
connection with our acquisition of Holographix.
(8) The option vests over four years with 12 1/2% vesting six months after the
grant date and 1/48 vesting each month thereafter. Upon a change of control
or termination of employment there are additional accelerated vesting
provisions.
17
Option Exercises and Holdings
The following table sets forth, as to the Named Officers, certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of June 30, 2001. Also reported are values for
"in-the-money" options that represent the positive spread between the
respective exercise prices of outstanding stock options and the fair market
value of the Company's Common Stock as of June 30, 2001.
Aggregated Option Exercises in Last Year
And Year-End Option Values
----------------------------------------------
Number of Shares Value of Unexercised
Shares Undelrying Unexercised In-The-Money Options at
Acquired Options at Year-End Year-End(1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ----------- -------------
Walter Alessandrini -- -- -- -- -- --
Paul Engle......... -- -- -- 2,350,000 -- --
Simon Cao.......... -- -- -- -- -- --
Charles Mao........ 130,000 $13,237,963 105,936 520,314 $913,941 $3,602,978
Paul Jiang......... -- -- -- -- -- --
Peter Maguire...... -- -- -- -- -- --
--------
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on June 29, 2001 (the last trading day of the
Company's 2001 fiscal year) of $9.70.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AGREEMENTS
From time to time, we have entered into employment agreements and change of
control agreements with our executive officers, including the Named Officers
listed in the "Summary Compensation Table." The following are the employment
agreements and change of control agreements with our chief executive officer
and each of our Named Officers.
Walter Alessandrini. In March 1999, Walter Alessandrini accepted our offer
of employment. The offer letter provides that Dr. Alessandrini is entitled to
receive an annual salary of $275,000 and a bonus of $150,000 during his first
year of employment, to be paid based on the achievement of performance-based
milestones. Dr. Alessandrini received an increase in his annual salary to
$400,000 from the compensation committee of the board of directors in January
2001. His employment with us is on an at-will basis. In connection with this
offer letter, in April 1999, Dr. Alessandrini purchased, at a price of $0.05
per share, 5,215,589 shares of our common stock, under a restricted stock
purchase agreement. These shares are subject to a right of repurchase that
lapses over a four-year period and as to one-fourth of these shares on March
22, 2000, with the repurchase right lapsing ratably monthly after that date.
Any shares as to which the repurchase right has not lapsed are subject to
repurchase by us in the event of the termination of his employment.
The offer letter also provided that we would loan Dr. Alessandrini up to
$300,000 in connection with the purchase of a home. For further discussion of
this loan, please see "Certain Transactions -- Loans to Executive Officers."
The offer letter also provides that if we terminate his employment with us
without cause then he will receive six months of salary and bonus and our right
to repurchase his shares under this offer letter will lapse as to a number of
shares equal to the greater of:
. one-fourth of these shares, if he was terminated before March 22, 2000; or
. an additional one-eighth of these shares if he was terminated on or after
March 22, 2000.
In addition, the offer letter provides that if he cannot serve as our Chief
Executive Officer for any period of time due to a legal restraint or litigation
in connection with a Confidentiality and Non-Competition Agreement that he
entered into with his previous employer, Pirelli Cables and Systems North
America, LLC, then we shall
18
pay him up to $100,000 in salary in monthly installments for up to six months
during the period that he is not serving as our Chief Executive Officer.
In October 1999, Dr. Alessandrini purchased 521,559 shares of our common
stock, at a price of $0.39 per share, under a restricted stock purchase
agreement. These shares are subject to a right of repurchase that lapses over a
four-year period and as to one-fourth of his shares on March 22, 2000 with the
repurchase right lapsing ratably monthly after that date. Each of the
restricted stock purchase agreements relating to these purchases provides that,
upon a change of control, the lapsing of our right of repurchase will be
accelerated so that at least 50% of the common stock purchased under each
restricted stock purchase agreement will not be subject to our right of
repurchase. In addition, upon an involuntary termination of his employment
without cause, upon or within 12 months of a change of control, our right of
repurchase will lapse as to all of the common stock subject to repurchase under
each of his restricted stock purchase agreements.
Simon Cao. On January 2, 1998, Simon Cao accepted our offer of employment.
