UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Amendment No. 2)
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Sec. 240.14a-12
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Optical Communication Products, Inc.
(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):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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Class A Common Stock, par value $.001 per share, of Optical Communication Products, Inc.
(Company Common Stock).
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2)
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Aggregate number of securities to which transaction applies:
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48,042,195 shares of Company Common Stock and 648,607 shares of Company Common Stock issuable
upon the exercise of options with an exercise price per share of less than $1.65 per
share.
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3)
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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):
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The filing fee is determined based upon the sum of (a) the product of 48,042,195 shares of
common stock and the merger consideration of $1.65 per share (equal to $79,269,622) and (b) the difference
between the merger consideration of $1.65 per share and the exercise price per share of
each of the 648,607 shares of common stock options outstanding in which the exercise price per share is less
than $1.65 per share (equal to $383,999). In accordance with Section 14(g) of the
Exchange Act, the filing fee was determined by multiplying $0.0000307 by the amount calculated
in the preceding sentence.
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4)
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Proposed maximum aggregate value of transaction:
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$79,653,621
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5)
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Total fee paid:
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$2,445.37
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Fee paid previously with preliminary materials.
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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.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED OCTOBER 1, 2007
OPTICAL
COMMUNICATION PRODUCTS, INC.
6101 Variel Avenue
Woodland Hills, California 91367
A MERGER
PROPOSAL YOUR VOTE IS VERY IMPORTANT
October 2,
2007
Dear Stockholder:
On June 19, 2007, the board of directors of Optical
Communication Products, Inc., a Delaware corporation (the
Company), acting upon the unanimous recommendation
of a special committee of independent directors, unanimously
approved a merger agreement providing for the merger of the
Company with Oplink Acquisition Corporation, a Delaware
corporation and wholly-owned subsidiary of Oplink Communications
Inc., a Delaware corporation (Oplink). If the merger
is completed, you will be entitled to receive $1.65 in cash,
without interest, for each share of the Companys common
stock that you own, and the Company will be wholly-owned by
Oplink.
You will be asked, at a special meeting of the Companys
stockholders, to vote to approve and adopt the merger agreement.
The board of directors, acting upon the unanimous recommendation
of the special committee, has determined that the merger
agreement and the merger are advisable, fair to, and in the best
interests of the Company and its unaffiliated stockholders (by
which we mean, for purposes of this proxy statement,
stockholders of the Company other than Oplink its affiliates and
affiliates of the Company) and approved the merger agreement.
The board of directors unanimously recommends that the
Companys stockholders vote FOR the approval
and adoption of the merger agreement.
At the special meeting of the Companys stockholders, you
may also be asked to vote on a proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies if there are insufficient votes at the time of the
special meeting to approve and adopt the merger agreement.
The date, time and place of the special meeting to consider and
vote upon the merger agreement will be as follows:
October 31, 2007
10:00 a.m. Pacific Time
6101 Variel Avenue, Woodland Hills, California
The proxy statement attached to this letter provides you with
information about the proposed merger and the special meeting of
the Companys stockholders and includes the merger
agreement as
Annex A.
We encourage you to read the
entire proxy statement carefully. You may also obtain more
information about the Company from documents that we have filed
with the Securities and Exchange Commission.
Your vote is very important. The merger cannot be completed
unless the merger agreement is adopted by the affirmative vote
of (i) the holders of
66
2
/
3
%
of our common stock that is not owned by Oplink or its
affiliates and (ii) the holders of a majority of the
outstanding voting power of our common stock.
As of the date
hereof, Oplink controls approximately 58% of our voting power
and has committed to vote in favor of the merger agreement and
any other matter to be approved by stockholders at the special
meeting.
If you fail to vote on the merger agreement, the effect will
be the same as a vote against the adoption of the merger
agreement. Therefore, please complete, sign and mail your
enclosed proxy card in the postage-paid envelope.
Voting by
proxy will not prevent you from voting your shares in person if
you subsequently choose to attend the special meeting and wish
to vote in person.
If you have any questions or need assistance voting your shares,
please contact Philip F. Otto, our Chief Executive Officer and
President, or Frederic T. Boyer, our Chief Financial Officer, at
(818) 251-7100
or our proxy solicitation agent, D.F. King & Co., Inc.,
toll-free at
(800) 659-5550.
Our board of directors and management thank you for your
cooperation and continued support.
By Order of the Board of Directors,
Philip F. Otto
Director, Chief Executive Officer and President
Woodland Hills, California
October 2, 2007
This proxy statement is dated October 2, 2007, and is first
being mailed to OCP stockholders on or about October 2,
2007.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE
TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT, PASSED UPON THE
MERITS OR FAIRNESS OF SUCH TRANSACTIONS, OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED OCTOBER 1, 2007
OPTICAL
COMMUNICATION PRODUCTS, INC.
6101 Variel Avenue
Woodland Hills, California 91367
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
To be held on October 31,
2007
TO THE STOCKHOLDERS OF OPTICAL COMMUNICATION PRODUCTS, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
Optical Communication Products, Inc., a Delaware corporation
(the Company) will be held on October 31, 2007,
at 10:00 a.m. Pacific Time at 6101 Variel Avenue,
Woodland Hills, California 91367, for the following purposes:
1. To consider and vote upon a proposal to approve and
adopt the Agreement and Plan of Merger (merger
agreement), dated as of June 19, 2007, by and among
the Company, Oplink Communications, Inc., a Delaware corporation
(Oplink), and Oplink Acquisition Corporation
(merger sub or Oplink Acquisition),
which provides for the merger of merger sub, a wholly-owned
subsidiary of Oplink, with and into the Company, with the
Company continuing as the surviving corporation, and the
conversion of each outstanding share of common stock of the
Company (other than shares held by stockholders who perfect
their appraisal rights under Delaware law, shares held by the
Company as treasury shares and shares held by Oplink or its
affiliates) into the right to receive $1.65 in cash, without
interest and less any applicable withholding taxes.
2. To consider and vote upon a proposal to adjourn the
special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time
of the meeting to approve and adopt the merger agreement;
3. To transact such other business as may properly come
before the special meeting or any adjournment thereof.
The foregoing matters are described in more detail in the
enclosed proxy statement. The board of directors has fixed the
close of business on September 10, 2007, as the record date
for the determination of the stockholders entitled to notice of,
and to vote at, the special meeting and any postponement or
adjournment thereof. Only those stockholders of record of the
Company as of the close of business on that date will be
entitled to vote at the special meeting or any postponement or
adjournment thereof. A list of stockholders entitled to vote at
the special meeting will be available for inspection for
10 days prior to the day of the meeting at the executive
offices of the Company.
All stockholders are cordially invited to attend the meeting in
person. Whether or not you plan to attend, please sign and
return the enclosed proxy as promptly as possible in the
envelope enclosed for your convenience. Should you receive more
than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to
assure that all of your shares will be voted. You may revoke
your proxy at any time prior to the special meeting. If you
attend the special meeting and vote by ballot, your proxy will
be revoked automatically and only your vote at the special
meeting will be counted.
By Order of the Board of Directors,
Philip F. Otto
Director, Chief Executive Officer and President
Woodland Hills, California
October 2, 2007
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE.
TABLE OF
CONTENTS
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ii
This summary term sheet highlights selected information from
this proxy statement with respect to the merger and may not
contain all of the information that is important to you. To
understand the merger fully and for a more complete description
of the legal terms of the merger, you should read carefully this
entire proxy statement, including the appendices, and the
documents we refer to or incorporate by reference herein. We
encourage you to read each of these documents, in particular the
merger agreement, a copy of which is attached as
Annex A
to this proxy statement.
Except as otherwise specifically noted in this proxy statement,
OCP, the Company, we,
our, us and similar words in this proxy
statement refer to Optical Communication Products, Inc.,
Oplink refers to Oplink Communications Inc.,
merger sub and Oplink Acquisition refers
to Oplink Acquisition Corporation, merger agreement
refers to the Agreement and Plan of Merger, dated June 19,
2007, among OCP, Oplink and merger sub, a copy of which is
attached as
Annex A
to this proxy statement,
merger refers to the merger contemplated by the
merger agreement, and transactions refers to the
transactions contemplated by the merger agreement.
The
Special
Meeting
(Page 35)
Date, Time and Place (Page 35).
The
special meeting will be held on October 31, 2007 at
10:00 a.m. Pacific Time, at 6101 Variel Avenue,
Woodland Hills, California 91367.
Record Date and Voting (Page 36).
Only
stockholders who hold shares of OCP common stock at the close of
business on September 10, 2007, the record date for the
special meeting, will be entitled to vote at the special
meeting. Each share of OCP common stock outstanding on the
record date will be entitled to one vote on each matter
submitted to stockholders for approval at the special meeting.
As of the record date, there were 114,181,271 shares of OCP
common stock outstanding.
Vote Required (Page 36).
The merger
referred to in the proposal cannot be completed unless the
merger agreement is approved and adopted by the affirmative vote
of (i) the holders of
66
2
/
3
%
of our common stock that is not owned by Oplink or its
affiliates and (ii) the holders of a majority of the
outstanding voting power of our common stock.
A failure to vote your shares of OCP common stock or an
abstention from voting on the merger will have the same effect
as a vote against such proposal.
Any proposal to adjourn or postpone the special meeting or on
any other matter to be voted upon at the special meeting
requires the affirmative vote of a majority of the shares
represented in person or by proxy entitled to vote on the matter
and actually voted on the matter for approval.
Proposal No. 1
Approval of the Merger Agreement
The
Parties to the
Merger
(Page 38)
Optical
Communication Products, Inc.
Founded in 1991, OCP is a leading designer and manufacturer of
fiber optic components and sub-systems for metropolitan, local
area and fiber-to-the-home networks. OCPs product lines
include optical transceivers, transmitters and receivers.
Oplink
Communications, Inc.
Incorporated in 1995, Oplink is a leading provider of design,
integration and optical manufacturing solutions for optical
networking components and subsystems. Oplink offers advanced and
cost-effective optical electronic components and
subsystem manufacturing through its facilities in Zhuhai and
Shanghai, China. Additionally, Oplink maintains optical-centric
front-end design, application and customer service functions at
its headquarters in Fremont, California and has a research
facility in Wuhan, China. Oplinks customers include
telecommunications, data communications and cable TV equipment
manufacturers located around the globe.
1
Oplink
Acquisition Corporation
Oplink Acquisition is a newly formed Delaware corporation and
wholly-owned subsidiary of Oplink. Oplink formed Oplink
Acquisition for the sole purpose of entering into the merger
agreement and completing the merger contemplated by the merger
agreement.
Terms of
the Merger
Pursuant to the merger agreement, each share of our common stock
(other than shares owned by Oplink, shares held by the Company
as treasury shares and shares owned by stockholders who are
entitled to and who properly exercise appraisal rights under
Delaware law) will be converted into the right to receive $1.65
per share in cash, without interest and subject to applicable
withholding taxes. In addition, in connection with the merger,
Oplink will assume all outstanding stock options issued pursuant
to our stock option plans, which will become options to purchase
shares of Oplink common stock. At the closing of the merger, we
will be a direct wholly-owned subsidiary of Oplink.
Special
Committee of Our Board of Directors
Our board of directors formed a special committee of independent
directors on June 18
,
2003, comprised of Hobart
Birmingham, Stewart Personick and David Warnes, referred to as
the special committee. The special committee was
formed in response to correspondence received by the Company
from The Furukawa Electric Co., Ltd, referred to as
Furukawa, which at the time owned all outstanding
shares of the Companys Series B Common Stock,
regarding Furukawas desire to receive cash from its
investment in the Company. The special committee, which was
represented by separate counsel, represented the interests of
the Company and its unaffiliated stockholders.
Recommendation
of the Special Committee and Our Board of Directors
(Page 13)
After careful consideration, our board of directors, based upon
the unanimous recommendation of the special committee, has
unanimously determined that the merger agreement and the
transactions contemplated thereby, including the merger, are
advisable, substantively and procedurally fair to, and in the
best interests of the Company and our unaffiliated stockholders.
Our board of directors unanimously recommends that you vote
FOR the approval and adoption of the merger
agreement and the merger, and FOR the adjournment or
postponement of the special meeting, if necessary or
appropriate, to solicit additional proxies
.
For a discussion of the material factors considered by the
special committee and our board of directors in reaching their
conclusions and the reasons why our board of directors
determined that the merger agreement and the transactions
contemplated thereby, including the merger, are advisable,
substantively and procedurally fair to, and in the best
interests of the Company and our stockholders, see the sections
of this proxy statement entitled Special
Factors Reasons for the Special Committees
Determination; Fairness of the Merger and Special
Factors Reasons for Our Board of Directors
Determination; Fairness of the Merger.
Opinion
of the Special Committees Financial Advisor
(Page 16)
The special committee received the written opinion of Bear,
Stearns & Co., Inc., referred to as Bear
Stearns in this proxy statement, to the effect that, as of
June 19, 2007, the merger consideration to be received by
the holders of our common stock (other than Oplink and its
affiliates) was fair, from a financial point of view, to such
holders. The full text of Bear Stearns written opinion,
dated June 19, 2007, is attached as
Annex B
to
this proxy statement. We encourage you to read this opinion
carefully in its entirety for a description of the procedures
followed, assumptions made, matters considered and limitations
on the review undertaken. Bear Stearns opinion was
provided to the special committee in connection with its
evaluation of the merger consideration and relates only to the
fairness, from a financial point of view, of the merger
consideration, does not address any other aspect of the proposed
merger and does not constitute a recommendation to any
stockholder as to any matters relating to the merger or any
related transaction.
2
Effects
of the Merger
(Page 33)
Upon completion of the merger, merger sub will merge with and
into the Company, with the Company surviving the merger. Oplink
will own 100% of our then-outstanding stock, and you will no
longer be a stockholder of, or have any ownership interest in,
the Company. We will no longer be a public company, and our
common stock will no longer be quoted on the NASDAQ Global
Market. The registration of our common stock under the
Securities Exchange Act of 1934, as amended, will terminate, and
we will cease to file periodic reports with the Securities and
Exchange Commission under the Exchange Act.
Limitations
on Solicitation of Competing Proposals
(Page 42)
Pursuant to the merger agreement, we have agreed not to
initiate, solicit or facilitate from third parties any proposals
for an alternative transaction while the merger is pending.
Conditions
to Completing the Merger
(Page 42)
A number of conditions must be satisfied or waived before the
merger can be completed. The most important of these include:
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approval of the holders of
66
2
/
3
%
of our common stock that is not owned by Oplink or its
affiliates;
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accuracy, as qualified by an absence of a material adverse
effect (Proposal No. 1 Approval and Adoption of
the Merger Agreement Material Provisions of the
Merger Agreement Representations and
Warranties), of each partys representations and
warranties under the merger agreement; and
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each partys material compliance with its respective
obligations under the merger agreement.
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Termination
(Page 46)
The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time of the merger
(notwithstanding any approval of the merger agreement by the OCP
stockholders) by:
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the mutual written consent of OCP and Oplink;
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either OCP or Oplink if the closing does not occur on or before
October 31, 2007;
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either OCP or Oplink if, at the special meeting, the merger
agreement is not adopted by the requisite vote of stockholders;
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either OCP or Oplink if there has been a breach or failure to
perform by the other party of any representation, warranty,
covenant, or agreement contained in the merger agreement that
would give rise to a failure of any condition to closing the
merger and that is not cured within 30 days of notice of
such breach or failure to perform;
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either OCP or Oplink if any governmental entity issues an order,
decree or ruling, enjoining, restraining or otherwise
prohibiting the merger, or any legal requirement makes
consummation of the merger illegal;
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Oplink if our board of directors or the special committee
withdraws, qualifies or modifies its unanimous recommendation to
our unaffiliated stockholders or takes certain other actions
inconsistent with the transactions.
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Neither OCP nor Oplink will be obligated to make any payment to
the other in the event that the merger agreement is terminated.
Certain
United States Federal Income Tax Consequences
(Page 34)
The conversion of shares of our common stock into cash pursuant
to the merger is a taxable transaction for U.S. federal
income tax purposes and may also be a taxable transaction under
applicable state, local or foreign tax laws. You should consult
your own tax advisor about the particular tax consequences of
the merger to you.
3
Appraisal
Rights
(Page 47)
If you so choose, you may exercise appraisal rights and may
ultimately seek an appraisal by a court of the fair value of
your shares of our common stock. The appraised value of your
shares will be paid to you in cash. Depending upon the
determination of the appropriate court, the appraised fair value
of your shares may be more than, less than or equal to the cash
payment of $1.65 per share to be paid in the merger.
If your
chose to exercise these approval rights, you must deliver
written notice to the Company prior to the special meeting and
you must vote against Proposal No. 1 or abstain from
voting.
Financing
(Page 33)
Oplink has represented to us in the merger agreement that it
will have sufficient cash on-hand to complete the transactions
contemplated by the merger agreement. The merger is not
conditioned upon Oplink obtaining financing from any outside
sources.
Proposal No. 2
Adjournment of the Special Meeting
Proposal Two
(Page 49)
We may ask our stockholders to vote on a proposal to adjourn the
special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time
of the meeting to approve and adopt the merger agreement. We
currently do not intend to propose adjournment at the special
meeting if there are sufficient votes to adopt the merger
agreement. If the proposal to adjourn our special meeting for
the purpose of soliciting additional proxies is submitted to our
stockholders for approval, such approval requires the
affirmative vote of the holders of a majority of the shares of
our common stock present or represented by proxy and entitled to
vote on the matter.
4
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address some
commonly asked questions regarding the merger and the special
meeting. These questions and answers may not address all
questions that may be important to you as an OCP stockholder.
Please refer to the more detailed information contained
elsewhere in this proxy statement, the annexes to this proxy
statement and the documents referred to in this proxy statement.
Questions
and Answers Regarding the Special Meeting
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Q:
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Why am I receiving this proxy statement?
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A:
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We are sending this proxy statement to our stockholders in
connection with the solicitation of proxies to be voted at a
special meeting of our stockholders, or at any adjournments,
postponements or continuations of the meeting.
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Q:
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When and where is the special meeting?
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A:
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The special meeting will be held on October 31, 2007, at
10:00 a.m. Pacific Time, at 6101 Variel Avenue,
Woodland Hills, California 91367.
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Q:
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Who is entitled to vote at the special meeting?
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A:
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Holders of record of our common stock at the close of business
on September 10, 2007, the record date for the special
meeting, are entitled to vote in person or by proxy at the
special meeting.
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Q:
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What am I being asked to vote on?
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A:
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You are being asked to:
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approve and adopt the merger agreement;
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approve any proposal to adjourn, postpone or
continue the special meeting at a later date to solicit
additional proxies in the event that there are not sufficient
votes at the time of the meeting to approve and adopt the merger
agreement; and
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consider and act upon any other business that may
properly come before the special meeting or any adjournments,
postponements or continuations thereof.
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Q:
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What do I need to do now? How do I vote?
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A:
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We urge you to read this proxy statement carefully, including
its annexes. Then return your completed, signed and dated proxy
card in the enclosed envelope as soon as possible, so that your
shares can be voted at the special meeting of our stockholders.
Please do NOT send in your stock certificates at this time.
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If your shares of our common stock are held in street
name by your broker, be sure to give your broker
instructions on how you want to vote your shares because your
broker will not be able to vote on the proposals without
instructions from you.
See
the question below If my
broker holds my shares in street name, will my
broker vote my shares for me?
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Q:
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Why is it important for me to vote?
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A:
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Your vote is very important. The failure to return your proxy
card will mean that your shares will not be counted for purposes
of determining whether a quorum is present at the special
meeting and will have the same effect as voting
AGAINST
the proposal to approve and adopt the
merger agreement. Failure to return your proxy card will have no
effect on the other proposals.
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Q:
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If my broker holds my shares in street name, will
my broker vote my shares for me?
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A:
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Your broker will not be able to vote your shares with regard to
the adoption of the merger agreement without instructions from
you but will be able to vote with respect to any other proposals
that may properly come before the special meeting. You should
provide your broker with instructions on how to vote your shares
by following the procedures provided by your broker. Without
instructions, your shares will be considered present at the
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special meeting for purposes of determining a quorum but will
have the same effect as being voted
AGAINST
the approval and adoption of the merger agreement.
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Q:
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May I vote in person?
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A:
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Yes. You may attend the special meeting and vote your shares in
person whether or not you sign and return a proxy card or
otherwise vote by proxy. If your shares are held of record by a
broker, bank or other nominee and you wish to vote at the
special meeting, you must obtain a proxy from the record holder
of your shares in order to vote in person at the special meeting.
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Q:
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May I change my vote after I have mailed my signed proxy
card?
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A:
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Yes. You may change your vote at any time before the vote is
taken at the special meeting. You can do this in one of three
ways. First, you can send a written notice to the Secretary of
the Company stating that you would like to revoke your proxy.
Second, you can complete and submit a new proxy card by mail.
Third, you can attend the special meeting and vote in person at
the meeting. Your attendance at the special meeting will not
alone revoke your proxy. If you have instructed a broker, bank
or other nominee who is the record holder of your shares to vote
your shares at the special meeting, you must follow directions
received from your broker, bank or nominee to change your vote.
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Q:
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What should I do if I receive more than one set of voting
materials?
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A:
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You may receive more than one set of voting materials, including
multiple copies of this proxy statement and multiple proxy cards
or voting instruction cards. For example, if you hold your
shares in more than one brokerage account, you will receive a
separate voting instruction card for each brokerage account in
which you hold shares. If you are a stockholder of record and
your shares are registered in more than one name, you will
receive more than one proxy card. Please complete, sign, date
and return each proxy card and voting instruction card that you
receive.
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Questions
and Answers Regarding the Merger
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Q:
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How does our board of directors recommend I vote?
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A:
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Our board of directors unanimously recommends that you vote
FOR
the approval and adoption of the merger
agreement and the merger and
FOR
the
adjournment or postponement of the special meeting, if necessary
or appropriate, to solicit additional proxies.
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Q:
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What is the opinion of the Companys financial
advisor?
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A:
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The special committee of our board of directors received an
opinion from Bear Stearns that, as of June 19, 2007, the
merger is fair to the unaffiliated public stockholders of the
Company from a financial point of view. Please read
Special Factors Opinion of the Special
Committees Financial Advisor for information about
the opinion of Bear Stearns and
Annex B
for the
complete opinion.
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Q:
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When do you expect the merger to be completed?
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A:
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If the merger agreement and the merger are approved and adopted
at the special meeting by the requisite votes of our
stockholders, and if the other conditions to the merger are
satisfied or waived, we expect to complete the merger promptly
after the special meeting.
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Q:
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What will I receive in the merger?
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A:
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If the merger is completed, each outstanding share of our common
stock that you hold at the completion of the merger will be
converted into the right to receive $1.65 in cash, without
interest and less any applicable withholding taxes (unless you
exercise appraisal rights under Delaware law).
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Q:
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What vote is required to approve and adopt the merger
agreement?
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A:
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The merger cannot be completed unless the merger agreement is
approved and adopted by the affirmative vote of (i) the
holders of
66
2
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3
%
of our common stock that is not owned by Oplink or its
affiliates and (ii) the holders
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of a majority of the outstanding voting power of our common
stock. As of the date hereof, Oplink controls approximately 58%
of our voting power and has committed to vote in favor of the
merger agreement.
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Q:
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What happens if the merger is not consummated?
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A:
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If the merger agreement is not approved and adopted by the
Companys stockholders at the special meeting or if the
merger is not consummated for any other reason, the
Companys stockholders will not receive any payment for
their shares in connection with the merger. Instead, the Company
will remain a public company and shares of its common stock will
continue to be listed and traded on the NASDAQ Global Market.
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Q:
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What plans does the Company have if the merger agreement is
not approved?
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A:
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If the merger agreement is not approved and adopted, Oplink and
OCP would consider how the companies could cooperate while
remaining independent. Delaware law prohibits Oplink and OCP
from consummating any business combination until
April 23, 2010 without the authorization at an annual or
special meeting of OCP stockholders of two-thirds of the
outstanding OCP common stock not owned by Oplink and its
affiliates and construes business combination
broadly. Oplink currently expects to allow OCP to operate as an
independent company until such time as it may consummate a
business combination. During such time, Oplink may engage in
both private and public purchases of OCP common stock. Oplink
may also investigate strategies to decrease the regulatory
burden of OCP being a publicly traded company and explore
measures to delist and deregister the OCP common stock.
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Q:
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Should I send in my OCP stock certificates now?
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A:
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No. If you hold certificates representing shares of our
common stock after the merger is completed, you will receive
detailed written instructions explaining how to exchange your
certificates for a cash payment of $1.65, without interest and
less any applicable withholding taxes, for each share of our
common stock evidenced by your certificate.
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Q:
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What happens if I sell my shares of OCP common stock before
the special meeting?
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A:
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The record date for the special meeting is earlier than the
expected date of the merger. If you transfer your shares of OCP
common stock after the record date but before the special
meeting, you will retain your right to vote at the special
meeting, but the right to receive the merger consideration will
pass to the person to whom you transferred your shares.
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Q:
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What rights do I have to seek an appraisal of my shares?
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A:
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If you wish, you may exercise dissenters rights and may
ultimately seek an appraisal by a court of the fair value of
your shares of our common stock. The appraised value of your
shares will be paid to you in cash. Depending upon the
determination of the appropriate court, the appraised fair value
of your shares may be more than, less than or equal to the cash
payment of $1.65 per share to be paid in the merger.
See
Proposal No. 1 Approval and Adoption of the
Merger AgreementDissenters Rights of Appraisal
below.
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Q:
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Who can help answer my other questions?
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A:
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If you would like additional copies of this proxy statement
(which will be provided to you without charge) or if you have
questions about the special meeting, including the procedures
for voting your shares, you should contact:
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D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, New York 10005
(800) 659-5550
info@dfking.com
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7
On June 9, June 16 and June 17, 2003, OCP received
correspondence from Furukawa regarding Furukawas desire to
receive cash from its investment in OCP. At that time,
OCPs board of directors was comprised of seven directors,
three of whom were designees of Furukawa. In response to
Furukawas request, OCPs board of directors
established a special committee on June 18, 2003, comprised
of the three independent directors, Hobart Birmingham, Stewart
Personick and David Warnes, to evaluate strategic alternatives
for OCP and its stockholders. In July 2003, the special
committee engaged Munger, Tolles & Olson LLP as its
legal counsel. In August 2003, the special committee engaged
Bear, Stearns & Co. Inc. (referred to herein as
Bear Stearns) as its financial advisor to assist the
committee in exploring and evaluating strategic alternatives for
OCP.
Beginning in August 2003, the special committee evaluated
several strategic alternatives for OCP and its stockholders,
including potential business combinations with third parties.