Initially, Dr. Cao was entitled to receive an annual salary of $125,000. On
September 8, 1998, Dr. Cao agreed to amend his initial offer letter to increase
his annual salary to $140,000. In August 1999, our board of directors increased
his annual salary to $180,024 and the compensation committee of the board of
directors increased his salary to $225,000 effective January 2001. His
employment with us is on an at-will basis. In connection with this offer
letter, in January 1998, Dr. Cao purchased, at a price of $0.0007 per share,
2,700,000 shares of our common stock, under a restricted stock purchase
agreement. These shares are subject to a right of repurchase that lapses over a
four-year period and lapsed as to one-fourth of these shares on January 13,
1999 with the repurchase right lapsing ratably monthly after that date.
In August 1999, Dr. Cao purchased, at a price of $0.10 per share, 900,000
shares of our common stock and in October 1999 purchased, at a price of $0.39
per share, 1,020,726 shares of our common stock, in each case under a
restricted stock purchase agreement. These shares are subject to a right of
repurchase that lapses over a four-year period and lapses as to one-fourth of
the shares purchased in August 1999, on June 17, 2000 and as to one-fourth the
shares purchased in October 1999, on October 8, 2000. The repurchase right
lapses ratably monthly after these dates. Each of the restricted stock purchase
agreements relating to these purchases provide that, upon a change of control,
the lapsing of our repurchase right will be accelerated so that at least 50% of
the common stock purchased under each restricted stock purchase agreement will
not be subject to our right of repurchase. In addition, upon an involuntary
termination of his employment without cause, upon or within 12 months of a
change of control, our right of repurchase will lapse as to all of the common
stock subject to repurchase under each of his restricted stock purchase
agreements.
Paul Jiang. In January 1998, Paul Jiang accepted our offer of employment.
His offer letter provided that he was entitled to receive an annual salary of
$115,000. On September 8, 1998, Mr. Jiang agreed to amend his initial offer
letter to increase his annual salary to $126,500. In August 1999, our board of
directors increased his annual salary to $140,000. The compensation committee
of the board of directors increased Mr. Jiang's salary to $175,000 effective
January 2001. His employment with us is on an at-will basis. In connection with
this offer letter, in January 1998, Mr. Jiang was granted an option to purchase
1,800,000 shares of our common stock, at an exercise price of $.0007 per share,
which he exercised in February 1998 under a restricted stock purchase
agreement. These shares are subject to a right of repurchase that lapses over a
four-year period and lapsed as to one-fourth of these shares on February 3,
1999 with the purchase right lapsing ratably monthly after that date.
In July 1999, Mr. Jiang purchased 450,000 shares of our common stock, at a
price of $0.03 per share, under a restricted stock purchase agreement. These
shares are subject to a right of repurchase that lapses over a four year period
and lapsed as to one-fourth of the shares purchased on February 8, 1999 with
the purchase right lapsing ratably monthly after that date. In November 1999,
Mr. Jiang purchased 150,000 shares of our common stock, at a price of $2.67 per
share, under a restricted stock agreement. These shares are subject to a right
of repurchase that lapses over a four-year period and as to one-fourth of his
shares on November 23, 2000 with the repurchase right lapsing monthly after
that date. Each of the restricted stock purchase agreements relating to
19
these purchases provide that, upon a change of control, the lapsing of our
repurchase right will be accelerated so that at least 50% of the common stock
purchased under each restricted stock purchase agreement will not be subject to
our right of repurchase. In addition, upon an involuntary termination of his
employment without cause, upon or within 12 months of a change of control, our
right of repurchase will lapse as to all of the common stock subject to
repurchase under each of his restricted stock purchase agreements.
Paul Engle. In September 2000, Mr. Engle accepted our offer of employment.
His offer letter provided that he is entitled to receive an annual salary of
$350,000 and a performance bonus of up to $175,000 per year. His offer letter
also provided for a $150,000 loan upon his commencement of employment, in
connection with the loan, and after completion of one year of employment, Mr.
Engle will receive a net bonus of $150,000 or a cancellation of the loan. His
employment with us is on an at-will basis.