The special committee, either directly or through Bear Stearns
or its legal advisors, engaged in a comprehensive marketing
process to identify potential acquirors or merger partners, with
the objective of initiating an auction process. On behalf of the
special committee, Bear Stearns contacted approximately 17
prospective bidders for the Company. Seven other parties
approached Bear Stearns unsolicited. Bear Stearns sent
preliminary information regarding the Company to 13 third
parties. Thereafter, the special committee and its advisors
conducted due diligence with respect to, and engaged in
discussions with, several potential strategic buyers. These
discussions often included Furukawa since, in addition to its
ownership of a majority of the Companys common stock,
Furukawa was also a key supplier to the Company, and both OCP
and potential acquirors were interested in negotiating long-term
supply arrangements with Furukawa. Discussions with some of
these parties progressed to the point of exchanging and
negotiating term sheets for
and/or
drafts of merger
and/or
supply agreements, but the parties were unable to agree to final
terms or the special committee was unable to obtain
Furukawas consent, as majority stockholder, to consider
the transaction. Each of these potential transactions was
contemplated to be a merger of equals in which OCP stockholders
would have received stock in exchange for shares of OCP common
stock based on an exchange ratio of the then current market
price of each partys stock, with no premium over
OCPs market price. During the period of these discussions,
OCPs market capitalization ranged from approximately $193
million to $242 million. One potential acquiror of the Company
suggested it might acquire OCP in an all-cash transaction at a
price below what was then OCPs market capitalization, but
the special committee determined that the Companys
minority stockholders would not have received fair value in such
a transaction. Discussions with these third parties other than
Oplink largely ceased by September 2005, although the special
committee continued to explore and consider prospective
strategic transactions, including with one of these third
parties, after that date. During the course of these
discussions, the special committee met with its financial and
legal advisors on a regular basis, either by telephone or in
person, to discuss the status of negotiations, or other
strategic alternatives for OCP.
Bear Stearns contacted Oplink in September 2003 as part of its
initial effort to identify potential merger candidates, and
Oplink and OCP executed a mutual nondisclosure agreement.
However, the special committee had only limited contact with
Oplink until June 2005, when Oplink contacted OCPs
then-Chief Executive Officer, Muoi V. Tran, regarding a
potential merger with OCP. At the same time, Oplink
representatives also contacted Furukawa employees regarding
their interest, which the Furukawa employees communicated to the
special committee. In response to Oplinks approach, two
members of the special committee and representatives from Bear
Stearns visited Oplinks offices in Fremont, California in
June, 2005, with Muoi V. Tran and the third member of the
special committee attending by telephone, to discuss a potential
business combination between Oplink and OCP. At the same time,
the special committee and Bear Stearns were in contact with
other potential merger partners. Oplink and OCP entered into a
mutual confidentiality agreement in September 2005.
During the period from September 2005 through January 2006, OCP
(through the special committee) and Oplink, together with their
respective financial and legal advisors, conducted due diligence
with respect to one another and negotiated the terms of a
proposed business combination between the two companies. As
contemplated by the parties during this period, the combination
was to be structured as a merger of equals, with OCP
to merge with a subsidiary of Oplink, and OCP stockholders
receiving Oplink common stock in exchange for their OCP common
stock. It was also contemplated that members of OCPs
senior management team would continue to serve
8
as executive officers of Oplink, and that OCP would appoint
one-half of the board of directors of Oplink after the merger.
During this period, OCP and Oplink also sought to negotiate with
Furukawa the terms of Furukawas commercial supply
obligations to the combined company following the merger, and
Oplink sought to negotiate the terms under which OCP senior
management and Furukawa (which would have become Oplinks
largest stockholder following the merger) would be entitled to
sell the Oplink common stock they were to receive in the merger.
In January 2006, after reaching an impasse with Furukawa on the
terms of Furukawas post-merger supply obligations and the
terms under which Furukawa would be entitled to sell its Oplink
common stock following the merger, Oplink terminated discussions
regarding the proposed merger.
In late March 2006, Oplink and Furukawa advised the special
committee that they had met with each other and desired to renew
discussions regarding a possible merger between Oplink and OCP.
The transaction was again proposed to be structured as a merger
of OCP with a subsidiary of Oplink, with OCP stockholders
receiving Oplink common stock, and members of OCPs senior
management team serving as executive officers of Oplink after
the merger. However, it was now contemplated that Furukawa and
OCP would each appoint directors of Oplink after the merger. In
late June 2006, following meetings among Oplink, Furukawa and
the special committee, and their respective representatives,
discussions were again terminated due to failure to reach
agreement on a number of material terms, including the exchange
ratio that would be used to determine the number of shares of
Oplink common stock to be issued to holders of OCP common stock
in the proposed merger. Oplink proposed an exchange ratio based
on the relative market values of OCP and Oplink common stock at
the time of the agreement. The special committee proposed that
the exchange ratio value OCP common stock at a premium to its
then-current market price, to reflect OCPs recent
historical market price. During the three-month period that
discussions with Oplink took place, OCPs market
capitalization decreased from approximately $386 million to $222
million. At these meetings, Furukawas representatives
stated that Furukawa was prepared to accept the stock exchange
ratio offered by Oplink if the parties could resolve the terms
of Furukawas post-merger supply obligations, and the terms
under which Furukawa would be entitled to sell its Oplink common
stock following the merger; however, Furukawa rejected a
proposal by the special committee that Furukawas shares of
Class B common stock of OCP be exchanged for Oplink shares
at a less favorable exchange ratio to enable OCPs
Class A common stockholders to receive a more favorable
exchange ratio.
Following termination of these negotiations, OCP proceeded with
the implementation of several strategic initiatives for
restructuring the Company, including the broadening of the
Companys senior management team, the movement of
manufacturing to China, formulation of a long-term strategic
plan, accelerated research and development on key products, the
acquisition of GigaComm Corporation, and consideration of other
strategic acquisitions to implement OCPs long-term
strategic plans. These initiatives were intended to reduce
costs, expand capacity and revenues, add more advanced, higher
margin products and return the Company to profitability and
growth. Although the Companys management anticipated these
initiatives would temporarily depress the Companys stock
price because of the costs incurred, management believed, that
in the long-term, these steps would create greater potential
value for OCPs stockholders than the Company could
otherwise achieve. These initiatives were outlined in depth in
discussions that Philip Otto, OCPs Chief Executive
Officer, and Hobart Birmingham, a director and chair of the
special committee, had with Furukawas senior management in
Tokyo in December 2006.
In early January 2007, representatives of Furukawa contacted
Robert Shih, Oplinks vice president of business
development, to request a meeting to discuss re-starting
negotiations regarding a possible combination between Oplink and
OCP, and Furukawa and Oplink representatives met on January 12
and January 25, 2007. Neither the special committee nor the
Companys management were informed of these meetings nor
did they participate in them. On February 7, 2007, Oplink
delivered to Furukawa a non-binding term sheet for a proposed
merger of OCP with a subsidiary of Oplink, with OCP stockholders
receiving $200 million in Oplink common stock. As with
prior proposals, the merger was conditioned upon negotiation of
an acceptable supply agreement between Furukawa, OCP and Oplink,
and acceptable arrangements for Furukawas sale of its
Oplink common stock following the merger. However, Oplink was
now proposing that OCP senior management not become executive
officers of Oplink after the merger, and that Furukawa be
entitled to appoint only one Oplink director (with no directors
appointed by OCP). At this time, OCPs board of directors
was comprised of eight directors, three of whom were designees
of Furukawa.
9
On February 9, 2007, Furukawa wrote to the special
committee asking it to review the non-binding term sheet as
quickly as possible, and asking the special committee to arrange
a meeting among Furukawa, Oplink and the special committee. The
special committee met by telephone on February 12 and
February 16, 2007 to discuss Oplinks term sheet. On
February 18, 2007, the special committee advised Furukawa
that it intended to meet with Oplink to learn more about its
proposal, and would not schedule a three-party meeting pending
the outcome of that meeting On February 23, 2007, Joseph
Liu, Oplinks president and chief executive officer, and
Bruce Horn, Oplinks then chief financial officer, met with
Hobey Birmingham, the chairman of the special committee, and
Philip Otto, OCPs president and chief executive officer,
in Burlingame, California, to discuss Oplinks non-binding
term sheet. After this meeting, the members of the special
committee conferred among themselves and the committees
financial and legal advisors.
On March 12, 2007, Mr. Birmingham notified
Mr. Liu that the special committee had evaluated
Oplinks non-binding term sheet and had decided not to
pursue a transaction with Oplink at that time. The special
committee informed Furukawa that the committee had concluded
that Oplink had failed to articulate a strategy or vision for
the combined entity and that Oplinks proposal did not
provide sufficient value to OCPs minority stockholders to
warrant further consideration. The special committee also
informed Furukawa that OCPs management was continuing to
pursue strategic alternatives to the proposed stock exchange
transaction with Oplink, including potential acquisitions by
OCP. Subsequently, the Furukawa employees on the Companys
board of directors informed the board and management that
Furukawa would not agree as a stockholder to the acquisitions
being considered by the Company.
On March 29, 2007, Mr. Liu, Mr. Horn and
Mr. Shih of Oplink met with representatives from Furukawa
to discuss a potential transaction involving Oplink, Furukawa
and/or
OCP.
On March 30, 2007, representatives from Oplink and Furukawa
and their respective advisors met to discuss strategic
alternatives available to Furukawa with respect to its majority
ownership position in OCP, including a possible sale of such
position to Oplink. Again, neither the Companys management
nor the special committee were aware or informed of such
discussions.
On April 3, 2007, Oplink delivered to Furukawa, a
preliminary term sheet with respect to a proposed purchase by
Oplink and sale by Furukawa of all of the shares of OCP common
stock owned by Furukawa at a price of $1.50 per share, to be
paid 50% in cash and 50% in Oplink common stock. On
April 12, 2007, Oplink and Furukawa entered into a letter
agreement with respect to the exclusivity and confidentiality of
the negotiations between Oplink and Furukawa regarding the
potential purchase and sale of Furukawas ownership
position in OCP. On April 16, 2007, Oplink engaged Seven
Hills Partners LLC as its financial advisor with respect to a
potential purchase of OCP common stock from Furukawa
and/or
a
potential business combination with OCP.
On April 18, 2007, representatives from Oplink and Furukawa
reached an agreement in principle with respect to a proposed
purchase by Oplink and sale by Furukawa of all of the shares of
OCP common stock owned by Furukawa at a price of $1.50 per
share, to be paid 85% in cash and 15% in Oplink common stock.
On April 22, 2007, Oplink and Furukawa entered into a stock
purchase agreement with respect to the purchase by Oplink and
sale by Furukawa of the 66,000,000 shares of OCP common
stock then held by Furukawa, constituting approximately 58% of
OCPs outstanding shares of common stock, in exchange for
$84,150,000 in cash and 857,258 shares of Oplink common
stock. The purchase price valued the OCP common stock at $1.50
per share, a $0.12 premium to the most recent closing price for
OCP common stock of $1.38 per share, with 85% of the purchase
payable in cash and 15% of the purchase price payable in shares
of Oplink common stock valued at Oplinks
thirty-day
average closing price.
On the evening of April 22, 2007, shortly after entering
into the stock purchase agreement with Furukawa, Oplink, in a
telephone call from Mr. Liu to Mr. Birmingham,
informed the special committee for the first time of
Oplinks proposed purchase of Furukawas OCP stock,
and later that evening delivered to the special committee an
offer to acquire all of the remaining shares of OCP common stock
at a price of $1.50 in cash, subject to completion of due
diligence and negotiation of a definitive agreement with respect
to the transaction. On the same evening, one of the employees of
Furukawa who was then a member of OCPs board of directors
telephoned Mr. Otto to notify him for the first time of
Furukawas proposed sale of its OCP stock to Oplink. Oplink
announced the stock purchase agreement with Furukawa and the
offer to the special committee on April 23, 2007.
10
On April 25, 2007, OCP announced that the special committee
was evaluating Oplinks offer to acquire the outstanding
shares of OCP common stock not owned by Furukawa, and that the
special committee was being assisted in its review by its
financial advisors, Bear, Stearns, and its legal counsel,
Munger, Tolles & Olson LLP. The special committee also
engaged Kirkland & Ellis LLP and Morris, Nichols,
Arsht & Tunnell LLP as legal counsel.
During the course of its discussions with Oplink, the special
committee met with its financial and legal advisors on a regular
basis, either by telephone or in person, to discuss
Oplinks various proposals and other strategic alternatives
for OCP, as described below. These meetings increased in
frequency after receipt of Oplinks April 22 offer.
Specifically, the special committee met in person or by
telephone on April 24, April 26, April 30,
May 1, May 3, May 7, May 10, May 16,
May 22, May 26, June 4, June 11,
June 13, June 14, and June 19, 2007 to discuss
Oplinks offer and other alternatives available for
maximizing value for OCPs minority stockholders, and
concluded that a merger with Oplink represented the best means
to accomplish this objective. In particular, as described
below, the special committee explored the feasibility of
alternative transactions with third parties. The special
committee also determined that a cash merger transaction was
better for unaffiliated stockholders than remaining as minority
stockholders of OCP as the special committee believed that
Oplink would not continue to permit OCP to operate independent
of its majority stockholder (as Furukawa generally had) or
permit OCP to pursue the strategic initiatives undertaken by
existing management, and Oplink had not, in the committees
view, articulated a strategy or vision for the combined entity.
For similar reasons, the special committee rejected, as it had
in the past, consideration of a stock transaction with Oplink.
The special committee also believed that, in light of the
Companys May 15, 2007 announcement of financial
results for the second quarter of 2007 (which included a net
loss of $17.1 million and declining revenues and gross
margins compared to the prior fiscal quarter and fiscal year),
OCPs stock price would decrease in the absence of a
negotiated transaction, and that Oplink might then attempt to
acquire shares from minority stockholders at a price lower than
$1.50 per share, either through private negotiations, a tender
offer, or a negotiated transaction with independent directors
appointed by Oplink. The special committee believed that the
committee was in the best position to negotiate the highest
price for the benefit of all minority stockholders. Finally, the
special committee considered whether it could block the sale of
Furukawas OCP stock to Oplink, and concluded, based on the
advice of counsel, that there was no legal basis for preventing
that sale from closing.
On May 4, 2007, OCP announced that the special committee
had adopted a
30-day
shareholder rights plan to protect the interests of OCPs
minority stockholders and that the special committee had
declared a dividend distribution of one right under the plan for
each outstanding share of OCP common stock. OCP further
announced that the rights would expire on June 2, 2007, and
would become exercisable only under three specific conditions:
the closing of Oplinks purchase of Furukawas
then-58.2% ownership interest in OCP, the acquisition of more
than 15% of OCPs outstanding common stock by a third
party, or the acquisition of any additional shares of OCP common
stock by Furukawa or Oplink.
During May 2007, the special committee and/or Bear Stearns
initiated contact with eight potential strategic merger partners
and two potential financial investment funds to determine the
feasibility of an alternative transaction to the merger proposed
by Oplink that would provide greater potential value to
OCPs minority stockholders. Most of these strategic
parties were companies that the special committee and Bear
Stearns had been in contact with during their earlier efforts
since August 2003 to identify a strategic transaction. However,
none of these strategic and financial parties expressed an
interest in considering a transaction with OCP, if at all given
the agreement between Oplink and Furukawa, that would provide
more value to OCPs minority stockholders than the $1.50
per share merger consideration offered by Oplink.
On May 7, 2007, Oplink filed a complaint in the Court of
Chancery of the State of Delaware against OCP and the members of
the special committee seeking, among other things, a declaration
that the shareholder rights plan adopted by the special
committee was invalid insofar as it attempted to prevent the
consummation of Oplinks purchase of the shares of OCP
common stock owned by Furukawa.
On May 18, 2007, representatives from Oplink, OCP, the
special committee, and their respective financial and legal
advisors met to discuss Oplinks proposal to acquire the
outstanding shares of OCP common stock not owned by Furukawa.
The special committee conveyed its position that Oplinks
offer of $1.50 per share in cash was insufficient,
notwithstanding Furukawas willingness to sell its OCP
shares at such price. Oplink indicated that it
11
was not willing to increase its offer above $1.50 without
additional information from OCP that would justify a higher
price.
On May 25, 2007, Furukawa delivered to OCP an action by
written consent of the stockholders of OCP pursuant to Delaware
law and OCPs bylaws. The written consent amended
OCPS bylaws to expand the size of the board of directors
from eight to 12 members and elect four individuals to the
newly-created board seats. Furukawa informed the special
committee that the newly-elected directors intended to amend the
shareholder rights plan solely to the extent necessary to permit
the sale of Furukawas then-58.2% ownership interest in OCP
to Oplink to proceed. The four new directors, and the three
existing OCP directors then employed by Furukawa, intended to
resign following the consummation of the sale. The actions taken
in the written consent were to become effective on the earlier
of July 4, 2007 or 20 days after the Companys
mailing of an information statement describing such actions.
On June 1, 2007, representatives from Oplink, OCP, the
special committee, and their respective financial and legal
advisors again met to discuss Oplinks proposal. The
parties were again unable to reach agreement as to the price to
be paid by Oplink for the outstanding shares of OCP common stock
not owned by Furukawa. At this meeting, Oplink conveyed its
willingness to increase the cash price it would pay to $1.55 per
share. The special committee indicated to Oplink that such price
was insufficient, and the meeting concluded when Oplink refused
to consider increasing its offer.
On June 2, 2007, the shareholder rights plan adopted by the
special committee expired by its terms. On June 5, 2007,
Oplink and Furukawa consummated Oplinks purchase from
Furukawa of 66,000,000 shares of OCP common stock,
constituting 58.2% of OCPs outstanding shares of common
stock as of such date. Thereafter, the three OCP directors
employed by Furukawa resigned as directors of OCP and Furukawa
withdrew its written consent to amend OCPs bylaws and
appoint new directors.
On June 4, 2007, Mr. Liu called Mr. Birmingham
and conveyed a new offer by Oplink to acquire the outstanding
shares of OCP common stock not owned by Furukawa at a cash price
of $1.60 per share. After conferring with the other members of
the special committee and its advisors, Mr. Birmingham
called Mr. Liu and proposed that Oplink increase its offer
to $1.70 per share. On June 5, 2007, Mr. Liu called
Mr. Birmingham and told him that Oplink could not justify
increasing its offer to more than $1.63 per share. Again after
conferring with the other members of the special committee and
the committees advisors, Mr. Birmingham called
Mr. Liu and rejected Oplinks offer of $1.63 per
share, and further told Mr. Liu that the special committee
would agree to a purchase price of $1.65 per share, but nothing
less. Mr. Liu responded by proposing that Oplink pay $1.64
per share, but Mr. Birmingham insisted that the special
committee would only agree to $1.65 per share. Later on
June 5, 2007, Mr. Liu again called Mr. Birmingham
and tentatively agreed that Oplink would acquire the outstanding
shares of OCP common stock not owned by Furukawa at a cash price
of $1.65 per share. The parties legal advisors proceeded
to negotiate the terms of a definitive merger agreement.
On June 13, 2007, representatives from Oplink and its
financial and legal advisors visited OCPs offices in
Woodland Hills, California to conduct due diligence with respect
to OCP in their respective areas of review.
On June 18, 2007, Oplinks board of directors approved
the merger and the merger agreement at a meeting, and authorized
the officers of Oplink to execute the merger agreement on
Oplinks behalf.
On June, 19, 2007, the special committee and OCPs board of
directors held a joint meeting to consider the merger agreement
and certain related matters. The special committee and the board
received presentations from Bear Stearns, as well as the legal
advisors for OCP and the special committee, with respect to the
merger agreement and the proposed merger. The special committee
recommended unanimously that the board approve, and the full
board approved, the merger agreement and the proposed merger.
On June 19, 2007, Oplink and OCP entered into the merger
agreement. Immediately thereafter, in accordance with the terms
of the merger agreement, the OCP board of directors increased
the authorized number of directors from eight to nine and
appointed Mr. Liu, Leonard LeBlanc, Chieh Chang, Jesse Jack
and Robert Shih as directors of OCP, and Muoi Van Tran resigned
from the OCP board of directors. On September 29, 2007,
Mr. Shih resigned as a director, so that the Companys
board, with one vacancy, is now comprised of four directors
designated by Oplink, Phillip Otto, OCPs Chief Executive
Officer, and the three independent directors who comprise the
special
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committee. In order to ensure the independence of the special
committee in connection with the merger with Oplink, at the time
that the Company entered into the merger agreement, the Company
also adopted an amendment to its bylaws that precludes removal
of, or interference with, the special committee by OCPs
full board of directors without the approval of a majority of
the members of the special committee. On June 20, 2007,
Oplink and OCP issued a joint press release announcing the
execution of the merger agreement.
Recommendation
of the Special Committee and Our Board of Directors
The special committee of our board of directors has unanimously
determined that the terms of the merger agreement and the merger
are advisable, substantively and procedurally fair to and in the
best interests of the Company and our unaffiliated stockholders.
The special committee unanimously recommended to our board of
directors that the merger agreement and the merger be approved
and adopted. The special committee considered a number of
factors in reaching its determinations and recommendations as
more fully described below.
Our board of directors, acting upon the unanimous recommendation
of the special committee, unanimously determined that the merger
agreement and the transactions contemplated thereby, including
the merger, are substantively and procedurally fair to, and in
the best interests of, the Company and our unaffiliated
stockholders. On the basis of the foregoing, our board of
directors has unanimously approved the merger agreement and the
merger, and unanimously recommends that our stockholders vote to
approve and adopt the merger agreement and the merger. The
unanimous recommendation of our board of directors was made
after consideration of all the material factors, both positive
and negative, as described below.
Reasons
for the Special Committees Determination; Fairness of the
Merger
In determining the fairness of the merger and unanimously
recommending approval of the merger agreement and the merger to
our board of directors, the special committee considered a
number of factors which, in the opinion of the members of the
special committee, supported the special committees
recommendation, including:
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the special committees knowledge of our business, assets,
financial condition and results of operations, our competitive
position, the nature of our business and the industry in which
we compete and, in particular, its belief that many of the
factors that may have caused our shares to trade at price levels
substantially below the merger consideration, including the
increase in our net losses and decrease in our revenues, gross
margins, and cash assets compared to prior periods caused by
decreasing market demand for our legacy products resulting in
decreasing sales of those products and increasing price pressure
from our customers, are not likely to change in the foreseeable
future, since Oplink, as majority stockholder of the Company,
would not permit the Companys management to continue to
pursue strategic initiatives that were intended to address these
negative trends;
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the relationship between the merger consideration and recent
market prices for our common stock; that is, the fact that $1.65
per share in cash represented a 20% premium over the closing
price on the last day of trading prior to the announcement of
Oplinks agreement with Furukawa;
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the sale by Furukawa of approximately 58% of the outstanding
stock of OCP for $1.50 per share in an arms-length transaction
with Oplink.
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the negotiations with respect to the merger consideration that,
among other things, led to an increase in Oplinks initial
offer from $1.50 per share of our common stock to $1.65 per
share of our common stock, and the special committees
determination that, following extensive negotiations between the
special committee and Oplink, $1.65 per share was the highest
price that Oplink would agree to pay, with the special committee
basing its belief on a number of factors, including the duration
and tenor of negotiations, assertions made by Oplink during the
negotiation process and the experience of the special committee
and its advisors;
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the financial presentation of Bear Stearns to the special
committee and our board of directors on June 19, 2007,
including Bear Stearns opinion as to the fairness, from a
financial point of view and as of the date of the opinion, of
the merger consideration to holders of our common stock (other
than Oplink and its affiliates); the special committee believed
that the analysis of Bear Stearns was reasonable and adopted
Bear Stearns analysis underlying the conclusion as they
relate to our unaffiliated stockholders because our
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affiliate stockholders would not receive any consideration for
their shares greater than that to be received by our
unaffiliated stockholders, any other benefits to be received by
our affiliates in connection with the merger would be incidental
and, in the aggregate, immaterial in value;
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the fact that the merger consideration will be paid in all cash
to our stockholders, eliminating any uncertainties in value to
our stockholders;
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the likelihood that the merger would close as a result of Oplink
having the necessary capital to finance the merger without
having to obtain financing;
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the fact that, under the terms of the merger agreement, the
special committee would be entitled, if necessary, to comply
with its fiduciary duties, to consider unsolicited bona fide
alternative proposals and would be entitled to change, withhold,
withdraw, amend or modify its recommendation in favor of the
merger agreement if it determined that any such proposal was
more favorable to the Companys stockholders;
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the fact that, under the terms of the merger agreement, our
board of directors (acting upon the recommendation of the
special committee) or the special committee may make a change of
recommendation if it concludes in good faith, after receipt of
advice of its outside legal counsel and financial adviser, that
failing to make such change of recommendation is reasonably
likely to be a violation of the directors fiduciary duties
to the Companys stockholders;
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the special committees judgment, in light of the fact that
no third parties had expressed an interest in acquiring the
Company following Oplinks public announcement of its offer
on June 6, 2007, that it was unlikely that any other buyer
would be willing to pay a price equal to or greater than $1.65
per share in cash;
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the special committees determination that the merger was
the best means available for maximizing value for OCPs
minority stockholders, especially compared to the value they
might receive in a future tender offer, private negotiation, or
an acquisition negotiated by independent directors appointed by
Oplink; and
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the ability of stockholders who may not support the merger to
exercise appraisal rights under Delaware law.
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In determining the fairness of the merger and unanimously
recommending approval of the merger agreement and the merger to
our board of directors, the special committee did not consider
OCPs liquidation value of OCP relevant in determining the
procedural and substantive fairness of the merger to the
unaffiliated stockholders because OCP is being sold as a going
concern and because the special committee believed that
liquidation value did not present a meaningful valuation for OCP
and its business. The special committee believed that OCPs
value is derived from the cash flows generated from its
continuing operations rather than the value of its assets that
might be realized in a liquidation. Moreover, because OCPs
assets include a significant amount of intangible assets,
intellectual property, leased properties and other assets that
are not readily transferable or are subject to restrictions on
their transfer in a liquidation scenario, the special committee
concluded that OCP is not susceptible to a meaningful
liquidation valuation. Further, the special committee did not
consider net book value, which is an accounting concept, in
determining the procedural and substantive fairness of the
merger to the unaffiliated stockholders because it believed that
such a measure understates OCPs value as a going concern
and is indicative of historical costs rather than OCPs
value as a going concern. In addition, the special committee
believed that net book value does not reflect, nor does it have
any meaningful impact on, the market trading price of OCP common
stock. The special committee noted, however, that the merger
consideration of $1.65 per share of OCP common stock is
higher than the net book value of the OCP common stock which was
approximately $1.51 per share as of March 31, 2007.
In determining the fairness of the merger and unanimously
recommending approval of the merger agreement and the merger to
our board of directors, the special committee did not consider
the fact that, upon completion of the merger, options to
purchase shares of the Company will be converted into options to
purchase shares of Oplink because the value of the outstanding
options was immaterial in relation to the the aggregate value of
the entire transaction. Specifically, the special committee was
aware that the aggregate value of vested,
in-the-money options, assuming completion of the
merger, was approximately $315,000, and the aggregate value of
all shares that will be converted to cash in the merger will be
approximately $80,000,000.
14
The special committee also determined that the merger is
procedurally fair because, among other things:
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the special committee is composed of independent directors who
do not serve as directors of and were not appointed by Oplink;
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the special committee was granted the full authority of our
board of directors to evaluate Oplinks proposal and any
alternative transactions;
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the special committee retained and received advice from its own
independent legal and financial advisors in evaluating,
negotiating and recommending the terms of the merger agreement,
and these advisors reported directly to and took direction
solely from the special committee;
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the price of $1.65 per share and the other terms and conditions
of the merger agreement resulted from active and lengthy
negotiations between the special committee and its legal and
financial advisors, on the one hand, and Oplink and its legal
and financial advisors, on the other hand;
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under Delaware law, the merger agreement must be adopted by the
affirmative vote of the holders of 66
2
/
3
%
of common stock that is not owned by Oplink or its affiliates;
and
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under Delaware law, our stockholders have the right to demand
appraisal of their shares.
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The special committee also considered a variety of risks and
other potentially negative factors concerning the merger. The
material risks and potentially negative factors considered by
the special committee were as follows:
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the Company will cease to be a public company and our
stockholders will no longer participate in any potential future
growth;
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while we expect to complete the merger, there can be no
assurances that all conditions to the parties obligations
to complete the merger agreement will be satisfied and, as a
result, the merger may not be completed;
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gains from all cash transactions are generally taxable to our
stockholders for U.S. federal income tax purposes; and
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the possibility of disruption to our operations following the
announcement of the merger, and the resulting effect on us if
the merger does not close.
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The special committee concluded, however, that these risks and
potentially negative factors could be managed or mitigated by
the Company or were unlikely to have a material impact on the
merger, and that, overall, the potentially negative factors
associated with the merger were outweighed by the potential
benefits of the merger.
Reasons
for Our Board of Directors Determination; Fairness of the
Merger
At the time it approved the merger agreement, our board of
directors consisted of five directors. On June 19, 2007
following the joint meeting with the special committee and its
legal and financial advisors, our board of directors, acting
upon the unanimous recommendation of the special committee,
unanimously approved the merger agreement and the transactions
contemplated thereby, including the merger. In considering the
determination of the special committee, our board of directors
believed that the analysis of the special committee was
reasonable and adopted the special committees conclusion
and the analysis underlying the conclusion.
Our board of directors believes that the merger agreement and
the merger are substantively and procedurally fair to, and in
the best interests of, our stockholders for all of the reasons
set forth above under Special Factors Reasons
for the Special Committees Determination; Fairness of the
Merger.
In reaching these conclusions, our board of directors considered
it significant that the special committee retained independent
legal and financial advisors who have extensive experience with
transactions similar to the merger and who assisted the special
committee in evaluating the merger and in negotiating with
Oplink.
15
Opinion
of the Special Committees Financial Advisor
Overview
Pursuant to an engagement letter dated August 7, 2003, the
special committee retained Bear Stearns to act as its financial
advisor with respect to exploring and evaluating strategic
alternatives available to OCP and providing financial advice and
assistance in connection with any transaction that might be
pursued by the special committee. In selecting Bear Stearns, the
special committee considered, among other things, the fact that
Bear Stearns is an internationally recognized investment banking
firm with substantial experience advising companies in the
optical components industry as well as substantial experience
providing strategic advisory services. Bear Stearns, as part of
its investment banking business, is continuously engaged in the
evaluation of businesses and their debt and equity securities in
connection with mergers and acquisitions, underwritings, private
placements and other securities offerings, senior credit
financings; valuations and general corporate advisory services.
At the June 19, 2007 joint meeting of the special committee
and OCPs board of directors, Bear Stearns delivered its
oral opinion, which was subsequently confirmed in writing, that,
as of June 19, 2007, and based upon and subject to the
assumptions, qualifications and limitations set forth in the
written opinion, the consideration of $1.65 per share in cash to
be received by OCP stockholders was fair, from a financial point
of view, to the stockholders of OCP, excluding Oplink and merger
sub.
The full text of Bear Stearns written opinion is
attached as Annex B to this proxy statement and you should
read the opinion carefully and in its entirety. The opinion sets
forth the assumptions made, some of the matters considered and
qualifications to and limitations of the review undertaken by
Bear Stearns. The Bear Stearns opinion, which was authorized for
issuance by the Fairness Opinion and Valuation Committee of Bear
Stearns, is subject to the assumptions and conditions contained
in the opinion and is necessarily based on economic, market and
other conditions and the information made available to Bear
Stearns as of the date of the Bear Stearns opinion, Bear Stearns
has no responsibility for updating or revising its opinion based
on circumstances or events occurring after the date of the
rendering of such opinion.
In reading the discussion of the fairness opinion set forth
below, you should be aware that Bear Stearns opinion:
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Was provided to the special committee and OCPs board of
directors solely for their benefit and use;
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Did not constitute a recommendation to the special committee or
OCPs board of directors;
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Does not constitute a recommendation to any stockholder of OCP
as to how to vote in connection with the merger or otherwise;
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Did not address OCPs underlying business decision to
pursue the merger, the relative merits of the merger as compared
to any alternative business or financial strategies that might
exist for OCP or the effects of any other transaction in which
OCP might engage; and
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Did not express any view or opinion as to the fairness of the
amount or nature of any compensation payable to any of
OCPs officers, directors or employees, or any class of
such persons, in connection with the merger relative to the
consideration to be received in the merger.
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OCP did not provide specific instructions to, or place any
limitations on, Bear Stearns with respect to the procedures to
be followed or factors to be considered by it in performing its
analyses or providing its opinion.
In connection with rendering its opinion, Bear Stearns:
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Reviewed the merger agreement, dated June 19, 2007;
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Reviewed OCPs Annual Reports to Shareholders and Annual
Reports on
Form 10-K
for the fiscal years ended September 2006, 2005 and 2004, its
Quarterly Reports on
Form 10-Q
for the periods ended December 31, 2006, and March 31,
2007 and its Current Reports on
Form 8-K
filed since September 30, 2006;
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Reviewed certain operating and financial information relating to
OCPs businesses and prospects, including projections for
the three years ended September 30, 2010 and extrapolated
projections for the five years ended September 30, 2015,
all as prepared and provided to Bear Stearns by OCPs
management;
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Met with certain members of OCPs senior management to
discuss OCPs businesses, operations, historical and
estimated financial results and future prospects;
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Reviewed the historical prices, trading multiples and trading
volumes of the common shares of OCP;
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Reviewed publicly available financial data, stock market
performance data and trading multiples of companies which Bear
Stearns deemed generally comparable to OCP;
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Reviewed the terms of recent mergers and acquisitions involving
companies which Bear Stearns deemed generally comparable to OCP;
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Performed discounted cash flow analyses based on the projections
for OCP furnished to Bear Stearns; and
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Conducted those other studies, analyses, inquiries and
investigations as Bear Stearns deemed appropriate.
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In connection with rendering its opinion, Bear Stearns further
noted that:
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Bear Stearns relied upon and assumed, without independent
verification, the accuracy and completeness of the financial and
other information provided to it by OCP or obtained by Bear
Stearns from public sources, including, without limitation, the
projections referred to above.
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With respect to the projections, Bear Stearns relied on
representations that they had been reasonably prepared on bases
reflecting the then best currently available estimates and
judgments of the senior management of OCP as to the expected
future performance of OCP.
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Bear Stearns did not assume any responsibility for the
independent verification of any information referred to above,
including, without limitation, the projections, Bear Stearns
expressed no view or opinion as to the projections and Bear
Stearns further relied upon the assurances of the senior
management of OCP that they were unaware of any facts that would
have made the information and projections incomplete or
misleading.
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In arriving at its opinion, Bear Stearns did not perform or
obtain any independent appraisal of the assets or liabilities
(contingent or otherwise) of OCP, nor was Bear Stearns furnished
with any such appraisals (other than a real estate appraisal of
OCPs headquarters carried out by third party consultants
at OCPs instruction).
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During the course of Bear Stearns engagement, Bear Stearns
was asked by the special committee to solicit indications of
interest from various third parties regarding a transaction with
OCP, and Bear Stearns considered the results of such
solicitation in rendering its opinion.
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Bear Stearns assumed that the transactions contemplated by the
merger agreement will be consummated in a timely manner and in
accordance with the terms of the merger agreement without any
limitations, restrictions, conditions, amendments or
modifications, regulatory or otherwise, that collectively would
have a material effect on OCP.
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Bear Stearns is not a legal, regulatory, tax or accounting
expert and has relied on the assessments made by OCP and its
advisors with respect to these issues.
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Bear Stearns did not express any opinion as to the price or
range of prices at which the shares of common stock of OCP may
trade subsequent to the announcement of the merger.
Summary
of Analyses
The following is a summary of the principal financial and
valuation analyses performed by Bear Stearns and presented to
the special committee and OCPs board of directors in
connection with rendering its fairness opinion.
Some of the financial analyses summarized below include
summary data and information presented in tabular format. In
order to understand fully the financial and valuation analyses,
the summary data and
17
tables must be read together with the full text of the
summary. Considering the summary data and tables alone could
create a misleading or incomplete view of Bear Stearns
financial and valuation analyses.
Comparable
Company Analysis
Bear Stearns reviewed publicly available financial and stock
market information of the following nine companies in the
optical components industry:
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Avanex Corp.
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Bookham, Inc.
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Emcore Corp.
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Finisar Corp.
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JDS Uniphase Corp.
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MRV Communications, Inc.
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Oplink Communications, Inc.
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Opnext, Inc.
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Optium Corp.
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These companies were selected, among other reasons, because they
share similar business characteristics to OCP and they operate
in the optical components industry. However, comparability
between these companies and OCP is very difficult due to widely
varying sizes and operating statistics. While none of the
companies listed is identical to OCP, Bear Stearns made
judgments and assumptions concerning differences in financial
and operating characteristics of the selected companies and
other factors that could affect the enterprise values of the
selected companies.
Based on the synthesis of comparable company considerations,
Bear Stearns selected MRV Communications and Bookham as the most
relevant comparable companies to OCP. Financial data of the
selected companies were based on publicly available research
analysts estimates and other publicly available
information.
Based on the Bookham and MRV Communications expected revenue
multiples. Bear Stearns identified a range of
0.55x-0.80x
fiscal year 2007 expected revenue and
0.50x-0.70x
fiscal year 2008 expected revenue to apply to OCPs
projected revenue. Utilizing these valuation multiples by
applying them to fiscal year 2007 expected revenue of $70.6
million and fiscal year 2008 expected revenue of $82.1 million
resulted in a range of enterprise values of $38.9 - $56.5
million and $41.1 - $57.5 million, respectively, and adding the
projected June 30, 2007 cash balance of $104 million resulted in
total equity values of $142.9 - $160.5 million and $145.1 -
$161.5 million, respectively, which based on 114.6 million
shares outstanding of OCP common stock, implied per share values
of $1.25 - $1.40 based on 2007 revenue multiples and $1.27 -
$1.41 based on 2008 revenue multiples. Bear Stearns noted that
including certain non-operating assets would increase the above
ranges by an incremental $0.30 per share.
Discounted
Cash Flow Analysis
Bear Stearns performed a discounted cash flow analyses for the
purpose of determining a range of implied present values for
OCP. The discounted cash flow analyses were based on internal
projections for the fiscal years 2007 through 2010 prepared and
provided by OCP management to Bear Stearns (see Annex
F Projected Financial Information). The
base case projected results for the fiscal years 2007 through
2010 and were based on managements financial plan. The
extended case extrapolated projections for the five fiscal years
ended September 30, 2015 (see Annex F
Projected Financial Information). These extended case
projections were derived from the base case projections and were
reviewed and approved by OCP management. Based on the results of
the analyses, Bear Stearns calculated an overall range of $1.17
- $1.65 per share.
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For each of the discounted cash flow analyses that it performed,
Bear Stearns incorporated the projected June 30, 2007, net
cash balance of $104 million, and the $5 million
minority investment in StrataLight Communications, Inc. at cost,
to arrive at implied equity values. Furthermore, management
indicated that it plans to sell its headquarters during 2008 at
a price that is supported by an independent third party
appraisal and preliminary bid on the property. On that basis,
Bear Stearns also reflected the estimated proceeds of the sale
(offset by projected relocation and lease expenses) in its
discounted cash flow analyses as a positive cash flow item in
fiscal year 2008. Bear Stearns performed a separate discounted
cash flow analysis to value the Companys use of net
operating losses using the discount rates noted below, in light
of expected interest income from cash and marketable securities.
Bear Stearns included the net present value of the net operating
losses and related tax attributes in its discounted cash flow
values as well.
Discounted Cash Flow Analysis
Base
Case.
Employing the base case projections (see
Annex F Projected Financial
Information), Bear Stearns calculated the estimated
present value of the standalone unlevered, after-tax free cash
flows that OCP would generate during the fiscal years 2007 to
2010. The terminal value was calculated by applying a multiple
of last twelve months, or LTM, revenue ranging from 0.55x to
0.85x, which is similar to the range utilized in Bear
Stearns comparable company analysis discussed above. The
present values of the cash flows and terminal values were
discounted using a range of discount rates from 17.0% to 20.0%,
which were based on Bear Stearns judgment of the weighted
average cost of OCPs capital. Because of the lack of
meaningful positive cash flows during the fiscal years
2007-2010,
Bear Stearns was not able to use more standard earnings before
interest, taxes, depreciation and amortization, or EBITDA,
terminal multiples or to conduct a perpetual growth rate
analysis. This analysis resulted in a range of enterprise values
of $26.2 - $50.2 million and after taking into
account the adjustments above resulted in total equity values of
$163.9 - $189.3 million which, based on
114.6 million shares outstanding of OCP common stock,
implied per share values of $1.43 - $1.65 per share of OCP
common stock.
Discounted Cash Flow Analysis
Extended
Case.
Employing the extended case projections
(see Annex F Projected Financial
Information), Bear Stearns calculated the estimated
present value of the standalone unlevered, after-tax free cash
flows that OCP would generate during the fiscal years 2007 to
2015. Bear Stearns then calculated an implied range of terminal
values under three methodologies: (1) by applying a
multiple of LTM revenue ranging from 0.55x to 0.85x, which is
similar to the range utilized in Bear Stearns comparable
company analysis discussed above, (2) by applying a range
of perpetual revenue growth rates of 3% to 9% and (3) by
applying a range of
2011-2015
revenue growth rates of 12% to 20% and
2011-2015
EBITDA margins of 6% to 10% at a constant multiple of LTM
revenue of 0.70x, the midpoint between the 0.55x to 0.85x range
discussed above. The range of growth rates and EBITDA margins
that were utilized under methodologies (2) and (3) were provided
by OCP management based on their views regarding the industry
and OCPs predicted future performance, based in part on
published data for the overall transceiver industry indicating
that revenue growth rates are predicted to be approximately 20%
through 2012, and recognizing the inherent highly speculative
nature of predicting the growth of the transceiver market and
the Companys performance in later years. The present
values of the cash flows and terminal values calculated under
methodologies (1) and (2) were discounted using a
range of discount rates from 17.0% to 20.0%, which were based on
Bear Stearns judgment of the weighted average cost of
OCPs capital. The present values of the cash flows and
terminal values calculated under methodology (3) were
discounted using a constant discount rate of 18.5%, the midpoint
between the 17.0% to 20.0% range discussed above. These analyses
resulted in a range of implied enterprise values of $21.8 -
$49.0 million under methodology (1), ($3.7) -$3.5 million under
methodology (2), and $21.6 - $47.8 million under methodology
(3). After taking into account the adjustments above, these
analyses resulted in total equity values of $159.5 - $188.1
million under methodology (1), $134.0 - $142.6 million under
methodology (2), and $159.7 - $186.2 million under methodology
(3), which, based on 114.6 million shares outstanding of OCP
common stock, implied the following range of per share values:
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Range
|
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Methodology 1
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|
$
|
1.39 1.64
|
|
Methodology 2
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$
|
1.17 1.24
|
|
Methodology 3
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$
|
1.39 1.63
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19
Precedent
Merger and Acquisition Transaction Analysis
Bear Stearns analyzed selected precedent merger and acquisition
transactions in the optical components industry since 2000.
Minimal relevant data was available to analyze operating
profiles and to derive acquisition multiples because most of the
transactions involved private companies. Bear Stearns focused
its analysis on Oplinks purchase of Furukawas OCP
Class B shares (at 0.69x LTM and 0.60x next twelve months,
or NTM revenue) and Emersons purchase of Stratos (at 0.99x
LTM and 0.91x NTM revenue), as they represented the most
relevant transactions upon which to base a comparable
transaction valuation. Utilizing the Furukawa transaction at the
low end and the Stratos transaction at the high end by applying
the relevant multiples to LTM revenue of $67.5 million and NTM
revenue of $73.9 million resulted in a range of enterprise
values of $47.3 - $67.5 million and $44.4 - $66.5 million,
respectively, and adding the projected June 30, 2007 cash
balance of $104 million resulted in total equity values of
$151.3 - $171.5 million and $148.4 - $170.5 million,
respectively, which based on 114.6 million shares outstanding of
OCP common stock, implied per share values of $1.32 - $1.50
based on LTM revenue multiples and $1.30 - $1.49 based on
NTM revenue multiples. Bear Stearns noted that including certain
non-operating assets would increase the above ranges by an
incremental $0.30 per share.
Other
Considerations
The preparation of a fairness opinion is a complex process and
involves various judgments and determinations as to the most
appropriate and relevant assumptions and financial and valuation
analyses and the application of those methods to the particular
circumstances involved. A fairness opinion is therefore not
readily susceptible to partial analysis or summary description,
and taking portions of the analyses set out above, without
considering the analysis as a whole, would in the view of Bear
Stearns create an incomplete and misleading picture of the
processes underlying the analyses considered in rendering the
Bear Stearns opinion. In arriving at its opinion, Bear Stearns:
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Based its analyses on assumptions that it deemed reasonable,
including assumptions concerning general business and economic
conditions, capital markets considerations and industry-specific
and company-specific factors.
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Did not form a view or opinion as to whether any individual
analysis or factor, whether positive or negative, considered in
isolation, supported or failed to support the Bear Stearns
opinion.
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Considered the results of all its analyses and did not attribute
any particular weight to any one analysis or factor.
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Arrived at its ultimate opinion based on the results of all
analyses undertaken by it and assessed as a whole and believes
that the totality of the factors considered and analyses
performed by Bear Stearns in connection with its opinion
operated collectively to support its determination as to the
fairness of the consideration to be received by the stockholders
of OCP, excluding Oplink and merger sub.
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Bear Stearns also noted that:
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The analyses performed by Bear Stearns, particularly those based
on estimates and projections (see Annex F
Projected Financial Information), are not necessarily
indicative of actual values or actual future results, which may
be significantly more or less favorable than suggested by these
analyses.
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None of the public companies used in the comparable company
analysis described above are identical to OCP, and none of the
precedent merger and acquisition transactions used in the
precedent transactions analysis described above are identical to
the merger.
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Accordingly, the analyses of publicly traded comparable
companies and precedent merger and acquisition transactions is
not mathematical; rather such analyses involve complex
considerations and judgments concerning the differences in
financial, operating and capital markets-related characteristics
and other factors regarding the companies and precedent merger
and acquisition transactions to which OCP and the merger were
compared.
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The analyses performed by Bear Stearns do not purport to be
appraisals or to reflect the prices at which any securities may
trade at the present time or at any time in the future.
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The type and amount of consideration payable in the merger were
determined through negotiations between the special committee
and Oplink and was approved by OCPs board of directors
upon the recommendation of the special committee. The decision
to enter into the merger agreement was solely that of the
special committee and
20
OCPs board of directors. The Bear Stearns opinion was just
one of the many factors taken into consideration by the special
committee. Consequently, Bear Stearns analyses should not
be viewed as determinative of the decision of the special
committee with respect to the fairness of the aggregate
consideration to be received, from a financial point of view, by
the stockholders of OCP, excluding Oplink and merger sub.
Pursuant to the terms of Bear Stearns engagement letter,
OCP paid Bear Stearns a retainer of $750,000 in 2003 in
connection with Bear Stearns initial engagement by the
special committee. Following the announcement of Oplinks
agreement to purchase Furukawas majority interest in OCP
and Oplinks offer to the special committee to acquire the
remaining shares of OCP for $1.50 per share in cash, the
special committee agreed to pay Bear Stearns an evaluation fee
of $1.5 million consideration of Bear Stearns
assistance in responding to the Oplink announcement and offer,
which fee was paid on May 4, 2007. Bear Stearns will also
be entitled to receive an additional payment of approximately
$3.0 million if the merger with Oplink is consummated. In
addition, OCP has agreed to reimburse Bear Stearns for certain
expenses and to indemnify Bear Stearns against certain
liabilities arising out of Bear Stearns engagement.
Consistent with applicable legal and regulatory requirements,
Bear Stearns has adopted policies and procedures to establish
and maintain the independence of Bear Stearns research
departments and personnel. As a result, Bear Stearns
research analysts may hold views, make statements or investment
recommendations
and/or
publish research reports with respect to OCP, Oplink, the merger
and other participants in the merger that differ from the views
of Bear Stearns investment banking personnel.
In the ordinary course of business, Bear Stearns and its
affiliates may actively trade for its own account and for the
accounts of its customers equity and debt securities, bank debt
and/or
other
financial instruments issued by OCP
and/or
Oplink and their respective affiliates, as well as derivatives
thereof, and, accordingly, may at any time hold long or short
positions in these securities, bank debt, financial instruments
and derivatives.
Interests
of Our Directors and Executive Officers in the Merger
In considering the recommendations of our board of directors,
stockholders should be aware that certain of our directors and
executive officers have interests in the transaction that are
different from, or in addition to, the interests of stockholders
generally. These interests may present them with actual or
potential conflicts of interest, and these interests, to the
extent material, are described below. The special committee and
our board of directors were aware of these potential conflicts
of interest and considered them, among other matters, in
reaching their decisions, as applicable, to approve the merger
agreement and the merger and to unanimously recommend that our
stockholders vote in favor of adopting the merger agreement.
Compensation
of Members of the Special Committee
Each member of the special committee is compensated for serving
as a member of OCPs board of directors, including as
members
and/or
chairs of the committees of the board. This compensation was
authorized by the compensation committee of our board of
directors, and ratified by our board of directors. In order to
compensate Mr. Birmingham as the chairman of the special
committee for the significant additional time commitment that
has been required of him in connection with fulfilling his
duties and responsibilities as chairman of the special
committee, Mr. Birmingham has received additional
compensation of $10,000 per month during periods of high
activity, including the period after the announcement of
Oplinks agreement to acquire Furukawas OCP stock and
prior periods of active discussions with potential merger
partners. Since the special committee was formed in June 2003.
Mr. Birmingham, Mr. Warnes and Dr. Personick have received
aggregate payments for services on the committee of $193,000,
$80,000 and $80,000, respectively. In addition, each member of
the special committee will receive $30,000 for their service on
the special committee. This is payable whether or not the merger
is completed. The members of the special committee also will be
reimbursed for their reasonable out-of-pocket expenses related
to their services on the special committee.
Acceleration
of Stock Options and Retention Payments for Executive
Officers
If the merger is completed, options held by Mr. Otto,
OCPs Chief Executive Officer and President, and Frederic
Boyer, OCPs Chief Financial Officer, will become fully
vested and immediately exercisable into shares of
21
Oplink common stock in the event that they are not offered
continued employment with the Company after the merger on
comparable terms as they now have with the Company, and under
other circumstances. Mr. Otto holds options to purchase
2,000,000 shares of OCP common stock at an exercise price
of $1.91 per share. Mr. Boyer holds options to purchase
250,000 shares of OCP common stock at an exercise price of
$1.90 per share and options to purchase 250,000 shares of
OCP common stock at $2.66 per share. It is expected that the
options held by Mr. Otto and Mr. Boyer will expire unexercised.
Under the terms of the merger agreement, each outstanding OCP
stock option, whether vested or unvested, will be converted into
an option to purchase a number of shares of Oplinks common
stock determined by multiplying the number of shares of OCP
common stock subject to such stock option by a fraction, the
numerator of which is $1.65 and the denominator of which is the
average closing price per share of Oplinks common stock on
The NASDAQ Global Market for the five trading days ending two
business days prior to the closing. The per share exercise price
for the newly issued stock options will be equal to the per
share exercise price for the shares of OCP common stock that
could have been purchased prior to the effective time of the
merger divided by a fraction, the numerator of which is $1.65
and the denominator of which is the average closing price per
share of Oplinks common stock on The NASDAQ Global Market
for the five trading days ending two business days prior to the
closing. As of the record date and assuming completion of the
merger, directors and officers of the Company hold, in the
aggregate, vested, in-the-money stock options with a
total value of $57,675. These options are held by OCPs
independent directors, Mr.Birmingham, Mr. Warnes and
Dr. Personick, with total value of $24,425, $24,425 and
$8,825, respectively.
Each of Mr. Otto and Mr. Boyer have retention bonus
agreements with the Company that provide that they will receive
bonus payments of $175,000 and $210,625, respectively, so long
as they remain employed by the Company until January 2,
2008, or if their employment is terminated without cause earlier
by the Company.
Indemnification
and Insurance
The merger agreement provides that all rights to
indemnification, exculpation and advancement of expenses
existing in favor of our current or former directors and
officers as provided in our organizational documents, or in any
indemnification agreement or arrangement as in effect as of the
date of the merger agreement, with respect to matters occurring
prior to the effective time of the merger will survive the
consummation of the merger and will continue in full force and
effect from and after the closing of the merger. Oplink
guarantees the payment obligation, if any, of the surviving
corporation pursuant to such rights, subject to applicable law,
and will not modify or terminate such rights in any adverse
manner, including through amendment of the surviving
corporations certificate of incorporation or bylaws, or
thorough a merger or transfer of assets of the surviving
corporation.
On or prior to the effective time of the merger, we will
purchase a tail policy to our policies of directors and
officers liability insurance maintained on the date of the
merger agreement. This tail policy is required to remain
effective for six years after the closing date of the merger
with respect to claims arising from facts or events that existed
or occurred prior to or at the effective time of the merger and
will contain coverage that is at least as protective of the
persons covered as the coverage provided by the policy in place
on the date of the merger agreement. If such tail
policy is unavailable at a cost not greater than 200% of the
annual premium of the existing coverage, then we may obtain as
much comparable insurance as may be obtained in good faith at a
cost not greater than 200% of the annual premium of our existing
coverage.
Resignation
of Non-Oplink Directors
Members of the special committee and Phil Otto, director, Chief
Executive Officer and President of the Company, have indicated
that they intend to resign from the board of directors if the
merger agreement is terminated by Oplink because it is not
approved by the Companys stockholders, or upon the closing
of the merger.
See
Proposal No. 1
Approval and Adoption of the Merger Agreement
Material Provisions of the Merger Agreement
Resignation and Appointment of Directors below.
22
Oplinks
and Oplink Acquisitions Purposes and Reasons for the
Merger
Oplinks and Oplink Acquisitions purpose for pursuing
the merger is to acquire for cash all the equity interests in
OCP not currently held by Oplink. Oplink considered alternatives
to the merger to accomplish this purpose, but determined that
negotiating a merger with OCPs special committee was the
best course of action for Oplink, as well as for OCPs
minority stockholders.
Oplinks determination that a merger approved by the OCP
special committee was the best alternative was driven primarily
by the requirements of Section 203 of the Delaware General
Corporation Law and by a determination that having the special
committee continue to represent the interests of OCPs
minority stockholders would help ensure the procedural and
substantive fairness of any transaction in which Oplink acquired
the remaining outstanding shares from the minority stockholders.
Under Section 203 of the Delaware General Corporation Law,
Oplink is prohibited from engaging in any business
combination with OCP until three years after the date of
the agreement with Furukawa, or April 23, 2010, unless the
business combination is approved by holders of
66
2
/
3
%
of OCP common stock that is not owned by Oplink or its
affiliates. Section 203 is intended to deter acquisitions
of controlling interests in Delaware corporations effected
without the consent of the corporations board of
directors, sometimes referred to as hostile
takeovers. The restrictions of Section 203 are applicable
to Oplink because the agreement between Oplink and Furukawa
regarding the sale of the 58% ownership interest of OCP was made
without the consent or approval of the OCP board of directors.