In connection with this offer letter, in September 2000, Mr. Engle received
a grant of 50,000 shares of restricted stock. 25% of the grant will vest on
August 19, 2001 and the remaining shares will vest ratably each quarter over a
3-year period. In addition to the restricted stock grant Mr. Engle was also
granted an option to purchase 500,000 shares of common stock at a rate of
$122.00 per share. Such grant shall vest over a four-year period, with 25%
vesting after one year and monthly vesting thereafter. The restricted stock
agreement relating to the restricted stock grant provides that, upon a change
of control, the lapsing of our repurchase right will be accelerated so that at
least 50% of the common stock purchased under the restricted stock agreement
will not be subject to our right of repurchase. In addition, upon an
involuntary termination of his employment without cause, upon or within 12
months of a change of control, our right of repurchase will lapse as to all of
the common stock subject to repurchase under each of his restricted stock
agreements. In the event that Avanex terminates Mr. Engle without cause or if
Mr. Engle is subjected to a "Constructive Termination" and Mr. Engle has
reported to the Company and worked for at least 90 days, Mr. Engle will receive
(i) the acceleration of vesting of the options and lapse of our repurchase
rights on restricted stock granted equal to the greater of (A) six months of
additional vesting or lapse of repurchase rights or (B) vesting or lapse of
repurchase rights through the first year cliff of the vesting schedule, and
(ii) six months' salary and bonus.
Charles (Xiaoping) Mao. Dr. Mao joined us in February 1999 as the Director
of Subsystem Design Engineering. Dr. Mao received several additional promotions
culminating in his promotion to Senior Vice President, Sales and Marketing on
March 15, 2001. The promotion letter for Dr. Mao provides for an annual salary
of $190,000 with a performance bonus of up to 45% of his annual salary. The
promotion letter also included an additional stock option grant for 100,000
shares with 12.5% of the shares vesting six months after the grant date and
1/48th of the shares vesting each month thereafter. The promotion letter
provides that Dr. Mao's employment with the Company is at-will.
20
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") was established in April 1999.
During the fiscal year ended June 30, 2001, the Committee consisted of Messrs.
Brooks, Goguen and Neiman, none of who are employees or officers of the
Company. Mr. Neiman resigned from the Company's Board of Directors in July 2001
and Mr. Goguen resigned from the Board in August 2001. The Compensation
Committee currently consists of Messrs. Brooks and Faggin.
The objectives of the Committee are to align executive compensation with the
Company's business objectives and performance, to enable the Company to
attract, retain and reward executive officers of outstanding ability who
contribute to our long-term success. The Committee is responsible for setting
and administering the policies governing annual compensation of executive
officers. The Committee reviews the performance of executive officers and
approves their cash and equity compensation. Additionally, the Committee
reviews and approves the compensation package of a newly hired executive or of
an executive whose scope of responsibility has changed significantly.
Compensation Philosophy
The Company operates in the highly competitive and rapidly changing high
technology industry. The Committee believes that the compensation programs for
the executive officers must be designed to attract, motivate and retain
talented executives responsible for the long-term success of the Company and
the creation of stockholder value. To meet these goals, the Committee has
adopted a mix among the compensation elements of salary, bonus and stock. Prior
to the fiscal year ended June 30, 2001, the compensation of executive officers
reflected a "start-up" compensation strategy with the salary component at lower
levels and the stock component at higher levels than might otherwise be
applicable in an established company environment. During fiscal year 2001, the
Committee adjusted the executive compensation program to reflect competitive
base salary, bonus and equity compensation practices of similar companies in
the telecommunications and high technology industries, with which the Company
competes for executive management talent.
Executive Officer Compensation
Executive officer compensation consists of base salary, incentive pay and
participation in benefit plans generally available to other employees. The
Committee considers market information from published survey data provided to
the Committee by the Company's human resources staff. The market data consists
primarily of base salary and total cash compensation rates, as well as
incentive bonus and stock programs of other similar companies in the
telecommunications and high technology industries.
Cash Compensation
The members of the compensation committee reviewed and approved cash
compensation for executive officers in January 2001. Base salaries and other
elements of cash compensation were determined based on an executive's job
responsibilities, level of experience, individual performance and contribution
to the business and using competitive compensation data from similar companies
as described above. No specific formula was applied to determine the weight of
each factor.