Following the execution of Oplinks agreement with Furukawa
to purchase Furukawas 58% equity ownership of OCP, Oplink
considered several alternatives for acquiring the remaining 42%
of OCP outstanding common stock. One of the alternatives
considered by Oplink was to effect the removal of the OCP board
and special committee, following the consummation of
Oplinks acquisition of 58% of OCPs outstanding
voting stock, and appoint new individuals to serve on the OCP
board. Oplink rejected this alternative because it believed that
a transaction negotiated with, approved by and recommended to
the OCP minority stockholders by the OCP special committee would
be (1) more likely to receive the approval of holders of at
least
66
2
/
3
%
of the minority shares, as required by Section 203 the
Delaware General Corporation Law, and (2) more likely to be
perceived as procedurally and substantively fair to the minority
stockholders, than a transaction negotiated by Oplink and OCP
after the special committee had been removed by Oplink.
Oplink also considered launching a tender offer for the
remaining 42% of OCP common stock as an alternative to
negotiating the merger with the OCP special committee. Oplink
rejected this alternative because it was concerned that without
the support and approval of the OCP special committee, a tender
offer by Oplink might not be broadly accepted by the OCP
minority stockholders. Furthermore, even if a substantial number
of minority stockholders accepted Oplinks tender offer,
Oplink would still be prohibited under Section 203 the
Delaware General Corporation Law from consummating a merger with
OCP to obtain the shares not tendered in response to the tender
offer without the approval of holders of at least
66
2
/
3
%
of the remaining shares not tendered, which Oplink believed
could be difficult to obtain.
Oplinks
and Oplink Acquisitions Position as to Fairness of the
Merger
Oplink and Oplink Acquisition attempted to negotiate the terms
of a transaction that would be most favorable to themselves, and
not to the stockholders of OCP (including its unaffiliated
stockholders) and accordingly did not negotiate the merger
agreement with the goal of obtaining terms that were fair to
OCPs unaffiliated stockholders. Oplinks designees on
the OCP board of directors were first appointed only after the
execution of the merger agreement. Neither Oplink nor Oplink
Acquisition voted, influenced or otherwise participated in the
deliberation of the special committee or OCPs board of
directors when the special committee voted to recommend, or when
the board voted to approve, the merger agreement. Neither Oplink
nor Oplink Acquisition undertook any independent evaluation of
the fairness of the proposed merger to the unaffiliated
stockholders of OCP or engaged a financial advisor for such
purposes or received other advice specifically regarding such
fairness. For the above reasons, the views of neither Oplink nor
Oplink Acquisition as to the fairness of the merger should be
construed as a recommendation to any stockholder as to how that
stockholder should vote on the proposal to approve and adopt the
merger agreement.
23
Both Oplink and Oplink Acquisition believe that the merger
agreement and the merger are substantively and procedurally fair
to the unaffiliated stockholders of OCP based upon their
knowledge of the Company, the Companys financial
performance, the trading price of its common stock and the
history of arms-length negotiations with the Company. In
particular, both Oplink and Oplink Acquisition note the per
share merger consideration of $1.65 per share represents a 20%
premium over the closing price on April 20, 2007, the last
day of trading prior to the announcement of Oplinks
agreement with Furukawa, a 21% premium to the average closing
price for the period between March 20, 2007 and
April 20, 2007, a 17% premium to the average closing price
for the period between February 20, 2007 and April 20,
2007 and a 9.3% premium to the average closing price for the
period between January 19, 2007 and April 20, 2007,
and is 10% higher than the per share consideration Oplink paid
for the OCP shares held by Furukawa. Oplink and Oplink
Acquisition also note that the Companys financial
performance in recent periods has been relatively poor, which
suggests that the per share merger consideration of $1.65 is a
fair price to the unaffiliated stockholders. Oplink and Oplink
Acquisition also note that the extensive arms-length
negotiations between Oplink and the special committee led to an
increase from Oplinks initial offer of $1.50 per share to
$1.65 per share, and that Furukawa accepted a price of
approximately $1.50 per share in an arms-length negotiation for
the sale of its equity ownership in OCP. In addition, both
Oplink and Oplink Acquisition consider the fact that the special
committee and the Companys board of directors received an
opinion from Bear Stearns, its independent financial advisor, to
the effect that, as of June 19, 2007, and based upon and
subject to the various considerations and assumptions described
in the opinion, the $1.65 per share consideration to be received
by the stockholders (other than Oplink and its affiliates) was
fair, from a financial point of view, to such stockholders (see
Special Factors Reasons for the Special
Committees Determination; Fairness of the Merger and
Opinion of the Special Committees
Financial Advisor). Oplink and Oplink Acquisition believe
that such determination supports a determination of fairness to
the unaffiliated stockholders of OCP because the affiliate
stockholders of OCP would not receive any consideration for
their shares greater than that to be received by OCPs
unaffiliated stockholders, and any other benefits to be received
by OCPs affiliate stockholders in connection with the
merger would be incidental to the merger and, in the aggregate,
immaterial in value. Oplink and Oplink Acquisition also believe
that the analysis and report prepared by its own financial
advisor, Seven Hills, which report Oplink and Oplink Acquisition
adopt, supporting Seven Hills opinion that the merger is
fair, from a financial point of view, to Oplink, is supportive
of a determination that the merger is substantively fair to the
unaffiliated stockholders of OCP, based on the valuation ranges
for OCP common stock set forth in Seven Hills report.
Oplink and Oplink Acquisition did not consider the liquidation
value of OCP because they considered OCP to be a viable, going
concern and therefore did not consider liquidation value to be a
relevant methodology. Further, Oplink and Oplink Acquisition did
not consider net book value, which is an accounting concept, as
a factor because they believed that net book value is not a
material indicator of the value of OCP as a going concern but
rather is indicative of historical costs. OCPs net book
value per share as of March 31, 2007 was approximately
$1.51.
In considering both the substantive and procedural fairness of
the merger to the unaffiliated stockholders of OCP both Oplink
and Oplink Acquisition also consider that under Delaware law,
the merger needs to be approved by the holders of
66
2
/
3
%
of the voting power of common stock not held by Oplink and its
affiliates.
The process followed in the negotiations among the special
committee, OCP, Oplink and Oplink Acquisition was specifically
adopted to ensure fairness to the unaffiliated stockholders of
OCP. The unaffiliated stockholders of OCP were represented by
the special committee which retained sophisticated legal counsel
and financial advisors. While Oplink in currently a majority
stockholder of the Company, at the time negotiations commenced
with the special committee on April 22, 2007, Oplink owned only
100 shares of OCP. Further, it did not appoint or cause to be
appointed any directors to the board of directors prior to the
execution of the merger agreement. Nor did Oplink vote,
influence or otherwise participate in the deliberation of the
special committee or the Companys board of the directors
when the special committee voted to recommend, or when the board
voted to approve, the merger agreement. For these reasons, both
Oplink and Oplink Acquisition believe that Oplinks status
as a majority stockholder of OCP did not unduly influence the
decision of the special committee or the board of directors with
respect to the merger agreement or the merger and that the
merger is procedurally fair to the unaffiliated stockholders of
OCP.
The foregoing discussion of the information and factors
considered and given weight by each of Oplink and Oplink
Acquisition in connection with the procedural and substantive
fairness of the merger to the unaffiliated
24
stockholders of OCP is not intended to be exhaustive but is
believed to include all material factors considered by each of
Oplink and Oplink Acquisition. Neither Oplink nor Oplink
Acquisition found it practicable to assign, and did not assign,
relative weights to the individual factors considered in
reaching its conclusions as to the fairness of the proposed
merger to the unaffiliated stockholders of OCP. Rather, its
fairness determination was made after consideration of all of
the foregoing factors as a whole.
Opinion
of Oplinks Financial Advisor
Pursuant to a letter agreement dated April 16, 2007, Oplink
engaged Seven Hills Partners LLC, referred to as Seven
Hills in this proxy statement, to act as its financial
advisor in connection with a possible acquisition of, business
combination with, or series of transactions with, OCP. Oplink
selected Seven Hills based on its experience, expertise and
reputation. Seven Hills provides merger and acquisition advisory
services to public and private companies and in this capacity is
continually engaged in performing financial analyses with
respect to businesses and their securities in connection with
mergers and acquisitions as well as for other transactions and
corporate purposes.
At a meeting of the Oplink board on June 18, 2007, Seven
Hills delivered to the Oplink board of directors its oral
opinion (which was subsequently confirmed in writing) that, as
of that date and based upon the assumptions made, matters
considered and limits of review set forth in Seven Hills
written opinion, the $1.65 per share in cash to be paid by
Oplink in connection with the merger, on a collective basis (the
merger consideration) was fair, from a financial
point of view, to Oplink. The full text of Seven Hills
written opinion, which sets forth, among other things, the
assumptions made, procedures followed, matters considered and
limitations on the scope of the review undertaken by Seven Hills
in delivering its opinion, is attached as
Annex C
to
this proxy statement. The opinion should be read carefully and
in its entirety. The following description of Seven Hills
opinion is only a summary of the written opinion and is
qualified in its entirety by reference to the full text of such
opinion.
Seven Hills opinion was provided solely for the
information and assistance of Oplinks board of directors
in connection with its consideration of the merger. It addresses
only the fairness, from a financial point of view, to Oplink of
the merger consideration. The Seven Hills opinion does not
address the fairness of the merger consideration to OCP or its
stockholders or any other party or any other aspect of the
merger, nor does it constitute a recommendation to any
stockholder as to how such stockholder should vote or otherwise
act with respect to the merger or any other matter.
The Seven Hills opinion does not address the relative merits of
the merger as compared to any alternative business transaction
that might be available to Oplink, nor does it address the
underlying business decision of Oplink to enter into the
Agreement or proceed with the merger. The Seven Hills opinion
should not be viewed as determinative of the views of Oplink or
the Oplink board of directors with respect to the merger. The
merger consideration was determined through negotiations between
Oplink and OCP and not pursuant to recommendations of Seven
Hills. It should be noted that in the context of this engagement
by Oplink, Seven Hills was not authorized to, and did not
investigate any alternative transactions that may be available
to Oplink.
In connection with its opinion, Seven Hills reviewed and
considered, among other things:
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a draft of the Agreement dated June 14, 2007;
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certain publicly available financial and other information for
OCP, including Annual Reports on
Form 10-K
for the fiscal year ended September 30, 2006 and Quarterly
Reports on
Form 10-Q
for the quarter ended March 31, 2007;
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certain financial and operating information with respect to the
business, operations and prospects of OCP furnished to Seven
Hills by OCP, including financial projections of OCP through
fiscal year 2010 prepared by the management of OCP, which
projections are set forth in Annex F Projected
Financial Information, together with financial projections for
fiscal years 2011 and 2012 reviewed and approved by Oplink,
which projections are set forth below;
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certain publicly available financial projections prepared by
Wall Street research analysts for OCP, Oplink and certain other
publicly traded companies that Seven Hills deemed relevant;
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25
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certain operating results, the reported price and trading
histories of the shares of the common stock of OCP, and
operating results, the reported price and trading histories of
certain publicly traded companies that Seven Hills deemed
relevant;
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|
|
certain financial terms, to the extent publicly available, of
certain selected business combinations that Seven Hills deemed
relevant;
|
|
|
|
pro forma impact of the merger on certain financial and
operating metrics, including the impact on cash balance, for
Oplink;
|
|
|
|
certain estimates of cost savings and other synergies expected
to result from the merger, prepared and provided to Seven Hills
by Oplink;
|
|
|
|
discussions with the senior management of Oplink and their
strategic and financial rationale for the merger;
|
|
|
|
discussions and negotiations among representatives of Oplink,
OCP and their respective advisors; and
|
|
|
|
such other information, financial studies, analyses and
investigations and such other factors that we deemed relevant
for the purposes of this opinion.
|
Seven Hills relied upon the accuracy and completeness of all of
the financial, accounting and other information discussed with
or reviewed by Seven Hills and assumed such accuracy and
completeness for purposes of rendering its opinion, and has not
undertaken any independent verification of such information.
Seven Hills relied upon the assurances of management of Oplink
that it is not aware of any facts that would make such
information inaccurate or misleading in any respect. Seven Hills
assumed, with Oplinks consent, with respect to the
financial projections for OCP provided to Seven Hills by OCP or
approved by Oplink, that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments
of the management of OCP or Oplink, as applicable, of the future
financial performance of OCP on a standalone basis, that they
form a reasonable basis for Seven Hills opinion and that
OCP will perform substantially in accordance with such
projections, and, with respect to the financial projections for
Oplink prepared by Wall Street analysts, that they were
reasonably prepared, that they form a reasonable basis for Seven
Hills opinion and that Oplink will perform substantially
in accordance with such projections. Furthermore, Seven Hills
did not obtain or make, or assume responsibility for obtaining
or making, any independent evaluation or appraisal of the
properties or assets or liabilities (contingent or otherwise) of
OCP, nor was Seven Hills furnished with any such evaluations or
appraisals, nor has Seven Hills evaluated the solvency or fair
value of OCP under any state or federal laws relating to
bankruptcy, insolvency or similar matters.
For purposes of rendering its opinion, Seven Hills assumed that
the representations and warranties of each party contained in
the Agreement are true and correct, that each party will perform
all of the covenants and agreements required to be performed by
it under the Agreement and that all conditions to the
consummation of the merger will be satisfied without material
waiver thereof. Seven Hills further assumed that the final form
of the Agreement will not vary materially from the last draft
Agreement reviewed by Seven Hills and that the merger will be
consummated substantially in accordance with the terms described
in such draft, without any amendment or waiver of material terms
or conditions. Seven Hills assumed that all material
governmental, regulatory or other consents and approvals
necessary for the consummation of the merger will be obtained
without any adverse effect on Oplink, on OCP or on the
contemplated benefits of the merger. Seven Hills noted that it
is not a legal, tax or regulatory expert and has relied upon,
without assuming any responsibility for independent verification
or liability therefor, the assessment of Oplinks legal,
tax and regulatory advisors with respect to the legal, tax and
regulatory matters related to the Agreement.
Seven Hills opinion was necessarily based upon economic
and market conditions and other circumstances as in effect on,
and the information made available to Seven Hills as of,
June 18, 2007. Although subsequent developments may affect
its opinion, Seven Hills does not have any obligation to update,
revise or reaffirm its opinion.
The following represents a brief summary of various information
sources and the material financial analyses employed by Seven
Hills in connection with providing its opinion to the Oplink
board of directors. The following summary does not purport to be
a complete description of the financial analyses performed by
Seven Hills, nor does the order of analyses described represent
relative importance or weight given to those analyses performed
by Seven
26
Hills. Some of the summaries of financial analyses performed by
Seven Hills include information presented in tabular format. In
order to fully understand the financial analyses performed by
Seven Hills, you should read the tables together with the text
of each summary. The tables alone do not constitute a complete
description of the financial analyses. Considering the data set
forth in the tables without considering the full narrative
description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of the financial analyses
performed by Seven Hills.
Trading and Transaction Statistics.
Seven
Hills, based on publicly available information, calculated the
premium of the implied consideration offered by Oplink over the
one-day
prior, one-week prior, one-month prior, two-month prior,
three-month prior, six-month prior, one-year prior, 52-week
high, and 52-week low share prices of OCPs closing stock
price on April 20, 2007, one day prior to the announcement
of Oplinks agreement to acquire the OCP shares owned by
Furukawa:
|
|
|
|
|
|
|
|
|
Trading Period
|
|
Price
|
|
|
Premium
|
|
|
April 20, 2007
|
|
$
|
1.38
|
|
|
|
19.6
|
%
|
1-Week
|
|
$
|
1.39
|
|
|
|
18.7
|
%
|
1-Month
|
|
$
|
1.36
|
|
|
|
21.3
|
%
|
2-Month
|
|
$
|
1.41
|
|
|
|
17.0
|
%
|
3-Month
|
|
$
|
1.51
|
|
|
|
9.3
|
%
|
6-Month
|
|
$
|
2.06
|
|
|
|
(19.9
|
)%
|
1-Year
|
|
$
|
2.95
|
|
|
|
(44.1
|
)%
|
52-Week High
|
|
$
|
3.23
|
|
|
|
(48.9
|
)%
|
52-Week Low
|
|
$
|
1.32
|
|
|
|
25.0
|
%
|
Additionally, Seven Hills, based on publicly available
information and estimates furnished to Seven Hills by OCP,
including financial projections of OCP prepared by the
management of OCP, calculated and compared multiples of
enterprise value, referred to as EV, for OCP and the implied EV
offered by Oplink in the merger. Seven Hills defined EV as
equity value (defined as fully diluted shares outstanding
(treasury method) multiplied by stock price) plus debt less cash
and cash equivalents. EV was compared to:
|
|
|
|
|
last twelve months revenue, referred to as EV/LTM revenue;
|
|
|
|
last quarter annualized revenue, referred to as EV/LQA revenue;
|
|
|
|
calendar year 2007 revenue, referred to as EV/CY07 revenue;
|
|
|
|
calendar year 2008 revenue, referred to as EV/CY08 revenue;
|
The enterprise value and price comparison information appears in
the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger
|
|
|
|
OCP(1)
|
|
|
Statistics(2)
|
|
|
EV/LTM Revenue
|
|
|
0.60
|
x
|
|
|
1.06
|
x
|
EV/LQA Revenue
|
|
|
0.62
|
x
|
|
|
1.09
|
x
|
EV/CY07 Revenue
|
|
|
0.58
|
x
|
|
|
1.01
|
x
|
EV/CY08 Revenue
|
|
|
0.48
|
x
|
|
|
0.84
|
x
|
|
|
|
(1)
|
|
EV calculated based on OCPs closing stock price of $1.38
on April 20, 2007, one day prior to the announcement of
Oplinks agreement to acquire the OCP shares owned by
Furukawa.
|
|
|
|
(2)
|
|
EV implied by $1.65 price offered by Oplink in the merger.
|
27
Selected Public Company Analysis.
Seven Hills
compared selected financial information, ratios and public
market multiples for OCP to the corresponding data for the
following six publicly-traded optical component companies:
Optical
Component Companies
|
|
|
|
|
JDS Uniphase Corporation
|
|
|
|
Finisar Corporation
|
|
|
|
Avanex Corporation
|
|
|
|
Oplink Communications, Inc.
|
|
|
|
Bookham, Inc.
|
|
|
|
Alliance Fiber Optic Products, Inc.
|
Although the selected public companies were used for comparison
purposes, none of the companies are directly comparable to OCP,
and they may significantly differ from OCP based on, among other
things, the size of the companies, the geographic coverage of
the companies operations and the particular business
segments in which the companies focus.
Seven Hills reviewed, among other information, multiples of EV
and share price values for the selected public companies implied
by those selected public companies as of June 15,
2007:
|
|
|
|
|
last twelve months revenue, referred to as EV/LTM revenue;
|
|
|
|
calendar year 2007 revenue, referred to as EV/CY07 revenue;
|
|
|
|
calendar year 2008 revenue, referred to as EV/CY08 revenue;
|
The results of Seven Hills review are summarized in the
table below:
|
|
|
|
|
Selected Public Companies
|
|
EV/LTM Revenue
|
|
0.50x - 1.72x - 1.92x - 3.31x
|
EV/CY07 Revenue
|
|
0.54x - 1.83x - 1.75x - 2.99x
|
EV/CY08 Revenue
|
|
0.46x - 1.62x - 1.59x - 2.91x
|
These multiples, when applied to OCPs applicable operating
results, imply the following per share values for OCP common
stock:
|
|
|
|
|
|
|
Low - Median - Mean - High
|
|
|
EV/LTM Revenue
|
|
$
|
1.32 - $2.04 - $2.16 - $2.98
|
|
EV/CY07 Revenue
|
|
$
|
1.36 - $2.16 - $2.11 - $2.87
|
|
EV/CY08 Revenue
|
|
$
|
1.37 - $2.23 - $2.21 - $3.19
|
|
Information for the selected public companies was based on
publicly available SEC filings, select public research reports,
selected press releases and other publicly available data.
28
Selected Transaction Analysis.
Seven Hills
reviewed publicly available financial information relating to
the following selected transactions for optical component
companies from January 1, 2003 to June 15, 2007:
|
|
|
Acquirer
|
|
Target
|
|
Emerson Electric Co.
|
|
Stratos International, Inc.
|
Tessera Technologies, Inc.
|
|
Digital Optics Corporation
|
ADC Telecommunications, Inc.
|
|
Fiber Optic Network Solutions Corporation
|
Advanced Photonix, Inc.
|
|
Picotronix, Inc.
|
Newport Corporation
|
|
Spectra-Physics, Inc.
|
Bookham, Inc.
|
|
Onetta, Inc.
|
JDS Uniphase Corporation
|
|
E2O Communications, Inc.
|
Finisar Corporation
|
|
Honeywell International Inc., VCSEL
|
Bookham, Inc.
|
|
New Focus, Inc.
|
Although the selected transactions were used for comparison
purposes, none of the transactions are directly comparable to
the merger and none of the companies are directly comparable to
OCP, and, the selected transactions may differ significantly
from the merger based on, among other things, the size of the
transactions, the structure of the transactions and the dates
that the transactions were announced and consummated.
Seven Hills reviewed, among other information, multiples of the
transaction value, referred to as TV, calculated as the equity
purchase price adjusted for the targets debt and cash and
cash equivalents, for the selected transactions implied by those
selected transactions:
|
|
|
|
|
last twelve months revenue, referred to as LTM revenue;
|
|
|
|
last quarter annualized revenue, referred to as LQA revenue;
|
The results of Seven Hills review are summarized in the
table below:
|
|
|
|
|
Selected Transactions
|
|
TV/LTM Revenue
|
|
0.99x - 2.08x - 2.01x - 2.99x
|
TV/LQA Revenue
|
|
0.97x - 1.78x - 2.04x - 3.17x
|
These multiples, when applied to OCPs applicable operating
results, imply the following per share values for OCP common
stock:
|
|
|
|
|
|
|
Low - Median - Mean - High
|
|
|
TV/LTM Revenue
|
|
$
|
1.61 - $2.25 - $2.21 - $2.79
|
|
TV/LQA Revenue
|
|
$
|
1.58 - $2.04 - $2.20 - $2.84
|
|
Multiples for the selected transactions were based on relevant
SEC filings, selected press releases and other publicly
available data.
Premiums Paid Analysis.
Seven Hills reviewed
selected purchase price per share premiums paid or to be paid of
technology companies announced from January 1, 2006 through
June 15, 2007, with equity values from $50 million to
$300 million:
|
|
|
Acquirer
|
|
Target
|
|
Emerson Electric Co.
|
|
Stratos International, Inc.
|
Exar Corporation
|
|
Sipex Corporation
|
Motorola, Inc.
|
|
Terayon Communication Systems, Inc.
|
Allen Systems Group, Inc.
|
|
Mobius Management Systems, Inc.
|
Quartzite Holdings, Inc.
|
|
Quovadx, Inc.
|
KEG Holdings, Inc.
|
|
Applied Innovation Inc.
|
CheckFree Corporation
|
|
Corillian Corporation
|
29
|
|
|
Acquirer
|
|
Target
|
|
Polycom, Inc.
|
|
SpectraLink Corporation
|
CheckFree Corporation
|
|
Carreker Corporation
|
NT Acquisition, Inc.
|
|
Netsmart Technologies, Inc.
|
Motorola, Inc.
|
|
Netopia, Inc.
|
NAVTEQ Corporation
|
|
Traffic.com, Inc.
|
Fortezza Iridium Holdings, Inc.
|
|
Indus International, Inc.
|
Oracle Systems Corporation
|
|
MetaSolv, Inc.
|
Internap Network Services Corporation
|
|
VitalStream Holdings, Inc.
|
Illinois Tool Works Inc.
|
|
Click Commerce, Inc.
|
Corel Corporation
|
|
InterVideo, Inc.
|
Inomax, LLC
|
|
Zomax Incorporated
|
Nokia Inc.
|
|
Loudeye Corp.
|
Gladiator Corporation
|
|
WatchGuard Technologies, Inc.
|
M2M Holdings, Inc.
|
|
Onyx Software Corporation
|
JDA Software Group, Inc.
|
|
Manugistics Group, Inc.
|
Oracle Systems Corporation
|
|
Portal Software, Inc.
|
GE Fanuc Embedded Systems, Inc.
|
|
SBS Technologies, Inc.
|
Borland Software Corporation
|
|
Segue Software, Inc.
|
Magellan Holdings, Inc.
|
|
Datastream Systems, Inc.
|
For these selected transactions, set forth in the following
table are the ranges of premiums to the targets closing
stock prices on dates for periods prior to the announcement of
the applicable transaction:
|
|
|
|
|
Premium (%) to Stock Price
|
|
One Day Prior to Announcement
|
|
(2.2%) - 24.4% - 28.8% - 154.2%
|
One Week Prior to Announcement
|
|
(1.4%) - 24.8% - 29.1% - 150.0%
|
One Month Prior to Announcement
|
|
(7.2%) - 27.6% - 30.9% - 107.4%
|
These premiums, when applied to OCPs closing stock price
on April 20, 2007, one day prior to the announcement of
Oplinks agreement to acquire the OCP shares owned by
Furukawa, imply the following per share values for OCP common
stock:
|
|
|
|
|
|
|
Low - Median - Mean - High
|
|
|
One Day Prior to Announcement
|
|
$
|
1.35 - $1.72 - $1.78 - $3.51
|
|
One Week Prior to Announcement
|
|
$
|
1.36 - $1.72 - $1.78 - $3.45
|
|
One Month Prior to Announcement
|
|
$
|
1.28 - $1.76 - $1.81 - $2.86
|
|
Premiums for the selected transactions were based on relevant
SEC filings, selected press releases and other publicly
available data.
Discounted Cash Flows Analysis.
Seven Hills
derived a range of values for OCP common stock based upon the
discounted present value of OCPs after-tax cash flows from
financial forecasts for the fiscal years ended
September 30, 2008 through September 30, 2012, and the
terminal value of OCP at September 30, 2012, based upon
multiples of EBITDA. After-tax cash flow was calculated by
taking projected EBITDA, subtracting projected depreciation,
projected taxes, capital expenditures, changes in working
capital, and adding back projected depreciation and projected
proceeds from the sale of property. In performing this analysis,
Seven Hills utilized discount rates ranging from 16.0% to 20.0%,
based on the estimated weighted average cost of capital of the
six publicly-traded optical component companies (as listed
above). Seven Hills utilized terminal multiples of enterprise
value to estimated 2012 EBITDA ranging from 10.0 times to 14.0
times.
30
Utilizing this methodology, the indicated per share equity value
of OCP ranged from $1.53 to $1.84 per share.
The projected financial data for OCPs 2008 through 2010
fiscal years used in Seven Hills discounted cash flows analysis
were prepared and furnished to Seven Hills by OCP management and
are set forth in Annex F Projected Financial
Information. The projected financial data for OCPs 2011
and 2012 fiscal years used in Seven Hills discounted cash
flows analysis were initially prepared by Seven Hills, per the
request of Oplink management, and subsequently reviewed and
approved by Oplink and are set forth below. Seven Hills
initially prepared the projections for fiscal 2011 and 2012, per
the request of Oplink management, by extrapolating from the
projections through fiscal 2010 prepared by OCP management and
assuming a 15% rate of growth in fiscal 2011 and 2012. These
projections and assumptions were reviewed by Oplink management,
who determined they were reasonable in light of OCPs
historical operations and forecasted financial performance.
Projected
Financial Information
|
|
|
|
|
|
|
|
|
|
|
Year Ending September 30,
|
|
|
|
2011
|
|
|
2012
|
|
|
|
(In millions)
|
|
|
Revenue
|
|
$
|
138.6
|
|
|
$
|
159.4
|
|
Cost of Revenue
|
|
|
97.5
|
|
|
|
112.1
|
|
Gross Profit
|
|
|
41.1
|
|
|
|
47.2
|
|
Operating Expenses
|
|
|
36.6
|
|
|
|
42.1
|
|
Income (Loss) from Operations
|
|
|
4.5
|
|
|
|
5.2
|
|
Other Income, Net
|
|
|
6.7
|
|
|
|
6.7
|
|
Income (Loss) before Income Taxes
|
|
|
11.2
|
|
|
|
11.9
|
|
EBITDA*
|
|
$
|
11.4
|
|
|
$
|
12.8
|
|
|
|
|
*
|
|
EBITDA is a measure that is not derived in accordance with GAAP.
EBITDA is defined as income (loss) from operations before
depreciation and amortization.
|
Other
Considerations
The merger and acquisition transaction environment varies over
time because of macroeconomic factors such as interest rate and
equity market fluctuations and microeconomic factors such as
industry results and growth expectations. No company or
transaction reviewed was identical to the proposed transaction
and, accordingly, the foregoing analyses involve complex
considerations and judgments concerning differences in financial
and operating characteristics and other factors that would
affect the acquisition values in the selected transactions,
including the size and demographic and economic characteristics
of the markets of each company and the competitive environment
in which it operates.
The foregoing description is only a summary of the analyses and
examinations that Seven Hills deems material to its opinion. It
is not a comprehensive description of all analyses and
examinations actually conducted by Seven Hills. The preparation
of a fairness opinion is a complex process that involves various
judgments and determinations as to the most appropriate and
relevant assumptions and financial analyses and the application
of these methods to the particular circumstances and, therefore
such an opinion is not readily susceptible to partial analysis
or summary description. Seven Hills believes that its analyses
and the summary set forth above must be considered as a whole
and that selecting portions of its analyses and of the factors
considered, without considering all analyses and factors, would
create an incomplete view of the process underlying the analyses
set forth in its presentation to Oplinks board of
directors. In addition, Seven Hills may have given some analyses
more or less weight than other analyses, and may have deemed
various assumptions more or less probable than other
assumptions. The fact that any specific analysis has been
referred to in the summary above is not meant to indicate that
this analysis was given greater weight than any other analysis.
Accordingly, the ranges of valuations resulting from any
particular analysis described above should not be taken to be
the view of Seven Hills with respect to the actual value of OCP.
31
In performing its analyses, Seven Hills made numerous
assumptions with respect to industry performance, general
business and economic conditions and other matters, many of
which are beyond the control of OCP or Oplink. The analyses
performed by Seven Hills are not necessarily indicative of
actual values or future results, which may be significantly more
or less favorable than those suggested by these analyses. These
analyses were prepared solely as part of the analysis performed
by Seven Hills with respect to the fairness, from a financial
point of view, to Oplink of the merger consideration to be paid
by Oplink in the transaction, and were provided to the Oplink
board of directors in connection with its evaluation of the
merger. In addition, analyses relating to the value of
businesses do not purport to be appraisals or to reflect the
prices at which businesses or securities may actually be sold.
Accordingly, such analyses and estimates are inherently subject
to uncertainty, being based upon numerous factors or events
beyond the control of the parties or their respective advisors.
Seven Hills opinion and presentation was only one of the
factors that the Oplink board of directors took into
consideration in making its determination to approve the
Agreement and the merger.
Oplink has paid Seven Hills a fee of $250,000 in connection with
the delivery of the opinion summarized above, and has agreed to
pay Seven Hills an additional fee of $450,000 upon completion of
the merger. The Oplink board of directors was aware of this fee
structure and took it into account in considering Seven
Hills opinion and in approving the merger. Oplink
previously paid Seven Hills approximately $600,000 for services
rendered by Seven Hills and the delivery of a fairness opinion
in connection with Oplinks purchase of Furukawas
majority equity ownership of OCP. Oplink has also agreed to
reimburse Seven Hills for its out-of-pocket expenses and to
indemnify Seven Hills, its affiliates, and its respective
partners, directors, officers, agents, consultants, employees
and controlling persons against specific liabilities, including
liabilities under the federal securities laws.
Seven Hills in the past has provided, currently is providing, or
in the future may provide investment banking, financial and
advisory services to Oplink or certain of their affiliates, for
which services Seven Hills has received, or expects to receive,
compensation.
Oplinks
Plans for OCP after the Merger
If the merger is completed, all outstanding shares of our common
stock will be exchanged for the cash consideration described in
this proxy statement and the merger agreement and the Company
will become a wholly owned subsidiary of Oplink. Oplink has
advised OCP that it does not have any current plans or proposals
that relate to or would result in an extraordinary corporate
transaction following completion of the merger involving
OCPs corporate structure, business or management, such as
a merger, reorganization, liquidation, relocation of any
operations or sale or transfer of a material amount of assets.
We expect that following the merger, Oplink will continuously
evaluate and review OCPs business and operations and may
develop new plans and proposals that they consider appropriate
to maximize the value of OCP, and may undertake any of the
foregoing actions if they are deemed desirable at any time
following the closing of the merger. Oplink expressly reserves
the rights to make any changes it deems appropriate in light of
such evaluation and review or in light of future development.
In the event the merger is not consummated for any reason,
including the failure of holders of at least
66
2
/
3
%
of OCP common stock not held by Oplink or its affiliates to
approve the merger agreement, OCP stockholders will not receive
any payment for their shares in connection with the merger.
Instead, OCP will remain a majority-owned subsidiary of Oplink
and OCP common stock will continue to be listed and traded on
The NASDAQ Global Market. In addition, Phil Otto, a director and
Chief Executive Officer and President of the Company, and
Stewart Personick, Hobart Birmingham and David Warnes, the
members of the special committee, have indicated that they
intend to resign from the Companys board of directors if
the merger is not consummated, in which case, the only remaining
OCP directors would be individuals that are also directors or
employees of Oplink. In the event the merger is not consummated,
it is expected that OCP management will continue to manage
OCPs business in a manner consistent with its current
operations. Stockholders will continue to be subject to the same
risks and opportunities as they currently are, including general
industry, economic, regulatory and market conditions.
Accordingly, if the merger is not consummated, there can be no
assurance as to the future value of OCP common stock. From time
to time, the board of directors will evaluate and review, among
other things, the business operations, properties, dividend
policy and capitalization of OCP and make such changes as are
deemed appropriate and continue to seek to identify strategic
alternations to enhance stockholder value. If the merger is not
consummated, there can be no assurance that any other
transaction acceptable to OCP stockholders will be offered, or
that the business, prospects or results of operations of OCP
will not be adversely impacted. Oplink
32
expressly reserves the rights to cause any changes to be made to
OCPs business and management as a majority stockholder or
explore any alternative transactions, including, but not limited
to, investigating strategies to decrease the regulatory burden
of OCP being a publicly traded company and exploring measures to
delist and deregister the OCP common stock, engaging in open
market or privately negotiated purchases of shares to increase
the aggregate ownership of Oplink and its affiliates in OCP to
90% of the then outstanding shares and subsequently effecting a
short-form merger (without any requirement of a vote by
OCPs stockholders), when it is able to do so under
Delaware law. Under Delaware law, until April 23, 2010,
Oplink cannot effect a merger (including a short-form merger) or
other business combination with OCP and other transactions
between OCP and Oplink are restricted unless the merger
agreement is approved and adopted by holders of
66
2
/
3
%
of OCP common stock that is not owned by Oplink or its
affiliates.
Certain
Effects of the Merger
If the merger is consummated, the entire equity interest of OCP
will be owned by Oplink, and Oplink will be the sole beneficiary
of our future earnings and growth, if any. Similarly, Oplink
will bear the entire risk of any decrease in the value of OCP
after the merger.
If the merger is completed, OCP stockholders other than Oplink
will have no interest in OCPs net book value or net
earnings. Following the merger, the entire interest in
OCPs net book value and net earning will be held by
Oplink. The table below sets forth Oplinks direct and
indirect interests in OCPs net book value and net income
prior to and immediately after the merger, based upon the net
book value of OCP at June 30, 2007 and the net income of
OCP for the nine months ended June 30, 2007.
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Ownership Prior to the Merger
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Ownership After the Merger
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Net Book Value
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Earnings
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Net Book Value
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Earnings
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$ in
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$ in
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$ in
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$ in
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Name
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thousands
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%
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thousands
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%
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thousands
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%
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thousands
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%
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Oplink
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94,683
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57.9
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%
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(17,290
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)
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57.9
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%
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163,529
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100
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%
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(29,861
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)
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100
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%
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If the merger is consummated, OCP will become a wholly-owned
subsidiary of Oplink and its common stock will cease to be
quoted on The NASDAQ Global Market. Upon consummation of the
merger, the certificate of incorporation of merger sub will be
the initial certificate of incorporation of the surviving
corporation and the bylaws of merger sub will be the bylaws of
the surviving corporation, except that the name of the surviving
corporation will be Optical Communication Products,
Inc.. Upon consummation of the merger, the directors of
merger sub will be the initial directors of the surviving
corporation and the officers of merger sub will be the initial
officers of the surviving corporation.
Oplink has represented to us in the merger agreement that it
will have sufficient cash on-hand to complete the transactions
contemplated by the merger agreement. The merger is not
conditioned upon Oplink obtaining financing from any outside
sources.
No regulatory approval is necessary for the consummation of the
merger.
To our knowledge, there is no on-going litigation in connection
with or related to the merger.
Whether or not the proposed merger is consummated, all fees and
expenses incurred in connection with the merger will be paid by
the party to the merger agreement incurring those fees and
expenses. The Company estimates
33
that if the merger is completed, the fees and expenses incurred
by the Company in connection with the merger will be
approximately as follows:
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Description
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Amount
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Financial advisory fee
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4,500,000
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Legal fees and expenses
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1,200,000
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Proxy solicitation fee and expenses
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15,000
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SEC filing fee
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2,445
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Printing and mailing cost
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152,000
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Miscellaneous
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60,000
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Total
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5,929,445
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Oplink and Oplink Acquisition estimate that if the merger is
completed, the fees and expenses incurred by Oplink and Oplink
Acquisition in connection with the merger will be approximately
as follows:
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Description
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Amount
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Financial advisory fee
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700,000
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Legal fees and expenses
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300,000
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Miscellaneous
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100,000
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Total
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1,100,000
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Material
United States Federal Income Tax Consequences of the
Merger
The following is a summary of the material U.S. federal
income tax consequences of the merger to stockholders of OCP
whose shares of OCP common stock are converted into the right to
receive cash in the merger. The following summary is based on
the Internal Revenue Code of 1986, as amended, or the
Code, Treasury regulations promulgated thereunder,
judicial decisions, and administrative rulings, all of which are
subject to change, possibly with retroactive effect. The summary
does not address all of the U.S. federal income tax
consequences that may be relevant to particular stockholders in
light of their individual circumstances or to stockholders who
are subject to special rules, including:
non-U.S. persons,
U.S. expatriates, insurance companies, dealers or brokers
in securities or currencies, tax-exempt organizations, financial
institutions, mutual funds, pass-through entities and investors
in such entities, stockholders who hold their shares of OCP
common stock as a hedge or as part of a hedging, straddle,
conversion, synthetic security, integrated investment, or other
risk-reduction transaction or who are subject to alternative
minimum tax or stockholders who acquired their shares of OCP
common stock upon the exercise of employee stock options or
otherwise as compensation. Further, this discussion does not
address any U.S. federal estate and gift or alternative
minimum tax consequences or any state, local, or foreign tax
consequences relating to the merger.
The Merger.
The receipt of cash pursuant to
the merger will be a taxable transaction for U.S. federal
income tax purposes, and may also be a taxable transaction under
applicable state, local, or foreign income or other tax laws.
Generally, for U.S. federal income tax purposes, a
stockholder will recognize gain or loss equal to the difference
between the amount of cash received by the stockholder in the
merger and the stockholders adjusted tax basis in the
shares of OCP common stock converted into cash in the merger. If
shares of OCP common stock are held by a stockholder as capital
assets, gain, or loss recognized by such stockholder will be
capital gain or loss, which will be long-term capital gain or
loss if the stockholders holding period for the shares of
OCP common stock exceeds one year. Capital gains recognized by
an individual upon a disposition of a share of OCP that has been
held for more than one year generally will be subject to a
maximum U.S. federal income tax rate of 15% or, in the case
of a share that has been held for one year or less, will be
subject to tax at ordinary income tax rates. In addition, there
are limits on the deductibility of capital losses. The amount
and character of gain or loss must be determined separately for
each block of OCP common stock (i.e., shares acquired at the
same cost in a single transaction) converted into cash in the
merger.
Backup Withholding.
A stockholder (other than
certain exempt stockholders, including, among others, all
corporations and certain foreign individuals) whose shares of
OCP common stock are converted into the merger
34
consideration may be subject to backup withholding at the then
applicable rate (under current law, the backup withholding rate
is 28%) unless the stockholder provides the stockholders
taxpayer identification number, or TIN, and
certifies under penalties of perjury that such TIN is correct
(or properly certifies that it is awaiting a TIN) and certifies
as to no loss of exemption from backup withholding and otherwise
complies with the applicable requirements of the backup
withholding rules. A stockholder that does not furnish a
required TIN or that does not otherwise establish a basis for an
exemption from backup withholding may be subject to a penalty
imposed by the Internal Revenue Service, or the IRS. Each
stockholder should complete and sign the
Form W-9
or Substitute
Form W-9
included as part of the letter of transmittal that will be sent
to stockholders promptly following closing of the merger so as
to provide the information and certification necessary to avoid
backup withholding. Backup withholding is not an additional tax.
Rather, the amount of the backup withholding can be credited
against the U.S. federal income tax liability of the person
subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results
in an overpayment of tax, a refund can be obtained by the
stockholder by filing a U.S. federal income tax return.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET
FORTH ABOVE IS BASED ON THE LAW IN EFFECT ON THE DATE HEREOF.
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND
OTHER TAX LAWS) OF THE MERGER.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement and the documents attached to or
incorporated by reference herein contain or are based upon
forward-looking information and involve risks and
uncertainties. Such forward-looking statements reflect, among
other things, managements current expectations and
anticipated results of operations, all of which are subject to
known and unknown risks, uncertainties and other factors that
may cause OCPs actual results, performance or
achievements, or industry results, to differ materially from
those expressed or implied by such forward-looking statements.
Therefore, any statements contained herein or in the documents
attached or incorporated by reference that are not statements of
historical fact may be forward-looking statements and should be
evaluated as such. Without limiting the foregoing, the words,
believes, anticipates,
plans, expects, may,
will, intends, estimates,
seeks and similar words and expressions are intended
to identify forward-looking statements. OCP assumes no
obligation to update any such forward-looking information to
reflect actual results or changes in the factors affecting such
forward-looking information. The many factors that could cause
actual results to differ materially from those expressed in, or
implied by, the forward-looking statements include, without
limitation: costs, charges and tax treatment related to the
proposed merger; failure to obtain required stockholder approval
for the merger; the merger not closing for any other reason; and
other factors disclosed in OCPs Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006 filed with the
Securities and Exchange Commission on December 20, 2006,
OCPs Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2007 filed with
the Securities and Exchange Commission on May 15, 2007,
OCPs Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2007 filed with the
Securities and Exchange Commission on August 20, 2007 and
in other reports filed by OCP from time to time with the
Securities and Exchange Commission.
The enclosed proxy is solicited on behalf of our board of
directors for use at a special meeting of stockholders to be
held on October 31, 2007, at 10:00 a.m. Pacific
Time, or at any adjournments of the special meeting, for the
purposes set forth in this proxy statement and in the
accompanying notice of special meeting. The special meeting will
be held at 6101 Variel Avenue, Woodland Hills, California 91367.
The Company intends to mail this proxy statement and the
accompanying proxy card on or about October 2, 2007 to all
stockholders entitled to vote at the special meeting.
35
At the special meeting, holders of OCP common stock will be
asked to:
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consider and vote upon a proposal to approve and adopt the
merger agreement, pursuant to which, among other things, OCP
will become a wholly-owned subsidiary of Oplink, and each share
of OCP common stock will be converted into the right to receive
$1.65 in cash, without interest and less any applicable
withholding taxes;
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consider and vote upon any proposal to adjourn, postpone or
continue the special meeting to a later date to solicit
additional proxies in favor of the proposal to approve and adopt
the merger agreement at the special meeting; and
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transact such other business as may properly come before the
special meeting or any adjournment, postponements or
continuations thereof.
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Record
Date and Voting Information
Our board of directors has fixed the close of business on
September 10, 2007 as the record date for determining the
holders of shares of OCP common stock entitled to receive notice
of and to vote at the special meeting. Only holders of record of
shares of OCP common stock at the close of business on that date
will be entitled to vote at the special meeting and at any
adjournment or postponement of that meeting. At the close of
business on the record date, there were 114,181,271 shares
of OCP common stock outstanding, held by approximately
105 holders of record.
Each holder of shares of OCP common stock outstanding on the
record date will be entitled to one vote for each share held of
record upon each matter properly submitted at the special
meeting and at any adjournment or postponement of that meeting.
A majority of the outstanding shares of common stock entitled to
vote at the special meeting constitutes a quorum for the purpose
of considering the proposals. Shares of common stock represented
at the special meeting but not voted, including shares of common
stock for which proxies have been received but for which
stockholders have abstained, will be treated as present at the
special meeting for purposes of determining the presence or
absence of a quorum for the transaction of all business. In the
event that a quorum is not present at the special meeting, it is
expected that the meeting will be adjourned or postponed to
solicit additional proxies.
For us to complete the merger, the merger agreement must be
approved and adopted by (i) stockholders holding
66
2
/
3
%
of our common stock outstanding at the close of business on the
record date that is not owned by Oplink or its affiliates and
(ii) stockholders holding a majority of our common stock
outstanding at the close of business on the record date.
Any proposal to adjourn or postpone the special meeting or on
any other matter to be voted upon at the special meeting
requires the affirmative vote of a majority of the shares
represented in person or by proxy entitled to vote on the matter
and actually voted on the matter for approval.
As of the record date, Oplink owns approximately 58% of the
outstanding shares of the Companys common stock, and has
committed to vote its shares in favor of the approval and
adoption of the merger agreement, approval of the merger and in
favor of a proposal, if necessary, to adjourn, postpone or
continue the special meeting to a later date to solicit
additional proxies. Accordingly, other than with respect to the
approval and adoption of the merger agreement and approval of
the merger, Oplink owns a sufficient number of our shares to
approve matters that may be brought before the special meeting.
As to the record date, the directors and officers of the Company
hold, in the aggregate, 237,500 shares of the
Companys common stock, excluding shares owned by Oplink
and shares represented by unexercised stock options.
36
All of these shares are held by Frederic Boyer, OCPs Chief
Financial Officer, and Liew-Chuang Chiu, OCPs Vice
President of Worldwide Operations, who have indicated to the
Company that they intend to vote their shares in favor of the
approval and adoption of the merger agreement.
Proxies
for Stockholders of Record
If your shares are registered directly in your name with the
Companys transfer agent, you are a stockholder of record
with respect to those shares, and a proxy card accompanies this
proxy statement sent to you. You may vote your shares by mailing
a completed, signed and dated proxy card in the envelope
provided with the proxy card. If the proxy card is properly
signed and returned, the proxy holders named on the proxy card
will vote your shares as you instruct. If you sign and return
the proxy card but do not vote on a proposal, the proxy holders
will vote for you on that proposal.
All properly executed proxies that we receive prior to the vote
at the special meeting, and that are not revoked, will be voted
in accordance with the instructions indicated on the proxies. If
no direction is indicated on a properly executed proxy returned
to us, the underlying shares will be voted
FOR
the approval and adoption of the merger
agreement and in the discretion of the proxy holder(s) on any
other matter that may properly be brought before the special
meeting. Abstentions, broker non-votes and shares
not in attendance and not voted at the special meeting will have
the same effect as a vote against the proposal to approve and
adopt the merger agreement. Abstentions and broker non-votes
will have no effect on the outcome of any vote to adjourn or
postpone the special meeting or any other matter properly
brought before the special meeting. It is very important that
ALL stockholders vote their shares, so please promptly complete,
sign, date and return the enclosed proxy card.
Stockholders should not send in their stock certificates with
their proxies.
A transmittal form with
instructions for the surrender of certificates representing
shares of common stock will be mailed to stockholders if the
merger is completed.
Voting
Instructions for Beneficial Owners
If your Company shares are held by a stockbroker, bank, or other
nominee rather than directly in your own name, you are
considered a beneficial owner and not a stockholder of record.
If you are a beneficial owner, your broker or other nominee has
enclosed a voting instruction form which you may complete and
return by mail to direct the nominee how to vote your shares. A
large number of nominees are participating in the ADP Investor
Communication Services online program. This program provides
eligible stockholders the opportunity to vote via the Internet
or by telephone. Voting forms will provide instructions for
stockholders whose bank or brokerage firm is participating in
ADPs program. Please consult your voting instruction form
for the specific procedures available.
This proxy solicitation is being made and paid for by the
Company on behalf of our board of directors. In addition, we
have retained D.F. King & Co., Inc.
(D.F. King) to assist in the solicitation. We
will pay D.F. King approximately $10,000 plus reasonable
out-of-pocket expenses for their assistance. Our directors,
officers and employees may also solicit proxies by personal
interview, mail,
e-mail,
telephone, facsimile or other means of communication. These
persons will not be paid additional remuneration for their
efforts. We will also request brokers, banks and other nominees
to forward proxy solicitation material to the beneficial owners
of shares of common stock that the brokers, banks and nominees
hold of record. Upon request, we will reimburse them for their
reasonable out-of-pocket expenses related thereto. In addition,
we will indemnify D.F. King against any losses arising out
of that firms proxy soliciting services on our behalf.
You have the right to change or revoke your proxy at any time
before the vote taken at the special meeting:
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by filing with the Companys Corporate Secretary a written
notice of revocation bearing a date later than the date of the
proxy, stating that the proxy is revoked;
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37
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by submitting a later-dated proxy at or before the special
meeting;
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by attending the special meeting and voting in person by ballot
(your attendance at the meeting will not, by itself, revoke your
proxy; you must vote in person at the meeting to revoke a
proxy); or
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if you have instructed a broker, bank or other nominee to vote
your shares, by following the directions from your broker, bank
or other nominee to change your proxy.
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If the special meeting is adjourned to a different place, date
or time, the Company need not give notice of the new place, date
or time if the new place, date or time is announced at the
meeting before adjournment, unless the adjournment is for more
than thirty (30) days or a new record date is or must be
set for the adjourned meeting.
A list of the stockholders entitled to vote at the special
meeting will be available for examination by any OCP stockholder
at the special meeting. For 10 days prior to the special
meeting, this stockholder list will be available for inspection
during ordinary business hours at our corporate offices located
at 6101 Variel Avenue, Woodland Hills, California 91367.
The Special Committee, which is represented by counsel,
represented the interests of the unaffiliated stockholders.
Other than as otherwise set forth herein, none of OCP, Oplink or
Oplink Acquisition has made any provision to grant unaffiliated
stockholders of OCP access to the corporate files of OCP or to
obtain counsel or appraisal services at OCPs expense.
APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT
The discussion of the merger and the merger agreement in this
section of the proxy statement is qualified in its entirety by
reference to the merger agreement, a copy of which is attached
as
Annex A
to this proxy statement. You should read
the entire merger agreement carefully as it is the legal
document that governs the merger.
The
Parties to the Merger Agreement
Optical
Communication Products, Inc.
Founded in 1991, OCP is a Delaware corporation with its
corporate headquarters located at 6101 Variel Avenue, Woodland
Hills, California 91367. Its telephone number is
(818) 251-7100.
OCP designs, manufactures and sells a comprehensive line of
fiber optic components and sub-systems. OCPs extensive
product line of optical transceivers, transmitters and receivers
for the metropolitan, local area and fiber-to-the-home
networking markets. OCP maintains four regional engineering
design centers, two in the U.S., one in Taiwan, and one in the
U.K., with a direct sales force to cover the North American,
European, Middle Eastern and Asian markets. In addition, there
are business offices located in the U.K., Japan and Taiwan to
support European, Japanese and Asian customers, respectively.
Oplink
Communications, Inc.
Incorporated in 1995, Oplink is a Delaware corporation with its
executive offices at 46335 Landing Parkway, Fremont CA 94538.
Its telephone number is
(510) 933-7200.
Oplink is a leading provider of design, integration and optical
manufacturing solutions (OMS) for optical networking
components and subsystems that expand optical bandwidth, amplify
optical signals, monitor and protect wavelength performance,
redirect light signals, reshape light profile to enable extended
signal reach and provide signal transmission and reception
within an optical network. Oplinks product portfolio
includes solutions for next-generation, all-optical dense and
coarse wavelength division multiplexing, optical amplification,
switching
38
and routing, monitoring and conditioning, dispersion management
and line transmission applications. As a photonic foundry,
Oplink offers its customers expert OMS for the production and
packaging of highly-integrated optical subsystems and turnkey
solutions based upon a customers specific product design
and specifications. Oplink offers advanced and cost-effective
optical-electrical components and subsystem manufacturing
through its facilities in Zhuhai and Shanghai, China.
Additionally, Oplink maintains optical-centric front-end design,
application, and customer service functions at its headquarters
in Fremont, California and has a research facility in Wuhan,
China. Oplinks customers include telecommunications, data
communications and cable TV equipment manufacturers located
around the globe.
Oplink currently owns approximately 57.9% of OCPs
outstanding shares.
Oplink
Acquisition Corporation
Oplink Acquisition, a Delaware corporation and wholly-owned
subsidiary of Oplink, was organized solely for the purpose of
entering into the merger agreement with OCP and completing the
merger. Oplink Acquisition was incorporated on June 13,
2007 and has not conducted any business operations. Oplink
Acquisitions principal executive offices are located at
c/o Oplink
Communications, Inc., 46355 Landing Parkway, Fremont, California
94538.
Material
Provisions of the Merger Agreement
At the effective time of the merger, merger sub will merge with
and into OCP upon the terms, and subject to the conditions, of
the merger agreement. As the surviving corporation, OCP will
continue to exist following the merger. Upon consummation of the
merger, the certificate of incorporation and bylaws of merger
sub will become the certificate of incorporation and bylaws of
OCP. Upon consummation of the merger, the directors of merger
sub will be the initial directors of the surviving corporation
and the officers of merger sub will be the initial officers of
the surviving corporation.
Unless otherwise agreed by the parties to the merger agreement,
the parties are required to close the merger no later than the
second business day after the satisfaction or waiver of the
conditions described under Proposal No. 1
Approval and Adoption of the Merger Agreement
Conditions to the Merger. The merger will be effective in
accordance with applicable law after the time the certificate of
merger is filed with the Secretary of State of the State of
Delaware (on the closing date of the merger). We expect to
complete the merger as promptly as practicable after our
stockholders adopt the merger agreement.
Each share of our common stock issued and outstanding
immediately prior to the effective time of the merger (other
than treasury shares, shares held by Oplink and shares held by
stockholders who have properly exercised their statutory
appraisal rights) will be converted into the right to receive
$1.65 in cash, without interest and less any applicable
withholding taxes.