Equity Compensation
The Committee believes that equity ownership provides significant motivation
to executive officers to maximize value for the Company's stockholders and,
therefore, will periodically grant stock options and restricted stock grants
under our stock option plan. The Committee will determine the size and
frequency of option grants for executive officers, after consideration of
recommendations from the CEO. Recommendations for equity compensation are based
upon the relative position and responsibilities of each executive officer,
21
previous and expected contributions of each officer to the Company and previous
option grants to such executive officers. Prior to the Company's initial public
offering, equity awards for executive officers, including the CEO, were made in
the form of restricted stock, which were purchased by the executive officers at
fair market value and are subject to the right of repurchase by the Company on
the unvested shares, if the executive officer ceases to provide services to the
company. Since the initial public offering, executive officers have received
stock options with an exercise price equal to the fair market value of the
stock at the time of grant. The President and current CEO has received
restricted stock grants with a purchase price at par value. Generally, equity
grants vest over four years, conditional upon continued employment with the
Company.
Chief Executive Officer Compensation
With respect to the compensation of Dr. Alessandrini for the 2001 fiscal
year, the Board recognized his unique role and responsibility as President and
Chief Executive Officer of the Company, but otherwise used substantially the
same criteria described above in setting the CEO's annual cash and equity
compensation. Dr. Alessandrini's base compensation was increased to $400,000 in
January 2001. In addition to his base salary, Dr. Alessandrini was paid a
quarterly performance bonus for the first two quarters of fiscal year 2001 of
$37,500 each quarter. In January 2001, the Compensation Committee established
an annual bonus plan for all of the executive officers. No bonuses were paid in
fiscal year 2001 under the executive bonus plan.
Section 162(m)
The Company has considered the potential future effects of Section 162(m) of
the Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the Named Officers, unless compensation is performance-based.
The Company has adopted a policy that, where reasonably practicable, the
Company will seek to qualify the variable compensation paid to its executive
officers for an exemption from the deductibility limitations of Section 162(m).
Respectfully submitted by the Board of Directors on behalf of the
Compensation Committee:
Walter Alessandrini, Chairman
Todd Brooks
Simon Cao
Vinton Cerf
Paul Engle
Federico Faggin
Joel Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 2001, our compensation committee
consisted of Messrs. Brooks, Goguen and Neiman. The Compensation Committee
currently consists of Messrs Brooks and Faggin. None of the members of our
compensation committee is currently or has been, at any time since our
formation, one of our officers or employees. None of our executive officers
currently serves or in the past has served as a member of the board of
directors or compensation committee of any entity that has one or more
executive officers serving on our board of directors or compensation committee.
22
Report of the Audit Committee
The primary role of the Audit Committee is to provide oversight and
monitoring of Company management and the independent auditors and their
activities with respect to the Company's financial reporting process. The Board
of Directors has determined that each member of the Audit Committee is
"independent" as required by the listing standards of the Nasdaq National
Market. The Board of Directors has adopted a written charter for the Audit
Committee. As described more fully in its charter, the purpose of the Audit
Committee is to assist the Board of Directors in its general oversight of the
Company's financial reporting, internal control and audit functions. Management
is responsible for the preparation, presentation and integrity of the Company's
financial statements, accounting and financial reporting principles, internal
controls and procedures designed to ensure compliance with accounting
standards, applicable laws and regulations. Ernst & Young LLP, the Company's
independent auditing firm, is responsible for performing an independent audit
of the consolidated financial statements in accordance with generally accepted
auditing standards.
The Audit Committee members are not professional accountants or auditors,
and their functions are not intended to duplicate or to certify the activities
of management and the independent auditor, nor can the Audit Committee certify
that the independent auditor is "independent" under applicable rules. The Audit
Committee serves a board-level oversight role, in which it provides advice,
counsel and direction to management and the auditors on the basis of the
information it receives, discussions with management and the auditors and the
experience of the Audit Committee's members in business, financial and
accounting matters. In the performance of its oversight function, the Audit
Committee has:
. Reviewed and discussed the audited financial statements with management;
. Discussed with Ernst & Young LLP, its independent accountants, the matters
required to be discussed by the Statement on Auditing Standards No. 61,
Communication with Audit Committees, as currently in effect;
. Received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as currently in effect;
. Discussed with Ernst & Young LLP the auditors' independence.