Treatment
of OCP Stock Options
At the effective time of the merger, each outstanding OCP stock
option, whether vested or unvested, will be converted into an
option to purchase a number of shares of Oplinks common
stock determined by multiplying the number of shares of OCP
common stock subject to such stock option by a fraction, the
numerator of which is $1.65 and the denominator of which is the
average closing price per share of Oplinks common stock on
The NASDAQ Global Market for the five trading days ending two
business days prior to the closing.
The per share exercise price for the newly issued stock options
will be equal to the per share exercise price for the shares of
OCP common stock that could have been purchased prior to the
effective time of the merger divided by a fraction, the
numerator of which is $1.65 and the denominator of which is the
average closing price per share of
39
Oplinks common stock on The NASDAQ Global Market for the
five trading days ending two business days prior to the closing.
Payment
for the Shares of Common Stock
Oplink will designate a paying agent who is acceptable to us to
make payment of the merger consideration as described above.
Prior to the filing of the certificate of merger, Oplink will
deposit with the paying agent funds sufficient to pay the merger
consideration to our stockholders.
At the effective time of the merger, we will close our stock
transfer books. After that time, there will be no further
transfer of shares of common stock.
As soon as practicable after the effective time of the merger,
Oplink will cause the paying agent to send you, as a record
holder, a letter of transmittal and instructions advising you
how to surrender your certificates in exchange for the merger
consideration. The paying agent will send you your merger
consideration promptly after you have (i) surrendered your
certificates to the paying agent and (ii) provided the
paying agent your signed letter of transmittal and any other
items specified by the letter of transmittal. Interest will not
be paid or accrue in respect of the merger consideration. The
surviving corporation will reduce the amount of any merger
consideration paid to you by any applicable withholding taxes.
YOU SHOULD NOT FORWARD YOUR STOCK CERTIFICATES TO THE PAYING
AGENT WITHOUT A LETTER OF TRANSMITTAL, AND YOU SHOULD NOT SEND
YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
If the paying agent is to pay some or all of your merger
consideration to a person other than you, as the registered
owner of a stock certificate, you must have your certificates
properly endorsed or otherwise in proper form for transfer, and
you must pay any transfer or other taxes payable by reason of
the transfer.
The transmittal instructions will tell you what to do if you
have lost your certificate, or if it has been stolen or
destroyed. You will have to provide an affidavit verifying that
fact and, if required by the surviving corporation, post an
indemnity agreement or bond in such customary and reasonable
amount as the surviving corporation specifies as indemnity
against any claim that may be made against the surviving
corporation in respect of the lost, stolen or destroyed
certificate.
Representations
and Warranties
The merger agreement contains representations made by us to
Oplink and merger sub, and representations and warranties made
by Oplink and merger sub to us. The assertions embodied in those
representations and warranties were made solely for purposes of
the merger agreement and may be subject to important
qualifications and limitations agreed by the parties in
connection with negotiating its terms. Moreover, some of those
representations and warranties may not be accurate or complete
as of any particular date because they are subject to a
contractual standard of materiality or material adverse effect
(as defined below) different from that generally applicable to
public disclosures to stockholders, or are used for the purpose
of allocating risk between the parties to the merger agreement
rather than establishing matters of fact. Furthermore, the
representations and warranties contained in the merger agreement
will not survive the merger and cannot be the basis for any
claims under the merger agreement by the other parties after
termination of the merger agreement. For the foregoing reasons,
you should not rely on the representations and warranties
contained in the merger agreement.
We made a number of representations to Oplink and to merger sub,
relating to, among other things:
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corporate organization and similar corporate matters, including
the qualification of the company to do business under applicable
law;
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our subsidiaries;
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the absence of a breach of our certificate of incorporation,
bylaws, contracts, permits or any laws as a result of the merger;
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authorization, execution, delivery, performance and
enforceability of, and required consents, approvals, orders and
authorizations of, and notices to, governmental authorities and
third parties relating to, the merger agreement and related
transactions with respect to OCP;
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accuracy of information supplied by OCP in connection with this
proxy statement;
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unanimous approval of the merger by the full board of directors
of OCP;
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our receipt of a fairness opinion from Bear Stearns;
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our engagement of, and payment of fees to, brokers, investment
bankers, and financial advisors, and fees payable by us to other
advisors in connection with the merger agreement and the
merger; and
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applicability of certain state takeover statutes to the merger
and merger agreement.
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Certain aspects of the representations and warranties of OCP are
qualified by the concepts of materiality or material
adverse effect.
For purposes of the merger agreement, a material adverse
effect when used in connection with a person means any
change, event, violation, inaccuracy, circumstance or effect
which is reasonably likely, either individually or in the
aggregate, to be materially adverse to the business, assets,
liabilities, capitalization, financial condition or results of
operation of such person, taken as a whole, or that could
reasonably be expected to adversely affect the ability of such
person to consummate the merger.
Notwithstanding the foregoing, to the extent any change, event,
violation, inaccuracy, circumstance or effect primarily results
from the following, it should not be taken into account in
determining whether there has been a material adverse
effect on a person:
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changes affecting the economy generally;
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changes affecting the industry generally;
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changes in stock price or trading volume;
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acts of terrorism or war;
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the announcement of the merger agreement and the transactions
contemplated by the merger agreement;
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failure to meet revenue or earnings predictions for any period
ending on or after the date of the merger agreement; or
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changes in applicable laws or generally accepted accounting
principles.
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Oplink and merger sub made a number of representations and
warranties in the merger agreement relating to, among other
things:
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their corporate organization and similar corporate matters;
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authorization, execution, delivery, performance, and
enforceability of, and required consents, approvals, orders, and
authorizations of, and notices to, governmental authorities and
third parties relating to, the merger agreement and related
matters with respect to Oplink and merger sub;
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the absence of a breach of their certificate of incorporation,
bylaws, contracts, permits or any laws as a result of the merger;
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accuracy of information supplied by Oplink or merger sub in
connection with this proxy statement;
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the sufficiency of Oplinks capital resources to consummate
the merger and related transactions, including acquiring
outstanding shares of seller;
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merger subs lack of prior operating activity; and
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Oplinks ownership of 66,000,100 shares of OCP.
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Certain aspects of the representations and warranties of Oplink
and merger sub are qualified by the concept of materiality.
Conditions
to Each Partys Obligations
Each partys obligation to effect the merger is subject to
the satisfaction or waiver of various conditions, which include
the following:
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the proposal to adopt the merger agreement is approved by the
requisite stockholder vote at the special meeting;
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no government entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, order, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect
and prohibits consummation of the merger; and
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all material approvals by governmental entities under applicable
law in connection with this merger and related transactions have
been obtained.
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Conditions
to OCPs Obligations
We will not be obligated to effect the merger unless the
following conditions are satisfied or waived:
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Oplinks representations and warranties made pursuant to
the merger agreement are true and correct as of the closing date
of the merger, interpreted without giving effect to any
limitations as to materiality or material adverse effect, except
where such failure to be true and correct would not have, either
individually or in the aggregate, a material adverse effect on
Oplink;
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Oplink and merger sub have performed in all material respects
all obligations required to be performed by them at or prior to
the closing date of the merger under the merger
agreement; and
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We have received a certificate of the appropriate signatory of
Oplink certifying compliance with the two preceding conditions.
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Conditions
to Oplinks and Merger Subs Obligations
Neither Oplink nor merger sub will be obligated to effect the
merger unless the following conditions are satisfied or waived:
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Our representations and warranties made pursuant to the merger
agreement are true and correct as of the closing date of the
merger, interpreted without giving effect to any limitations as
to materiality or material adverse effect, except where such
failure to be true and correct would not have, either
individually or in the aggregate, a material adverse effect on
OCP;
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We have performed in all material respects all obligations
required to be performed by us at or prior to the closing date
of the merger under the merger agreement;
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Oplink has received a certificate from our chief executive
officer and our chief financial officer certifying compliance
with the two preceding conditions.
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Our board of directors is not aware of any condition to the
merger that cannot be satisfied.
Restrictions
on Solicitations of Other Offers
We have agreed that we will not, and will not permit any of our
subsidiaries to, nor will we authorize any person or permit any
of our or our subsidiaries directors, officers, or
employees or any of our or their investment bankers, attorneys,
accountants, or other advisors or representatives to, directly
or indirectly:
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solicit, initiate, or knowingly encourage, or take any other
action knowingly to induce or facilitate, any inquiry with
respect to, or the making, submission or announcement of any
acquisition proposal;
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participate or otherwise engage in any discussions or
negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any
inquires or the making of any proposal that constitutes or may
reasonably be expected to lead to any acquisition proposal;
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engage in discussions with respect to any acquisition proposal;
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approve, endorse or recommend any acquisition proposal; and
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enter into a letter of intent or contract relating to an
acquisition proposal.
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Within one business day after the receipt of any acquisition
proposal or any request or inquiry which we reasonably believe
will lead to an acquisition proposal, we must provide Oplink
with the acquisition proposal or information regarding the
request, including the terms and conditions of such request or
inquiry and the identity of the person making any such request,
inquiry or acquisition proposal.
Notwithstanding the foregoing restrictions, in the event that
the Company or any of its subsidiaries receives a bona fide
written acquisition proposal that is unsolicited, is not
otherwise obtained in violation of the restrictions set forth in
the immediately preceding paragraphs and that the special
committee determines in good faith is or is reasonably likely to
lead to a superior offer, the special committee may (if it
concludes that failing to take such action is reasonably likely
to violate the directors fiduciary duties to the
stockholders of the Company):
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furnish nonpublic information to the party making such
acquisition proposal, provided that such nonpublic information
is only furnished upon receipt of a confidentiality agreement
and standstill agreement from the party making the acquisition
proposal and such nonpublic information is simultaneously
furnished to Oplink; and
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engage in negotiations and discussions with the third party with
respect to the acquisition proposal.
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Recommendation
Withdrawal
The merger agreement requires us to as promptly as practicable
call and hold a meeting of our stockholders for the purpose of
obtaining the adoption of the merger agreement. In this regard,
our board of directors has unanimously resolved to recommend
that our stockholders adopt the merger agreement. However, in
response to receipt of a superior offer, the board of directors
and/or
the
special committee may change its recommendation if the special
committee has concluded in good faith, after receipt of advice
of its legal counsel and financial adviser, that failure to
change its recommendation is reasonably likely to violate the
directors fiduciary duties to the stockholders of the
Company, and all of the following conditions are met:
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a superior offer has been made and not withdrawn;
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the special meeting of the stockholders of the Company has not
occurred;
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the Company has provided Oplink with five days prior written
notice stating:
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that the Company has received a superior officer;
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the material terms and conditions of the superior offer and the
identity of the maker of the superior offer; and
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that the board of director or special committee intends to
effect a change of recommendation and the manner in which it
intends to do so;
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the Company has provided Oplink with the proposed transaction
agreements; and
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during such five day period described above, the Company has
engaged in good faith negotiations with Oplink to amend the
merger agreement in a manner as would enable the Company to
proceed with the board of directors recommendation to the
Companys stockholders to approve the merger and adopt the
merger agreement.
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Other than in connection with the Companys receipt of an
acquisition proposal or superior offer, the board of directors,
upon recommendation of the special committee, or the special
committee may change its
43
recommendation if it has concluded in good faith, after receipt
of advice of its legal and financial advisers, that failure to
change its recommendation is reasonably likely to violate the
directors fiduciary duties to the stockholders of the
Company. The obligation of the Company to hold the special
meeting shall not be limited or otherwise affected by any
acquisition proposal with respect to it, or by any change of
recommendation. The Company shall not submit to the vote of its
stockholders any acquisition proposal, or propose to do so.
An acquisition proposal means any proposal or offer
from any person relating to any transaction or series of
transactions involving: (i) a purchase or transaction by
which any one person or associated group obtains more than a 10%
interest in the Company; (ii) any sale or transaction
whereby more than 10% of the assets of the Company are disposed
of; or (iii) the liquidation or dissolution of the Company.
A change of recommendation means the special
committees
and/or
the
board of directors, upon the recommendation of the special
committee, change, withholding, withdrawal, amendment or
modification of its recommendation in favor of the merger
agreement and the merger, and, if applicable, the special
committees
and/or
the
board of directors, upon the recommendation of the special
committee, recommendation that the stockholders of the Company
accept a tender or exchange offer.
A superior offer means any bona fide binding written
offer not solicited or otherwise procured in violation of the
merger agreement that is made by a third party to acquire,
directly or indirectly, all or substantially all of the assets
or a majority of the outstanding voting securities of the
Company, on terms that the board of directors has in good faith
concluded (after receipt of advice of its legal and financial
advisers), taking into account, among other things, all legal,
financial, regulatory and other aspects of the offer and the
maker of the offer, to be more favorable, from a financial point
of view, to the Companys stockholders than the terms of
the merger and which is reasonably capable of being consummated
and for which financing is reasonably determined to be available.
Indemnification
of Directors and Officers
All rights to indemnification, exculpation and advancement of
expenses existing in favor of the Companys and its
subsidiaries current and former directors and officers for
acts or omissions occurring prior to the effective time of the
merger, will survive the merger and Oplink will take all
necessary action to cause the surviving corporation to observe
such rights to the fullest extent permitted under applicable
law. Oplink guarantees the payment obligation, if any, of the
surviving corporation pursuant to such rights, subject to
applicable law, and will not modify or terminate such rights in
any adverse manner, including through amendment of the surviving
corporations certificate of incorporation or bylaws, or
through a merger or transfer of assets of the surviving
corporation.
Prior to the effective time of the merger, we will purchase a
tail policy under our existing directors and
officers liability insurance policy, with liability
insurance coverage at least as favorable as the policy currently
in place, for the six years following the effective time. If
such tail policy is unavailable at a cost not
greater than 200% of the annual premium of our existing
coverage, then we may obtain as much comparable insurance as may
be obtained in good faith at a cost not greater than 200% of the
annual premium of our existing coverage.
The obligations of Oplink and the surviving corporation under
the preceding paragraph may not be terminated or modified in a
manner which adversely affects any indemnified party without
such partys consent.
Resignation
and Appointment of Directors
In connection with the execution of the merger agreement, we
expanded the board of directors to nine members with the
appointments of Joseph Y. Liu, Chieh Chang, Leonard J. LeBlanc
and Jesse W. Jack, current members of Oplinks board of
directors, and Dr. Robert Shih, an Oplink officer, in
addition, Dr. Muoi V. Tran resigned from our board of
directors. On September 29, 2007, Mr. Shih resigned
from our board of directors.
The merger agreement provides that the directors of Oplink
Acquisition as of immediately prior to the effective time of the
merger will be the initial directors of the surviving
corporation. It is expected that Mr. Liu and another
designee of Oplink will serve as directors of Oplink Acquisition
as of immediately prior to the effective time of the merger, and
will be the initial directors of the surviving corporation.
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The merger agreement required us to prepare proxy materials
relating to the removal of our existing board of directors and
election of directors designated by Oplink, which removal and
appointment was to be effective if our stockholders did not
approve the merger agreement. Those proposals are not included
in this proxy statement, and are not expected to be presented at
the special meeting. However, members of the special committee
and Phil Otto, director, Chief Executive Officer and President
of the Company, have indicated that they intend to resign from
the board of directors, at Oplinks written request, if the
merger agreement is terminated by Oplink because it is not
approved by the Companys stockholders, or upon the closing
of the merger. Accordingly, regardless of whether the merger
agreement is approved by the stockholders, the directors of the
Company following the stockholders meeting are expected to be
directors
and/or
officers of Oplink.
In connection with the execution of the merger agreement, OCP
amended its bylaws to provide the special committee with broad
authority relating to the merger including the authority to:
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authorize the taking of any action on behalf of OCP in
connection with the merger agreement;
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approve and pay expenses incurred by OCP or the special
committee in connection with the merger agreement and
merger; or
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fill any vacancies on the special committee.
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OCP further amended its bylaws to adopt a supermajority vote
requirement for the board of directors requiring eight of nine
directors to approve the following actions by the board:
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authorization of a Company action in connection with the merger
agreement;
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authorization of any action inconsistent with the merger
agreement or merger;
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replacement of the financial or legal advisors to the special
committee or Company;
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replacement of the Companys senior management team;
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termination or change of the composition of the board of
directors special committee, audit committee, compensation
committee and special stock option committee;
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adoption of amendments inconsistent with charter documents of
any committee of the board of directors;
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replacement of the Companys auditors;
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change in the composition of the special committee or the number
of directors of the Company;
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amendment or repeal of the bylaw amendments;
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change in the date, time or place for the special meeting of the
Company stockholders or approve the adjournment of such
meeting; or
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creation of any new committee of the board of directors.
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OCP further amended its bylaws to provide for the termination of
the bylaw amendments at the effective time of the merger, or the
termination of the merger agreement; and to adopt an 80% vote
requirement for the stockholders of the Company to repeal or
amend Section 2 of Article III of the bylaws
(regarding the number and election of directors) or the bylaw
amendments.
Restrictions
on Oplink Actions
Subsequent to the appointment of Oplinks designees to the
board of directors, Oplink agreed:
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not to take any action in its capacity as stockholder of the
Company that is reasonably likely to materially and adversely
affect the supermajority voting requirements of the special
committee or board of directors or the delegation of authority
to the special committee;
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not to vote in its capacity as stockholder of the Company to
remove the members of the special committee from the board of
directors or the special committee, or to amend the
Companys bylaws; and
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to vote to reelect the members of the special committee.
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These obligations terminate on the earlier of the termination of
the merger agreement, or the effective time of the merger.
Additional
Covenants Regarding the Merger
In addition to the covenants in the merger agreement described
above, the merger agreement contains additional covenants
regarding the following:
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the preparation and filing of this proxy statement and a
Schedule 13E-3
transaction statement;
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confidentiality and reasonable access by Oplink to information
concerning our operations;
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public disclosure;
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reasonable efforts by the Company, Oplink and OAC to consummate
and make effective the merger agreement and transactions
contemplated by the merger agreement;
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takeover statutes;
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FIRPTA compliance; and
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the Company Stock Option Plan and ESPP.
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Termination
of the Merger Agreement
The merger agreement may be terminated at any time prior to the
effective time of the merger, whether before or after
stockholder approval has been obtained:
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by mutual written consent of us and Oplink; or
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by either us or Oplink if:
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the merger is not consummated on or before October 31,
2007, unless the failure of the merger to be completed by such
date is due to the failure of the party seeking to exercise such
termination right to perform or comply in all material respects
with any of the agreements of such party set forth in the merger
agreement;
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there is a final and nonappealable order, decree or ruling from
a court or other governmental entity or other action that
restrains, enjoins or otherwise prohibits consummation of the
merger; or
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our stockholders, at the special meeting or at any adjournment
or postponement thereof, fail to adopt the merger agreement,
unless the failure of the merger agreement to be adopted by our
stockholders is due to the failure of the party seeking to
exercise such termination right to perform or comply in all
material respects with any of the agreements of such party set
forth in the merger agreement; or
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by us if Oplink has breached any of its representations,
warranties, covenants or agreements in the merger agreement in a
manner that would give rise to, if occurring or continuing at
the effective time of the merger, the failure of the closing
conditions related to our obligations to effect the merger and
the breach is not cured within 30 days following written
notice to Oplink; provided that we are not in material breach of
the merger agreement; or
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by Oplink if:
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we have breached any of our representations, warranties,
covenants or agreements in the merger agreement in a manner that
would give rise to, if occurring or continuing at the effective
time of the merger, the failure of the closing conditions
related to Oplinks obligations to effect the merger and
the
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breach is not cured within 30 days following written notice
to us; provided that Oplink is not in material breach of the
merger agreement;
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our board of directors or special committee changes, withholds,
withdraws, amends or modifies its recommendation that our
stockholders adopt the merger agreement;
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we fail to include in this proxy statement a unanimous
recommendation that our stockholders adopt the merger agreement;
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our board of directors or special committee approves or
recommends to our stockholders a superior proposal;
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a tender or exchange offer relating to our securities has been
commenced and we have not sent our stockholders, within ten
business days after the commencement of such tender or exchange
offer, a statement disclosing that our special committee
recommends rejection of such tender or exchange offer; or
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we willfully and materially breach our covenants and agreements
under the merger agreement relating to solicitations,
acquisition proposals and board recommendation changes, as
described in Proposal No. 1 Approval and
Adoption of the Merger Agreement Material Provisions
of the Merger Agreement Restrictions on
Solicitations of Other Offers.
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Amendment,
Extension and Waiver
The parties may amend the merger agreement at any time, except
that after our stockholders have adopted the merger agreement,
there shall be no amendment that adversely affects our
stockholders rights without our stockholders
approval. All amendments to the merger agreement shall be in a
writing signed by us and Oplink.
At any time before the consummation of the merger, each of the
parties to the merger agreement may, by written instrument:
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extend the time for the performance of any of the obligations or
other acts of the other parties;
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waive any inaccuracies in the representations and warranties of
the other parties contained in the merger agreement or in any
document delivered pursuant to the merger agreement; or
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waive compliance by any of the other parties with any of the
agreements or conditions contained in the merger agreement.
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Dissenters
Rights of Appraisal
The discussion of the provisions set forth below is not a
complete summary regarding your appraisal rights under Delaware
law and is qualified in its entirety by reference to the text of
the relevant provisions of Delaware law, which are attached to
this proxy statement as
Annex D
. Stockholders
intending to exercise appraisal rights should carefully review
Annex D
. Failure to follow precisely any of the
statutory procedures set forth in
Annex D
may result
in a termination or waiver of these rights.
If the merger is consummated, dissenting holders of our common
stock who follow the procedures specified in Section 262 of
the Delaware General Corporate Law within the appropriate time
periods will be entitled to have their shares of our common
stock appraised by a court and to receive the fair
value of such shares in cash as determined by the Delaware
Court of Chancery in lieu of the consideration that such
stockholder would otherwise be entitled to receive pursuant to
the merger agreement.
The following is a brief summary of Section 262, which sets
forth the procedures for dissenting from the merger and
demanding statutory appraisal rights. Failure to follow the
procedures set forth in Section 262 precisely could result
in the loss of appraisal rights. This proxy statement
constitutes notice to holders of our common stock concerning the
availability of appraisal rights under Section 262. A
stockholder of record wishing to assert appraisal rights must
hold the shares of stock on the date of making a demand for
appraisal rights with respect to such shares and must
continuously hold such shares through the effective time of the
merger.
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Stockholders who desire to exercise their appraisal rights
must satisfy all of the conditions of Section 262. A
written demand for appraisal of shares must be filed with us
before the special meeting on October 31, 2007 at
10:00 a.m. Pacific Time. This written demand for
appraisal of shares must be in addition to and separate from a
vote against, or an abstention from voting on, the merger.
Stockholders electing to exercise their appraisal rights must
not vote for the merger. Any proxy or vote against
the merger will not constitute a demand for appraisal (or waiver
thereof) within the meaning of Section 262, nor will it be
deemed to satisfy any notice requirements under Delaware law.
A demand for appraisal must be executed by or for the
stockholder of record, fully and correctly, as such
stockholders name appears on the share certificate. If the
shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, this demand must be executed by
or for the fiduciary. If the shares are owned by or for more
than one person, as in a joint tenancy or tenancy in common,
such demand must be executed by or for all joint owners. An
authorized agent, including an agent for two or more joint
owners, may execute the demand for appraisal for a stockholder
of record; however, the agent must identify the record owner and
expressly disclose the fact that, in exercising the demand, he
is acting as agent for the record owner. A person having a
beneficial interest in our common stock held of record in the
name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow the steps
summarized below and in a timely manner to perfect whatever
appraisal rights the beneficial owner may have.
A Company stockholder who elects to exercise appraisal rights
should mail, or deliver his her or its written demand to us at
our address at 6101 Variel Avenue, Woodland Hills, CA 91367,
Attention: Secretary. The written demand for appraisal should
specify the stockholders name and mailing address, and
that the stockholder is thereby demanding appraisal of his, her
or its OCP common stock. Within 10 days after the effective
time of the merger, we must provide notice of the effective time
of the merger to all of our stockholders who have complied with
Section 262 and have not voted for the merger.
Within 120 days after the effective time of the merger (but
not thereafter), any stockholder who has satisfied the
requirements of Section 262 may deliver to us a written
demand for a statement listing the aggregate number of shares
not voted in favor of the merger and with respect to which
demands for appraisal have been received and the aggregate
number of holders of such shares. We, as the surviving
corporation in the merger, must mail such written statement to
the stockholder no later than 10 days after the
stockholders request is received by us or 10 days
after the latest date for delivery of a demand for appraisal
under Section 262, whichever is later.
Within 120 days after the effective time of the merger (but
not thereafter), either we or any stockholder who has complied
with the required conditions of Section 262 and who is
otherwise entitled to appraisal rights may file a petition in
the Delaware Court of Chancery demanding a determination of the
fair value of the OCP shares of stockholders entitled to
appraisal rights. We have no present intention to file such a
petition if demand for appraisal is made.
If a petition for appraisal is duly filed by a stockholder in
accordance with Section 262 and a copy of the petition is
delivered to us, we will be obligated, within 20 days after
receiving service of a copy of the petition, to provide the
Chancery Court with a duly verified list containing the names
and addresses of all stockholders who have demanded an appraisal
of their shares and with whom agreements as to the value of
their shares have not been reached by us. If we file a petition,
the petition must be accompanied by the verified list. The
Register in Chancery, if so ordered by the court, will give
notice of the time and place fixed for the hearing of such
petition by registered or certified mail to us and to the
stockholders shown on the list at the addresses therein stated,
and notice will also be given by publishing a notice at least
one week before the day of the hearing in a newspaper of general
circulation published in the City of Wilmington, Delaware, or
such publication as the court deems advisable. The forms of the
notices by mail and by publication must be approved by the
court, and we will bear the costs thereof. The Delaware Court of
Chancery may require the stockholders who have demanded an
appraisal for their shares (and who hold stock represented by
certificates) to submit their stock certificates to the Register
in Chancery for notation of the pendency of the appraisal
proceedings and the Delaware Court of Chancery may dismiss the
proceedings as to any stockholder that fails to comply with such
direction.
If a petition for an appraisal is filed in a timely fashion,
after a hearing on the petition, the court will determine which
stockholders are entitled to appraisal rights and will appraise
the shares owned by these stockholders,
48
determining the fair value of such shares, exclusive of any
element of value arising from the accomplishment or expectation
of the merger, together with a fair rate of interest to be paid,
if any, upon the amount determined to be the fair value.
OCP stockholders considering seeking appraisal of their shares
should note that the fair value of their shares determined under
Section 262 could be more, the same or less than the
consideration they would receive pursuant to the merger
agreement if they did not seek appraisal of their shares. The
costs of the appraisal proceeding may be determined by the court
and taxed against the parties as the court deems equitable under
the circumstances. Upon application of a dissenting stockholder,
the court may order that all or a portion of the expenses
incurred by any dissenting stockholder in connection with the
appraisal proceeding, including reasonable attorneys fees
and the fees and expenses of experts, be charged pro rata
against the value of all shares entitled to appraisal. In the
absence of a determination or assessment, each party bears his,
her, or its own expenses. The exchange of shares for cash
pursuant to the exercise of appraisal rights will be a taxable
transaction for United States federal income tax purposes and
possibly state, local, and foreign income tax purposes as well.
See the section of the proxy statement entitled Special
Factors Material Provisions of the Merger
Agreement Material U.S. Federal Income Tax
Consequences of the Merger.
Any stockholder who has duly demanded appraisal in compliance
with Section 262 will not, after the effective time of the
merger, be entitled to vote for any purpose the shares subject
to demand or to receive payment of dividends or other
distributions on such shares, except for dividends or
distributions payable to stockholders of record at a date prior
to the effective time of the merger.
At any time within 60 days after the effective time of the
merger, any stockholder will have the right to withdraw his, her
or its demand for appraisal and to accept the terms offered in
the merger agreement. After this period, a stockholder may
withdraw his, her, or its demand for appraisal and receive
payment for his, her, or its shares as provided in the merger
agreement only with our consent. If no petition for appraisal is
filed with the court within 120 days after the effective
time of the merger, stockholders rights to appraisal (if
available) will cease. Inasmuch as we have no obligation to file
such a petition, any stockholder who desires a petition to be
filed is advised to file it on a timely basis. No petition
timely filed in the court demanding appraisal may be dismissed
as to any stockholder without the approval of the court, which
approval may be conditioned upon such terms as the court deems
just.
Failure by any OCP stockholder to comply fully with the
procedures described above and set forth in
Annex D
to this proxy statement may result in termination of such
stockholders appraisal rights.
ADJOURNMENT OF THE SPECIAL MEETING
We may ask our stockholders to vote on a proposal to adjourn the
special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time
of the meeting to adopt the merger agreement or remove the four
directors. We currently do not intend to propose adjournment at
the special meeting if there are sufficient votes to adopt the
merger agreement. If the proposal to adjourn our special meeting
for the purpose of soliciting additional proxies is submitted to
our stockholders for approval, such approval requires the
affirmative vote of the holders of a majority of the shares of
our common stock present or represented by proxy and entitled to
vote on the matter.
Our board of directors recommends that the stockholders vote
FOR
the adjournment of the special meeting,
if necessary to solicit additional proxies.
49
IMPORTANT
INFORMATION REGARDING THE COMPANY
Selected Consolidated Financial Data
Set forth below is certain selected historical condensed
consolidated financial information with respect to the Company,
excerpted from the audited financial statements of the Company
in our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006, and from the
unaudited interim condensed consolidated financial statements of
the Company in our Quarterly Report on
Form 10-Q
for the fiscal quarters ended June 30, 2007 and
June 30, 2006, which were previously filed by us with the
Securities and Exchange Commission.
Additional financial information is included in the reports and
other documents filed by the Company with the Securities and
Exchange Commission. The following summary information is
qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any
related notes) contained therein. The financial information
(including any related notes) contained in certain of such
reports and other documents is incorporated herein by reference
as described in more detail in Where You Can Find More
Information. Such reports and other documents may be
inspected and copies may be obtained without charge as described
in Where You Can Find More Information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended,
|
|
|
Year Ended,
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Revenue
|
|
$
|
50,566
|
|
|
$
|
51,003
|
|
|
$
|
70,138
|
|
|
$
|
55,978
|
|
Cost of revenue
|
|
|
46,809
|
|
|
|
34,965
|
|
|
|
49,720
|
|
|
|
34,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
3,757
|
|
|
|
16,038
|
|
|
|
20,418
|
|
|
|
21,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
9,044
|
|
|
|
8,280
|
|
|
|
11,472
|
|
|
|
14,621
|
|
Selling and marketing
|
|
|
4,262
|
|
|
|
3,705
|
|
|
|
5,008
|
|
|
|
4,710
|
|
General and administrative
|
|
|
13,632
|
|
|
|
5,551
|
|
|
|
7,930
|
|
|
|
5,012
|
|
Transitional costs for contract manufacturing
|
|
|
2,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill
|
|
|
8,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
37,832
|
|
|
|
17,536
|
|
|
|
24,410
|
|
|
|
24,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
(34,075
|
)
|
|
|
(1,498
|
)
|
|
|
(3,992
|
)
|
|
|
(2,691
|
)
|
Investment income
|
|
|
4,296
|
|
|
|
4,349
|
|
|
|
6,063
|
|
|
|
3,308
|
|
Other income, net
|
|
|
101
|
|
|
|
239
|
|
|
|
(90
|
)
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(29,678
|
)
|
|
|
3,090
|
|
|
|
1,981
|
|
|
|
942
|
|
Provision for income taxes
|
|
|
183
|
|
|
|
298
|
|
|
|
586
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(29,861
|
)
|
|
$
|
2,792
|
|
|
$
|
1,395
|
|
|
$
|
941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share
|
|
$
|
(0.26
|
)
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share
|
|
$
|
(0.26
|
)
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
148,682
|
|
|
$
|
179,675
|
|
|
$
|
166,783
|
|
|
$
|
174,436
|
|
Non-current assets
|
|
$
|
29,607
|
|
|
$
|
24,224
|
|
|
$
|
40,535
|
|
|
$
|
25,816
|
|
Current liabilities
|
|
$
|
14,600
|
|
|
$
|
11,152
|
|
|
$
|
15,443
|
|
|
$
|
11,744
|
|
Non-current liabilities
|
|
$
|
160
|
|
|
$
|
|
|
|
$
|
159
|
|
|
$
|
200
|
|
Book value per common share
|
|
$
|
1.43
|
|
|
$
|
1.70
|
|
|
$
|
1.69
|
|
|
$
|
1.67
|
|
The Company did not compute a ratio of earnings to fixed charges
for June 30, 2007, June 30, 2006, September 30,
2006 or September 30, 2005 (the covered dates).
The Company had no interest expense as of the covered dates due
to the fact that it did not have any outstanding indebtedness as
of the covered dates.
50
OCPs common stock is traded on The NASDAQ Global Market
under the symbol OCPI. The following table sets
forth the range of high and low
intra-day
sales prices (rounded to the nearest cent) reported on The
NASDAQ Global Market for OCPs common stock for the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
Price Range of
|
|
|
|
Common Stock
|
|
|
|
High
|
|
|
Low
|
|
|
Fiscal Year Ended September 30, 2007:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
2.47
|
|
|
$
|
1.58
|
|
Second Quarter
|
|
$
|
1.68
|
|
|
$
|
1.31
|
|
Third Quarter
|
|
$
|
1.62
|
|
|
$
|
1.32
|
|
Fourth Quarter
|
|
$
|
1.58
|
|
|
$
|
1.64
|
|
Fiscal Year Ended September 30, 2006:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
2.65
|
|
|
$
|
1.80
|
|
Second Quarter
|
|
$
|
3.97
|
|
|
$
|
2.35
|
|
Third Quarter
|
|
$
|
3.23
|
|
|
$
|
1.92
|
|
Fourth Quarter
|
|
$
|
2.16
|
|
|
$
|
1.71
|
|
Fiscal Year Ended September 30, 2005:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
2.68
|
|
|
$
|
1.90
|
|
Second Quarter
|
|
$
|
2.65
|
|
|
$
|
1.67
|
|
Third Quarter
|
|
$
|
1.99
|
|
|
$
|
1.53
|
|
Fourth Quarter
|
|
$
|
2.15
|
|
|
$
|
1.72
|
|
On April 20, 2007, the last trading day before the public
announcement of Oplinks agreement to purchase the 57.9% of
our outstanding shares of common stock owned by Furukawa in
exchange for cash and stock worth approximately $1.50 per share,
the last sale price of our common stock was $1.38 per share.
On June 5, 2007, the last trading day before the public
announcement that Oplink and the OCP special committee had
reached an agreement in principle regarding the acquisition by
Oplink of the remaining 42.1% of our outstanding shares of
common stock for $1.65 per share in cash, the last sale price of
our common stock was $1.49 per share.
OCP has not declared or paid any cash dividends on its capital
stock since its inception and does not anticipate paying
dividends in the foreseeable future.
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the
beneficial ownership of our common stock as of
September 10, 2007, except as noted in the footnotes below,
by:
|
|
|
|
|
each person who we know to be the beneficial owner of 5% or more
of our outstanding common stock;
|
|
|
|
our chief executive officer and other highest paid executive
officers during our 2006 fiscal year;
|
|
|
|
each of our directors; and
|
|
|
|
all of our executive officers and directors as a group.
|
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission. In computing the
number of shares beneficially owned by a person and the
percentage of ownership of that person, shares of common stock
subject to options held by that person that are currently
exercisable or become exercisable within 60 days of
September 10, 2007, are deemed outstanding even if they
have not actually been exercised. Those shares, however, are not
deemed outstanding for the purpose of computing the percentage
ownership of any other person. As of September 10, 2007,
114,181,271 shares of our common stock were issued and
outstanding. Unless
51
otherwise indicated in the table, the persons and entities named
in the table have sole voting and sole investment power with
respect to the shares set forth opposite the stockholders
name, subject to community property laws where applicable.
Unless otherwise indicated, the address of each beneficial owner
listed below is
c/o Optical
Communication Products, Inc., 6101 Variel Avenue, Woodland
Hills, California 91367.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
Number of Shares
|
|
|
Shares Beneficially
|
|
|
|
Beneficially Owned
|
|
|
Owned
|
|
|
Named executive officers and directors:
|
|
|
|
|
|
|
|
|
Philip F. Otto(1)
|
|
|
625,000
|
|
|
|
*
|
%
|
Frederic T. Boyer(2)
|
|
|
322,917
|
|
|
|
*
|
|
Liew-Chuang Chiu(3)
|
|
|
101,000
|
|
|
|
*
|
|
Stewart D. Personick(4)
|
|
|
92,500
|
|
|
|
*
|
|
Hobart Birmingham(5)
|
|
|
62,500
|
|
|
|
*
|
|
David Warnes(6)
|
|
|
62,500
|
|
|
|
*
|
|
Joseph Y. Liu(7)
|
|
|
66,000,100
|
|
|
|
57.8
|
|
Leonard J. LeBlanc(7)
|
|
|
66,000,100
|
|
|
|
57.8
|
|
Chieh Chang(7)
|
|
|
66,000,100
|
|
|
|
57.8
|
|
Jesse W. Jack(7)
|
|
|
66,000,100
|
|
|
|
57.8
|
|
Robert Shih(8)
|
|
|
0
|
|
|
|
*
|
|
Other 5% Stockholders:
|
|
|
|
|
|
|
|
|
Oplink Communications, Inc.(9)
|
|
|
66,000,100
|
|
|
|
57.8
|
|
Muoi Van Tran(10)
|
|
|
12,855,595
|
|
|
|
11.3
|
|
Mohammad Ghorbanali(11)
|
|
|
7,176,553
|
|
|
|
6.3
|
|
All directors and executive officers as a group (11 persons)
|
|
|
67,266,517
|
|
|
|
58.9
|
%
|
|
|
|
(1)
|
|
Mr. Otto was granted options to purchase
500,000 shares of common stock in fiscal year 2006, 156,250
of which are presently exercisable or will become exercisable
within 60 days of September 10, 2007. On
January 24, 2007, Mr. Otto was awarded options to
purchase 1,500,000 shares of common Stock, 468,750 of which
are presently exercisable or become exercisable within
60 days of September 10, 2007.
|
|
|
|
(2)
|
|
Includes 187,500 shares of restricted stock. Mr. Boyer
was granted options to purchase 500,000 shares of common
stock in fiscal year 2006, 135,416 of which are presently
exercisable or exercisable within 60 days of
September 10, 2007.
|
|
|
|
(3)
|
|
Includes 50,000 shares of restricted stock. LC Chiu was
granted options to purchase 150,000 shares of common stock,
48,917 of which are presently exercisable or exercisable within
60 days of September 10, 2007.
|
|
|
|
(4)
|
|
Mr. Personick was granted options to
purchase100,000 shares of Class A common stock, 92,500
of which are presently exercisable or will become exercisable
within 60 days of September 10, 2007.
|
|
|
|
(5)
|
|
Mr. Birmingham was granted options to purchase
70,000 shares of Class A common stock, 62,500 of which
are presently exercisable or will become exercisable within
60 days of September 10, 2007.
|
|
|
|
(6)
|
|
Mr. Warnes was granted options to purchase
70,000 shares of our Class A common stock, 62,500 of
which are presently exercisable or will become exercisable
within 60 days of September 10, 2007.
|
|
|
|
(7)
|
|
Consists of 66,000,100 shares of common stock held by
Oplink. Mr. Liu is the president and chief executive
officer and a director of Oplink, Mr. LeBlanc is a director
and chairman of the board of Oplink, and Messrs. Chang and
Jack are directors of Oplink. The address for Messrs. Liu,
LeBlanc, Chang and Jack is
c/o Oplink
Communications, Inc., 46335 Landing Parkway, Fremont, California
94538. Messrs. Liu, LeBlanc, Chang and Jack disclaim
beneficial ownership of these shares.
|
52
|
|
|
(8)
|
|
Dr. Shih resigned as a director of the Company on
September 29, 2007, and until that date, was vice president
of business development at Oplink.
|
|
|
|
(9)
|
|
Oplinks address is 46335 Landing Parkway, Fremont,
California 94538.
|
|
|
|
(10)
|
|
Includes (a) 10,807,406 shares of our Class A
common stock held by Muoi Van Tran and Tracy Tam Trang, as
Co-Trustees of the Tran Family Trust dated June 26, 1997,
(b) 80,000 shares of Class A common stock held by
Muoi Van Tran and Tracy Tam Trang, as co-trustees of two
separate trusts for the benefit of Dr. Trans children
(which shares total less than 5% of the companys
outstanding common stock), (c) 110,100 shares of our
Class A common stock held by Dr. Trans children
each of whom share Dr. Trans household and
(d) options to purchase 1,858,086 shares of our
Class A common stock, all of which are presently
exercisable or exercisable within 60 days of
September 10, 2007. Dr. Tran resigned as chief
executive officer of the Company effective December 31,
2006, and resigned as a director of the Company effective
June 19, 2007.
|
|
|
|
(11)
|
|
Includes (a) 75,500 shares of common stock held by
Mohammad Ghorbanali, as trustee of the Navid Ghorbanali
Irrevocable Trust dated October 1, 2000 for the benefit of
Mr. Ghorbanalis child, and
(b) 75,500 shares of common stock held by Mohammad
Ghorbanali, as trustee of the Negar Ghorbanali Irrevocable Trust
dated October 1, 2000 for the benefit of
Mr. Ghorbanalis child. Effective September 30,
2006, Mr. Ghorbanali departed from the Company as an
employee and his employment agreement was terminated.
|
Securities
Transactions by the Company and its Directors and Executive
Officers and by Oplink and Oplink Acquisition and their
Directors and Executive Officers
None of the Company, Oplink, and Oplink Acquisition, nor any of
their respective executive officers or directors, have purchased
or sold shares of the Companys common stock within
60 days of the date of this proxy statement.
As of the date of this proxy statement, our board of directors
knows of no matters that will be presented for consideration at
the special meeting other than as described in this proxy
statement.
FUTURE
STOCKHOLDER PROPOSALS
In addition to the special meeting, we anticipate holding an
annual meeting of our stockholders in 2008, depending upon
whether the merger is consummated. If the merger is consummated,
we will not have public stockholders and there will be no public
participation in any future meeting of stockholders thereafter.
Stockholder proposals that are intended to be presented at our
2008 annual meeting and included in our proxy materials relating
to the 2008 annual meeting must be received by Corporate
Secretary, Optical Communication Products, Inc., 6101 Variel
Avenue, Woodland Hills, California 91367 no later than
August 30, 2007, which is 120 calendar days prior to the
anniversary of the mailing date for this years proxy
materials. All stockholder proposals must be in compliance with
applicable laws and regulations in order to be considered for
possible inclusion in the proxy statement and form of proxy for
the 2008 annual meeting.
If a stockholder wishes to present a proposal at our 2008 annual
meeting and the proposal is not intended to be included in our
proxy statement relating to the 2008 annual meeting, the
stockholder must give advance notice to us prior to the deadline
for the annual meeting. In order to be deemed properly
presented, the notice of a proposal must be delivered to our
Corporate Secretary no later than December 10, 2007, which
is 45 calendar days prior to the anniversary of the date of the
2007 annual meeting. However, in the event that the 2008 annual
meeting is called for a date which is not within 30days of the
anniversary of the date of the 2007 annual meeting, stockholder
proposals intended for presentation at the 2008 annual meeting
must be received by our Corporate Secretary no later than the
close of business on the tenth day following the date on which
public announcement of the date of the 2008 annual meeting is
first made. If a stockholder gives notice of such proposal after
December 10, 2007, then the proxy solicited by the board of
directors for the 2008 annual meeting will confer discretionary
authority to vote on such proposal at that meeting, which may
include a vote against such stockholder proposal.
53
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statement
and other information with the SEC. You may read and copy any
document we file at the SECs public reference room located
at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our SEC
filings are also available to the public at the SECs
website at
http://www.sec.gov
or at our website at www.
ocp-inc.com
.
You may also inspect reports, proxy statements and other
information about us at the offices of the NASDAQ Global Market.
For further information on obtaining copies of our public
filings at the NASDAQ Global Market, you should call
1-800-261-0148.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of proxy statements
and any of the documents incorporated by reference in this
document or other information concerning us, without charge, by
written or telephonic request directed to D.F. King & Co.
Inc., 48 Wall Street, 22nd Floor, New York, New York 10005,
toll-free at (800) 659-5550. Documents incorporated by reference
are available without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by
reference into those documents.
The merger described in this proxy statement is a going
private transaction. We have filed a Section 13(e)
Transaction Statement on
Schedule 13E-3
with the Securities and Exchange Commission with respect to the
merger. The
Schedule 13E-3,
including all amendments thereto, contains additional
information about us. The
Schedule 13E-3,
including all amendments and exhibits filed or incorporated by
reference as part of the
Schedule 13E-3,
is available for inspection and copying at our principal
executive offices during regular business hours, and may be
obtained by mail, without charge, by written request directed to
us at 6101 Variel Avenue, Woodland Hills, California 91367.
The Securities and Exchange Commission allows us to
incorporate by reference the information we file
with it, which means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is considered to be part of this proxy
statement and later information filed with the Securities and
Exchange Commission will update and supersede this information.
This proxy statement incorporates by reference the documents set
forth below that we have previously filed with the Securities
and Exchange Commission. The documents contain important
information about us and our financial condition.
We incorporate by reference into this proxy statement our:
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Annual Report on
Form 10-K
for the year ended September 30, 2006, filed on
December 20, 2006;
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Quarterly Report on
Form 10-Q
for the quarter ended December 31, 2006, filed on
February 14, 2007;
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Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007, filed on May 15,
2007;
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Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007, filed on
August 20, 2007;
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Current Reports on
Form 8-K,
filed on February 6, 2007, April 27, 2007, May 4,
2007, May 15, 2007, June 11, 2007, June 20, 2007,
June 25, 2007, August 1, 2007, August 20, 2007,
and August 28, 2007.
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In addition, we incorporate by reference all of our filings with
the Securities and Exchange Commission under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of the
initial filing of this proxy statement and before the special
meeting. Those documents include periodic reports, such as
Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements. We will amend the Schedule 13E-3 to
incorporate by reference any additional documents that we may
file with the Securities and Exchange Commission under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of the initial filing of this proxy statement and
before the date of the special meeting to the extent required to
fulfill our obligations under the Exchange Act. Any statement
contained in this proxy statement or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this proxy
statement to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this proxy statement.
54
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT
IS DATED OCTOBER 2, 2007. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY
STATEMENT TO STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO
THE CONTRARY.
By Order of the Board of Directors,
Philip F. Otto
Director, Chief Executive Officer and
President
Woodland Hills, California
October 2, 2007
55
AGREEMENT
AND PLAN OF MERGER BY AND AMONG OPLINK COMMUNICATIONS INC.,
OPLINK ACQUISITION CORPORATION AND OPTICAL COMMUNICATION
PRODUCTS, INC. DATED AS OF JUNE 19, 2007
EXECUTION
COPY
AGREEMENT
AND PLAN OF MERGER
BY AND AMONG
OPLINK COMMUNICATIONS INC.
OPLINK ACQUISITION CORPORATION
and
OPTICAL COMMUNICATION PRODUCTS, INC.
Dated as of June 19, 2007
TABLE OF
CONTENTS
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Page
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ARTICLE I
THE MERGER
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A-1
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1.1
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The Merger
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A-1
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1.2
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Effective Time; Closing
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A-1
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1.3
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Effect of the Merger
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A-2
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1.4
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Certificate of Incorporation and Bylaws of Surviving Corporation
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A-2
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1.5
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Directors and Officers of Surviving Corporation
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A-2
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1.6
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Effect on Capital Stock
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A-2
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1.7
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Dissenting Shares
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A-3
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1.8
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Surrender of Certificates
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A-4
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1.9
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No Further Ownership Rights in Company Common Stock
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A-5
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1.10
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Lost, Stolen or Destroyed Certificates
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A-5
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1.11
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Adjustments
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A-5
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1.12
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Taking of Necessary Action; Further Action
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A-5
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
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A-6
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2.1
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Organization and Qualification; Subsidiaries
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A-6
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2.2
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Certificate of Incorporation and Bylaws
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A-6
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2.3
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Authority Relative to this Agreement
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A-6
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2.4
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No Conflict; Required Filings and Consents
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A-6
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2.5
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Proxy Statement
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A-7
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2.6
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Board Approval
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A-7
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2.7
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Opinion of Financial Advisor
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A-8
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2.8
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Financial Advisor
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A-8
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2.9
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State Takeover Statutes
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A-8
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
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A-8
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3.1
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Corporate Organization
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A-8
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3.2
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Authority Relative to this Agreement
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A-8
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3.3
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No Conflict; Required Filings and Consents
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A-8
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3.4
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Proxy Statement
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A-9
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3.5
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Sufficient Funds
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A-9
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3.6
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No Prior Merger Sub Operations
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A-9
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3.7
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Ownership of the Company
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A-9
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ARTICLE IV
ADDITIONAL AGREEMENTS
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A-9
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4.1
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Proxy Statement and Other Filings
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A-9
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4.2
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Meeting of Company Stockholders
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A-10
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4.3
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Confidentiality; Access to Information
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A-11
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4.4
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No Solicitation
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A-11
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4.5
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Public Disclosure
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A-13
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4.6
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Reasonable Efforts
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A-14
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4.7
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Takeover Statutes
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A-14
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4.8
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FIRPTA Compliance
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A-14
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4.9
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Company Stock Option Plan; Company ESPP
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A-14
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4.10
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Indemnification of Directors and Officers
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A-15
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4.11
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Board of Directors
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A-16
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A-i
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Page
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ARTICLE V
CONDITIONS TO THE MERGER
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A-16
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5.1
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Conditions to Obligations of Each Party to Effect the Merger
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A-16
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5.2
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Additional Conditions to Obligations of the Company
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A-17
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5.3
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Additional Conditions to the Obligations of Parent and Merger Sub
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A-17
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ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
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A-18
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6.1
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Termination
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A-18
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6.2
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Notice of Termination; Effect of Termination
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A-19
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6.3
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Fees and Expenses
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A-19
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6.4
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Amendment
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A-19
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6.5
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Extension; Waiver
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A-19
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ARTICLE VII
GENERAL PROVISIONS
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A-19
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7.1
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Non-Survival of Representations and Warranties
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A-19
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7.2
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Notices
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A-20
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7.3
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Interpretation
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A-20
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7.4
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Counterparts
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A-21
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7.5
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Entire Agreement; Third Party Beneficiaries
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A-21
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7.6
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Severability
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A-22
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7.7
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Other Remedies; Specific Performance
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A-22
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7.8
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Governing Law
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A-22
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7.9
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Rules of Construction
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A-22
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7.10
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Assignment
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A-23
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7.11
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Waiver of Jury Trial
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A-23
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A-ii
INDEX
OF EXHIBITS
EXHIBIT A Bylaw
Amendment
AGREEMENT
AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of
June 19, 2007 (the
Agreement
), by and
among Oplink Communications, Inc., a Delaware corporation
(Parent)
, Oplink Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent
(Merger Sub)
, and Optical Communication
Products, Inc., a Delaware corporation (the
Company
).
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company (upon the unanimous recommendation of a special
committee of disinterested directors of the Company (the
Special Committee
)) have each determined that
it is in the best interests of their respective stockholders for
Parent to acquire the outstanding shares of capital stock of the
Company that it does not already own upon the terms and subject
to the conditions set forth herein.
WHEREAS, the Board of Directors of the Company (the
Board)
, upon the unanimous recommendation of
the Special Committee, has unanimously (i) determined that
the Agreement and the Merger (as defined in
Section 1.1
) is advisable and fair to, and in the
best interests of, the stockholders of the Company,
(ii) approved this Agreement and the other transactions
contemplated by this Agreement, including the Merger, and
(iii) determined to recommend that the stockholders of the
Company adopt this Agreement.
WHEREAS, the Board of Directors of Parent and Merger Sub have
(i) determined that the Merger is advisable and fair to,
and in the best interest of, Parent and its stockholders, and
(ii) approved this Agreement and the other transactions
contemplated by this Agreement, including the Merger.
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1
The Merger
.
At the Effective Time (as defined in
Section 1.2
)
and subject to and upon the terms and conditions of this
Agreement and the applicable provisions of the Delaware General
Corporation Law
(Delaware Law)
, Merger Sub
shall be merged with and into the Company (the
Merger)
, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the
surviving corporation. The Company, as the surviving corporation
after the Merger, is hereinafter sometimes referred to as the
Surviving Corporation
.
1.2
Effective Time; Closing
.
Upon the terms and subject to the conditions of this Agreement,
the parties hereto shall cause the Merger to be consummated by
filing with the Secretary of State of the State of Delaware a
certificate of merger (the
Certificate of
Merger
) executed in accordance with the relevant
provisions of Delaware Law (the time of such filing, or such
later time as may be agreed in writing by the Company and Parent
and specified in the Certificate of Merger, being the
Effective Time
) as soon as practicable on or
after the Closing Date (as herein defined). The closing of the
Merger (the
Closing
) shall take place at the
offices of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto,
California, at a time and date to be specified by the parties
hereto, which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in
Article V
(other than those conditions, which by
their terms, are to be satisfied or waived on the Closing Date,
but subject to the satisfaction or waiver thereof), or at such
other time, date and location as the parties hereto agree in
writing (the
Closing Date
).
A-1
1.3
Effect of the Merger
.
At the Effective Time, the effect of the Merger shall be as
provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all of the assets,
properties, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation,
and all of the debts, liabilities, obligations, restrictions and
duties of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions and duties of the
Surviving Corporation.
1.4
Certificate of Incorporation and Bylaws of
Surviving Corporation
.
(a)
Certificate of
Incorporation
.
As of the Effective Time, by
virtue of the Merger and without any action on the part of
Merger Sub or the Company, the Certificate of Incorporation of
the Surviving Corporation shall be amended and restated to read
the same as the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, until
thereafter amended in accordance with Delaware Law and such
Certificate of Incorporation;
provided, however
, that as
of the Effective Time the Certificate of Incorporation shall
provide that the name of the Surviving Corporation is
Optical Communication Products, Inc.
(b)
Bylaws
.
As of the Effective
Time, the Bylaws of the Surviving Corporation shall be amended
and restated to read the same as the Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, until thereafter
amended in accordance with Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws;
provided, however
, that all references in such Bylaws to
Merger Sub shall be amended to refer to Optical
Communication Products, Inc.
1.5
Directors and Officers of Surviving
Corporation
.
(a)
Directors
.
The initial
directors of the Surviving Corporation shall be the directors of
Merger Sub as of immediately prior to the Effective Time, until
their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal
in accordance with the Certificate of Incorporation and the
Bylaws of the Surviving Corporation.
(b)
Officers
.
The initial officers
of the Surviving Corporation shall be the officers of Merger Sub
as of immediately prior to the Effective Time, until their
respective successors are duly appointed and qualified or until
their earlier death, resignation or removal in accordance with
the Certificate of Incorporation and the Bylaws of the Surviving
Corporation.