Based upon the reports and discussions described in this Report, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended June 30, 2001.
Respectfully submitted by the members of the audit committee of the Company:
Joel Smith, Chairman
Federico Faggin
Vinton Cerf
23
COMPANY STOCK PRICE PERFORMANCE COMPARISON (1)
The graph below provides an indicator of cumulative total stockholder
returns for Avanex as compared with the NASDAQ Composite Index and S&P
Technology Sector Index weighted by market value at each measurement point. The
graph assumes $100 invested on February 3, 2000, in Avanex common stock at our
initial public offering price of $36.00 per share, the NASDAQ Composite Index
and the S&P Technology Sector Index and reinvestment of dividends. This graph
covers the period of time beginning February 3, 2000, when Avanex's common
stock was first traded on the Nasdaq National Market, through June 30, 2001. No
dividends have been declared or paid on the Company's common stock. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.
[PERFORMANCE GRAPH APPEARS HERE]
Cumulative Total Return
-----------------------
2/3/00 6/30/00 6/30/01
------- ------- -------
Avanex Corporation.... $100.00 $265.28 $26.94
NASDAQ Composite Index 100.00 93.45 50.91
S&P Technology........ 100.00 103.82 50.81
--------
(1)This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
24
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Thomas G. LaWer
Thomas G. LaWer
Secretary
September 17, 2001
25
PROXY
AVANEX CORPORATION
Proxy Solicited By The Board of Directors for The Annual Meeting of Stockholders
To Be Held On October 19, 2001
The undersigned hereby appoints Paul Engle and Thomas LaWer and each of
them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all shares of stock of Avanex Corporation, which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Avanex Corporation to be held at the Marriott Hotel, 46100 Landing Parkway,
Fremont, California 94538, telephone: (510) 413-3766 on Friday, October 19, 2001
at 10:00 a.m. (local time), and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
Unless A Contrary Direction Is Indicated, This Proxy Will Be Voted For
Proposal 1 And Proposal 2, As More Specifically Described In The Proxy
Statement. With Respect To The Election Of Directors In Proposition 1, If You
Do Not Vote For The Election Of A Nominee And Do Not Specifically Withhold Your
Vote, Then You Will Be Deemed To Have Granted The Above Persons The Authority To
Vote For The Election Of Such Nominee Or Nominees. If Specific Instructions Are
Indicated, This Proxy Will Be Voted In Accordance Therewith.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
------------------ ------------------
SEE REVERSE SIDE SEE REVERSE SIDE
------------------ ------------------
Dear Stockholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the operation of the Company that require your
immediate attention.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Avanex Corporation
--------------------------------------------------------------------------------
DETACH HERE
[X] Please mark votes
as in this example.
The Board Of Directors Recommends A Vote For Proposal 1.
1. To elect two directors to hold office until the 2004 Annual Meeting
of Stockholders.
Nominees: (01) Todd Brooks, (02) Vinton Cerf
[_] FOR ALL NOMINEES
[_] WITHHELD FROM ALL NOMINEES
[_] ______________________________________________
For all nominees except as noted above
The Board of Directors Recommends A Vote For Proposal 2.
2. To ratify the selection of Ernst & Young LLP as independent auditors
of the Company for its fiscal year ending June 30, 2002.
FOR AGAINST ABSTAIN
[_] [_] [_]
ADDRESS CHANGE: MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
Please Vote, Date And Promptly Return This Proxy In The
Enclosed Return Envelope Which Is Postage Prepaid If Mailed
In The United States.
Please sign exactly as your name appears hereon. If the
stock is registered in the names of two or more persons,
each should sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add their titles. If
signer is a corporation, please give full corporate name and
have a duly authorized officer sign, stating title. If
signer is a partnership, please sign in partnership name by
authorized person.
Signature: ______________ Date: _______ Signature: ______________ Date: _______