1.6
Effect on Capital Stock
.
Upon the terms and subject to the conditions of this Agreement,
at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the holders of
any of the following securities, the following shall occur:
(a)
Conversion of Shares
.
Each
share of Class A common stock, par value $0.001 per share,
of the Company
(Company Common Stock
) issued
and outstanding immediately prior to the Effective Time (other
than any shares of Company Common Stock to be canceled pursuant
to
Section 1.6(b)
and any Dissenting Shares, as
defined in
Section 1.7
), will be canceled and
extinguished and automatically converted into the right to
receive, upon surrender of the certificate(s) representing such
Company Common Stock in the manner provided in
Section 1.8
(or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit, and bond,
if required, in the manner provided in
Section 1.10
), cash in an amount equal to $1.65 per
share, without interest (the
Per Share Merger
Consideration
and the aggregate of all Per Share
Merger Consideration, the
Merger
Consideration
).
(b)
Cancellation of Treasury and Parent-Owned
Shares
.
All Company Common Stock and
Class B common stock, par value $0.001 per share, of the
Company
(Class B Common Stock
and
together with the Company Common Stock, the
Common
Shares
) held by the Company or owned by Merger Sub,
Parent or any direct or indirect wholly-owned subsidiary of the
Company or of Parent or, with respect to Class B Common
Stock, held or owned by any other person immediately prior to
the Effective Time shall be canceled and extinguished without
any conversion thereof.
A-2
(c)
Capital Stock of Merger
Sub
.
Each share of common stock, par value
$0.01 per share, of Merger Sub (the
Merger Sub Common
Stock
) issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully
paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub Common
Stock outstanding immediately prior to the Effective Time shall
evidence ownership of such shares of capital stock of the
Surviving Corporation.
(d)
Company Stock Options
.
(i) Subject to
Section 1.6(d)(ii)
, at the
Effective Time, all rights with respect to each option to
purchase Company Common Stock that was granted under the Company
Stock Option Plan (as defined in
Section 4.9(a)
;
each a
Company Stock Option
) then
outstanding, whether vested or unvested, shall be converted into
and become rights with respect to Parent Common Stock and Parent
shall assume each such Company Stock Option (as so assumed, an
Assumed Option
). From and after the Effective
Time, each Assumed Option shall continue to be subject to the
same terms and conditions as were applicable to such Company
Stock Option immediately prior to the Effective Time in
accordance with the Company Stock Option Plan under which it was
issued and the stock option agreement by which it is evidenced,
except that (i) each reference in such plan and agreement
to the Company shall be deemed to refer to Parent,
(ii) each Assumed Option may be exercised solely for shares
of Parent Common Stock, (iii) the number of shares of
Parent Common Stock subject to each Assumed Option shall be
equal to the number of shares of Company Common Stock remaining
unexercised under and subject to such Company Stock Option
immediately prior to the Effective Time multiplied by the result
obtained by dividing (A) $1.65 by (B) the average of
the closing price of a share of common stock of Parent on the
NASDAQ Global Market
(NASDAQ
) for the five
(5) trading days ending two business days prior to the
Closing Date (the
Option Exchange Ratio)
, as
it may be adjusted to reflect any reclassification, stock split,
reverse stock split, stock dividend, reorganization,
recapitalization or other like change with respect to common
stock, $0.001 par value per share, of Parent
(Parent Common Stock
) or Company Common Stock
occurring (or for which the record date is established) after
the date of this Agreement and prior to the Effective Time,
rounding down to the nearest whole share, (iv) the per
share exercise price under each Assumed Option shall be adjusted
by dividing the per share exercise price under such Company
Stock Option by the Option Exchange Ratio, rounding up to the
nearest cent, and (v) each Assumed Option shall, in
accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, reverse
stock split, reclassification, recapitalization or other similar
transaction subsequent to the Effective Time. To the extent that
a Company Stock Option qualifies as an incentive stock
option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the
Code)
, the option exercise price, the number
of shares of Parent Common Stock purchasable pursuant to the
Assumed Option and the terms and conditions of exercise of the
Assumed Option shall be determined in order to comply with
Section 424(a) of the Code. To the extent a Company Stock
Option is a nonstatutory stock option, the option exercise
price, the number of shares of Parent Common Stock purchasable
pursuant to the Assumed Option and the terms and conditions of
exercise of the Assumed Option shall be determined in order to
comply with Section 409A of the Code.
(ii) In lieu of assuming outstanding Company Stock Options
in accordance with
Section 1.6(d)(i)
, Parent may, in
its discretion, issue reasonably equivalent replacement stock
options in substitution for outstanding Company Stock Options,
provided that the number of shares of Parent Common Stock
subject to and the per share exercise price under each such
replacement option shall be determined in the same manner as set
forth in
Section 1.6(d)(i)
.
1.7
Dissenting Shares
.
(a) Notwithstanding any provision of this Agreement to the
contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by
stockholders who shall have not voted in favor of the Merger and
who shall have demanded properly in writing appraisal for such
Company Common Stock in accordance with Section 262 of
Delaware Law (collectively, the
Dissenting
Shares
) shall not be converted into, or represent the
right to receive, the Per Share Merger Consideration payable for
each such share of
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Company Common Stock. Such stockholders shall be entitled to
receive payment of the appraised value of such Company Common
Stock held by them in accordance with the provisions of such
Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such
Company Common Stock under such Section 262 shall thereupon
be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive
the Per Share Merger Consideration payable for each such share
of Company Common Stock, without any interest thereon, upon
surrender, in the manner provided in
Section 1.8
, of
the certificate or certificates that formerly evidenced such
Company Common Stock.
(b) The Company shall give Parent (i) prompt notice of
any demands for appraisal received by the Company, withdrawals
of such demands, and any other instruments served pursuant to
Delaware Law and received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law. The Company
shall not, except with the prior written consent of Parent, make
any payment with respect to any demands for appraisal or offer
to settle or settle any such demands.
1.8
Surrender of Certificates
.
(a)
Paying Agent
.
Prior to the
Effective Time, Parent shall select a bank or trust company
reasonably acceptable to the Company to act as agent (the
Paying Agent
) for the holders of Company
Common Stock to receive the funds to which holders of Company
Common Stock shall become entitled pursuant to
Section 1.6(a). Immediately prior to the Effective Time,
Parent shall deposit with the Paying Agent in immediately
available funds the Merger Consideration. Such funds shall be
invested by the Paying Agent as directed by Parent; earnings
from such investments shall be the sole and exclusive property
of Parent and the Surviving Corporation, and no part of such
earnings shall accrue to the benefit of holders of the shares of
Company Common Stock.
(b)
Payment Procedures
.
As soon as
reasonably practicable after the Effective Time, Parent shall
cause the Paying Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates (the
Certificates)
, which immediately prior to the
Effective Time represented the outstanding shares of Company
Common Stock converted into the right to receive the portion of
the Merger Consideration payable for such Company Common Stock,
(i) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall contain such other
provisions as Parent shall reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the portion of the Merger
Consideration payable upon surrender of said Certificates.
Parent shall use reasonable efforts to cause such mailings to
occur no later than three (3) business days after the
Effective Time. Upon surrender of Certificates for cancellation
to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal,
duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
required pursuant to those instructions, the holders of such
Certificates formerly representing the Company Common Stock
shall be entitled to receive in exchange therefor the portion of
the Merger Consideration payable for such shares of Company
Common Stock, and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding
Certificates shall be deemed from and after the Effective Time,
for all corporate purposes, to evidence only the ownership of
the respective portion of the Merger Consideration to which the
record holder of such Certificates is entitled by virtue
thereof. Promptly following surrender of any such Certificates
and the duly executed letters of transmittal, the Paying Agent
shall deliver to the record holders thereof, without interest,
the portion of the Merger Consideration to which such holder is
entitled upon surrender of said Certificates, subject to the
restrictions set forth herein.
(c)
Payments with respect to Unsurrendered Company
Common Stock; No Liability
.
At any time
following one day after the first anniversary of the Effective
Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds which had been made
available to the Paying Agent and not disbursed to holders of
Company Common Stock (including all interest and other income
received by the Paying Agent in respect of all funds made
available to it), and, thereafter, such holders shall be
entitled to look to Parent (subject to abandoned property,
escheat and other similar laws) only as general creditors
thereof with respect to any portion of the Merger Consideration
that may be payable upon due surrender of the Certificates held
by them. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation or the Paying Agent shall be liable to any
former holder of
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Company Common Stock for any portion of the Merger Consideration
properly delivered in respect of such Company Common Stock to a
public official pursuant to any applicable abandoned property,
escheat or other similar Legal Requirement.
(d)
Transfers of Ownership
.
If the
payment of the portion of the Merger Consideration to which such
holder is entitled is to be paid to a person other than the
person in whose name the Certificates surrendered in exchange
therefor are registered, it will be a condition of payment that
the Certificates so surrendered be properly endorsed and
otherwise in proper form for transfer (including, if requested
by Parent or the Paying Agent, a medallion guarantee), and that
the persons requesting such payment will have paid to Parent or
any agent designated by it any transfer or other taxes required
by reason of the payment of a portion of the Merger
Consideration to a person other than the registered holder of
the Certificates surrendered, or established to the satisfaction
of Parent or any agent designated by it that such tax has been
paid or is not applicable.
(e)
Required Withholding
.
Each of
the Paying Agent, Parent and the Surviving Corporation shall be
entitled to deduct and withhold from any consideration payable
or otherwise deliverable pursuant to this Agreement to any
holder or former holder of the Company Common Stock such amounts
as may be required to be deducted or withheld therefrom under
the Code or under any provision of state, local or foreign tax
law or under any other applicable Legal Requirement To the
extent such amounts are so deducted or withheld, such amounts
shall be treated for all purposes under this Agreement as having
been paid to the person to whom such amounts would otherwise
have been paid.
1.9
No Further Ownership Rights in Company
Common Stock
.
Payment of the Merger Consideration shall be deemed to have been
paid in full satisfaction of all rights pertaining to the
Company Common Stock, and after the Effective Time, there shall
be no further registration of transfers on the records of the
Surviving Corporation of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time
If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this
ARTICLE I
.
1.10
Lost, Stolen or Destroyed
Certificates
.
In the event that any Certificates shall have been lost, stolen
or destroyed, the Paying Agent shall pay in exchange for such
lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the portion of the
Merger Consideration payable with respect thereto;
provided,
however
, that Parent or the Paying Agent may, in its
discretion and as a condition precedent to the payment of such
portion of the Merger Consideration, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond (at the
sole expense of the holder of such Certificates) in such
reasonable and customary amount as it may direct as indemnity
against any claim that may be made against Parent, the Surviving
Corporation or the Paying Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.11
Adjustments
.
In the event of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities
convertible into Company Common Stock, whether directly or
indirectly), reorganization, reclassification, combination,
recapitalization or other like change with respect to the
Company Common Stock occurring after the date of this Agreement
and prior to the Effective Time, all references in this
Agreement to specified numbers of shares of any class or series
affected thereby, and all calculations provided for that are
based upon numbers of shares of any class or series (or trading
prices therefor) affected thereby, shall be equitably adjusted
to the extent necessary to provide the parties the same economic
effect as contemplated by this Agreement prior to such stock
split, reverse stock split, stock dividend, reorganization,
reclassification, combination, recapitalization or other like
change.
1.12
Taking of Necessary Action; Further
Action
.
If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right,
title and possession to all assets, property, rights,
privileges, powers and franchises of the Company and Merger Sub,
the officers and directors of the Surviving Corporation will
take all such lawful and necessary action.
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ARTICLE II
REPRESENTATIONS
AND WARRANTIES OF COMPANY
The Company hereby represents and warrants to Parent and Merger
Sub as follows:
2.1
Organization and Qualification;
Subsidiaries
.
(a) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its
business as it is now being conducted.
(b) Each of the Company and its subsidiaries is duly
qualified to do business as a foreign corporation, and is in
good standing, under the laws of all jurisdictions where the
character of the properties owned, leased or operated by it or
the nature of its activities makes such qualification necessary,
except where the failure to be so qualified and in good standing
has not had, and would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse
Effect on the Company.
2.2
Certificate of Incorporation and
Bylaws
.
The Certificate of Incorporation and Bylaws of the Company, each
as amended to date (together, the
Company Charter
Documents)
, and the equivalent organizational
documents of each subsidiary of the Company are in full force
and effect The Company is not in violation of any of the
provisions of the Company Charter Documents, and no subsidiary
of the Company is in violation of its equivalent organizational
documents.
2.3
Authority Relative to this
Agreement
.
The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger and other transactions
contemplated herein (collectively, the
Transactions)
, subject, with respect to the
Merger, to the Company Stockholder Approval (as defined below)
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been
duly and validly authorized by all necessary corporate action on
the part of the Company and no other corporate proceedings on
the part of the Company are necessary to authorize this
Agreement or to consummate the Transactions other than
(a) with respect to the Merger, the filing with the
Securities and Exchange Commission (the
SEC
)
of a proxy statement with respect to, and the receipt of, the
Company Stockholder Approval, (b) obtaining the Company
Stockholder Approval and (c) the filing of the Certificate
of Merger as required by Delaware Law The affirmative vote of
(i) the holders of a majority of the outstanding voting
power of Company Common Stock and (ii) the holders of
66
2
/
3
%
of the voting power of the Common Shares not owned
(as defined in Section 203 of the Delaware Law) by the
Parent or its affiliates or associates
(as defined in Section 203 of the Delaware Law) is the only
vote of the holders of capital stock of the Company necessary to
adopt this Agreement and approve the Merger under applicable
Legal Requirements (as defined below) and the Company Charter
Documents (the
Company Stockholder Approval
)
This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution
and delivery by Parent and Merger Sub, constitutes the legal and
binding obligation of the Company, enforceable against the
Company in accordance with its terms
Legal
Requirements
means any federal, state, local,
municipal, foreign or other law, statute, legislation,
constitution, principle of common law, resolution, ordinance,
code, edict, order, injunction, judgment, decree, rule,
regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Entity (as defined in
Section 2.4(b)
hereof).
2.4
No Conflict; Required Filings and
Consents
.
(a) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the
Company will not, (i) result in the creation of any
Encumbrance (as defined below) on any of the properties or
assets of the Company or any of its subsidiaries,
(ii) conflict with or violate the Company Charter Documents
or the equivalent organizational documents of any of the
Companys subsidiaries, (iii) subject, (A) with
respect to the Merger, to the Company Stockholder Approval and
(B) to compliance with the requirements set forth in
Section 2.4(b)
, conflict with or violate any Legal
Requirements applicable to the Company or any of its
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subsidiaries or by which its or any of their respective
properties is bound or affected, or (iv) conflict with or
violate, or result in any breach, impermissible assignment or
non-transferability of or constitute a default (or an event that
with notice or lapse of time or both would become a default)
under, or impair the Companys or any of its
subsidiaries rights or alter the rights or obligations of
any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of any
written, oral, express or implied agreement, contract,
subcontract, lease, mortgage, indenture, understanding,
arrangement, instrument, note, bond, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan,
permit, franchise or other instrument, obligation or commitment
or undertaking of any nature
(Contract
) to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected, excluding
from the foregoing clauses (i), (iii) or (iv) such
Encumbrances, conflicts, violations, breaches, impermissible
assignments, non-transferabilities, defaults, impairments,
alterations, or rights which would not individually or in the
aggregate have a Material Adverse Effect on the Company For the
purposes of this Agreement,
Encumbrance
means, with respect to any asset, any mortgage, deed of trust,
lien, pledge, charge, security interest, title retention device,
conditional sale or other security arrangement, collateral
assignment, claim, charge, adverse claim of title, ownership or
right to use, restriction or other encumbrance of any kind in
respect of such asset (including any restriction on (1) the
voting of any security or the transfer of any security or other
asset, (2) the receipt of any income derived from any
asset, (3) the use of any asset, and (4) the
possession, exercise or transfer of any other attribute of
ownership of any asset).
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the
Company shall not, require any consent, approval, authorization
or permit of, or filing with or notification to, any
supranational, national, state, municipal, local or foreign
government, any instrumentality, subdivision, court,
administrative agency or commission or other governmental
authority or instrumentality, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or
other governmental or quasi-governmental authority (a
Governmental Entity)
, except (i) for
applicable requirements, if any, of the Securities Exchange Act
of 1934, as amended (the
Exchange Act)
, state
securities laws
(Blue Sky Laws
) and state
takeover laws, the rules and regulations of NASDAQ, and the
filing of the Certificate of Merger as required by Delaware Law,
(ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, (A) would not, individually or in the
aggregate, be material to the Company or its subsidiaries or,
following the Effective Time, Parent, or prevent consummation of
the Transactions or (B) otherwise prevent the parties
hereto from performing their obligations under this Agreement.
2.5
Proxy Statement
.
The proxy statement to be sent to the stockholders of the
Company in connection with the Stockholders Meeting (as
defined in
Section 4.2
) (such proxy statement, as
amended or supplemented, being referred to herein as the
Proxy Statement)
, shall not, at the date the
Proxy Statement (or any amendment or supplement thereto) is
first mailed to stockholders of the Company and at the time of
the Stockholders Meeting, contain any statement which, at
such time and in light of the circumstances under which it was
made, is false or misleading with respect to any material fact,
or which omits to state any material fact necessary in order to
make the statements therein not false or misleading or necessary
to correct any statement in any earlier communication with
respect to the solicitation of proxies, if any, for the
Stockholders Meeting which shall have become false or
misleading Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information
supplied by Parent, Merger Sub or any of Parents or Merger
Subs representatives in writing for inclusion in the Proxy
Statement The Proxy Statement shall comply in all material
respects as to form with the requirements of the Exchange Act
and the rules and regulations thereunder.
2.6
Board Approval
.
Subject to the terms of
Section 4.4(d)
, the full
Board (upon the unanimous recommendation of the Special
Committee), by resolutions duly adopted (and such resolutions
not thereafter modified or rescinded) as of the date of this
Agreement, has unanimously (a) approved this Agreement and
the Merger and determined that this Agreement and the Merger are
advisable and fair to, and in the best interests of, the
stockholders of the Company, and (b) directed that adoption
of this Agreement be submitted to the Company stockholders for
consideration and recommended that the stockholders of the
Company adopt this Agreement.
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2.7
Opinion of Financial Advisor
.
The Special Committee has been advised in writing by its
financial advisor, Bear, Stearns & Co. Inc., that in
its opinion, as of the date of this Agreement, the Per Share
Merger Consideration is fair, from a financial point of view, to
the stockholders of the Company other than Parent and its
affiliates and associates.
2.8
Financial Advisor
.
Except for Bear, Stearns & Co. Inc., no broker, finder
or investment banker is entitled to any brokerage, finders
or other fee or commission in connection with the Merger or any
of the other Transactions based upon arrangements made by or on
behalf the Company The Company will pay the fees and expenses of
Bear, Stearns & Co. Inc. in accordance with the
Companys agreement with such firm.
2.9
State Takeover Statutes
.
Other than Section 203 of the Delaware Law, no other state
takeover statute or similar statute or regulation or
anti-takeover provision in the Company Charter Documents applies
to, purports to apply or at the Effective Time will be
applicable to the Merger, this Agreement or the Transactions.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
3.1
Corporate Organization
.
Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is
now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power,
authority and governmental approvals would not prevent or
materially delay consummation of the Merger, or otherwise
prevent Parent or Merger Sub from performing their respective
material obligations under this Agreement.
3.2
Authority Relative to this
Agreement
.
Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement, and to
perform its obligations hereunder and to consummate the
Transactions The execution and delivery of this Agreement by
Parent and Merger Sub and the consummation by Parent and Merger
Sub of the Transactions have been duly and validly authorized by
all necessary corporate action on the part of Parent and Merger
Sub, and subject to approval of the Agreement by Parent in its
capacity as sole stockholder of Merger Sub, which approval shall
be given immediately following execution of the Agreement, no
other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement, or to consummate the
Transactions (other than, with respect to the Merger, the filing
of the Certificate of Merger as required by Delaware Law) This
Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal and
binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms.
3.3
No Conflict; Required Filings and
Consents
.
(a) The execution and delivery of this Agreement by Parent
and Merger Sub does not, and the performance of this Agreement
by Parent and Merger Sub will not, (i) conflict with or
violate Parents or Merger Subs Certificate of
Incorporation or Bylaws, each as amended to date,
(ii) subject to compliance with the requirements set forth
in
Section 3.3(b)
hereof, conflict with or violate
any Legal Requirements applicable to Parent or Merger Sub or by
which any of their respective properties is bound or affected,
or (iii) conflict with or violate, result in any breach of
or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair
Parents or Merger Subs rights under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a material
Encumbrance on any of the material properties or assets of
Parent pursuant to any Contract to which Parent or Merger Sub is
a party or by which Parent or Merger Sub or their
A-8
respective properties are bound or affected, excluding from the
foregoing clauses (ii) or (iii) such conflicts,
violations, breaches, defaults, impairments or other effects
which would not, individually or in the aggregate, prevent or
materially delay consummation of the Transactions or otherwise
prevent Parent or Merger Sub from performing their respective
material obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent
and Merger Sub does not, and the performance of this Agreement
by Parent and Merger Sub shall not, require any consent,
approval, authorization or permit of, or filing with or
notification to, any Governmental Entity except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky
Laws and state takeover laws, the rules and regulations of
NASDAQ, and the filing of the Certificate of Merger as required
by Delaware Law and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the
aggregate, prevent or materially delay consummation of the
Transactions or otherwise prevent Parent or Merger Sub from
performing their respective material obligations under this
Agreement.
3.4
Proxy Statement
.
The information supplied by Parent and Merger Sub for inclusion
in the Proxy Statement shall not, at the date the Proxy
Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company and at the time of the
Stockholders Meeting, contain any untrue statement of a
material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not false or misleading, or necessary to correct any
statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders Meeting which
shall have become false or misleading Notwithstanding the
foregoing, Parent and Merger Sub make no representation or
warranty with respect to any information supplied by the Company
or any of its representatives for inclusion in the Proxy
Statement.
3.5
Sufficient Funds
.
Parent has and will have at the Effective Time sufficient cash
or cash-equivalent funds to consummate the Transactions,
including acquiring all of the outstanding shares of Company
Common Stock in the Merger.
3.6
No Prior Merger Sub Operations
.
Merger Sub was formed solely for the purpose of effecting the
Merger and has not engaged in any business activities or
conducted any operations other than in connection with the
Merger contemplated hereby.
3.7
Ownership of the Company
.
As of the date hereof and on the record date and on the meeting
date for the Stockholders Meeting, Parent and its
affiliates and associates own beneficially and of record
66,000,100 shares of Company Common Stock Except as set
forth in the preceding sentence, neither Parent nor any of its
affiliates or associates owns beneficially or of record any
voting securities of the Company or any other securities
convertible or exchangeable into voting securities of the
Company.
ARTICLE IV
ADDITIONAL
AGREEMENTS
4.1
Proxy Statement and Other Filings
.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare, and file with the SEC, a
Schedule 13E-3
if required under applicable Legal Requirements (which
Schedule 13E-3
shall be a joint filing by the Company and Parent), and
preliminary proxy materials relating to (i) the Company
Stockholder Approval and (ii) the removal of the existing
board of directors of the Company and election of directors
designated by Parent, which removal and appointment shall be
effective upon the failure to obtain the Company Stockholder
Approval Parent shall provide promptly to the Company such
information concerning Parent and the director nominees as, in
the reasonable judgment of the Company, Parent and their
respective counsel, may be required or appropriate for inclusion
in the Proxy Statement and the
Schedule 13E-3
(if applicable), or in any amendments or
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supplements thereto At the earliest practicable time following
the later of (i) receipt and resolution of SEC comments
thereon, or (ii) the expiration of the
10-day
waiting period provided in
Rule 14a-6(a)
promulgated under the Exchange Act, the Company shall file
definitive proxy materials with the SEC and cause the Proxy
Statement to be mailed to its stockholders The Company will
cause all documents that it is responsible for filing with the
SEC or other regulatory authorities in connection with the
Merger (or as required or appropriate to facilitate the Merger)
to comply in all material respects with all applicable Legal
Requirements Prior to filing the preliminary proxy materials,
definitive proxy materials, the
Schedule 13E-3
(if applicable) or any other filing with the SEC or any other
Governmental Entity, the Company shall provide Parent (which
term shall in all instances in this
Section 4.1
also
include Parents counsel) with reasonable opportunity to
review and comment on each such filing in advance and the
Company shall in good faith consider including in such filings
all comments reasonably proposed by Parent.
(b) The Company will notify Parent promptly of the receipt
of any comments from the SEC or its staff (or of notice of the
SECs intent to review the Proxy Statement) and of any
request by the SEC or its staff or any other government
officials for amendments or supplements to the Proxy Statement,
the
Schedule 13E-3
(if applicable) or any other filing or for
additional/supplemental information, and will supply Parent with
copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC, or its staff or
any other government officials, on the other hand, with respect
to the Proxy Statement, the
Schedule 13E-3
(if applicable) or other filing The Company and its outside
counsel shall permit Parent and its outside counsel to
participate in all communications with the SEC and its staff
(including all meetings and telephone conferences) relating to
the Proxy Statement, the
Schedule 13E-3
(if applicable), this Agreement or the Merger The Company shall
consult with Parent prior to responding to any comments or
inquiries by the SEC or any other Governmental Entity with
respect to any filings related to (or necessary or appropriate
to facilitate) the Merger, shall provide Parent with reasonable
opportunity to review and comment on any such written response
in advance and shall include in such response all comments
reasonably proposed by Parent Whenever any event occurs that is
required to be set forth in an amendment or supplement to the
Proxy Statement, the
Schedule 13E-3
(if applicable) or any other filing, the Company shall promptly
inform Parent of such occurrence, provide Parent with reasonable
opportunity to review and comment on any such amendment or
supplement in advance, shall in good faith consider including in
such amendment or supplement all comments reasonably proposed by
Parent, and shall cooperate in filing with the SEC or its staff
or any other government officials,
and/or
mailing to the stockholders of the Company, such amendment or
supplement.
4.2
Meeting of Company Stockholders
.
(a) Promptly after the date hereof, the Company shall take
all action necessary in accordance with Delaware Law, the rules
of NASDAQ and the Company Charter Documents to convene a special
meeting of its stockholders for the purpose of considering and
taking action with respect to (i) the Company Stockholder
Approval (the
Stockholders Meeting
) and
(ii) the removal of the existing board of directors of the
Company and election of directors designated by Parent, which
removal and appointment shall be effective upon the failure to
obtain the Company Stockholder Approval, to be held as promptly
as practicable Subject to the fiduciary duties of the directors,
the Company shall use all commercially reasonable efforts to
solicit from its stockholders proxies in favor of the adoption
of this Agreement and to take all other action necessary or
advisable to secure the vote or consent of its stockholders
required by the rules and regulations of NASDAQ or Delaware Law
to obtain such approvals Notwithstanding anything to the
contrary contained in this Agreement, the Company may adjourn or
postpone the Stockholders Meeting to the extent necessary
to ensure that any necessary supplement or amendment to the
Proxy Statement is provided to the Companys stockholders
in advance of a vote on this Agreement or, if as of the time for
which the Stockholders Meeting is originally scheduled (as
set forth in the Proxy Statement) there are insufficient shares
of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business
of the Stockholders Meeting or to approve this Agreement
and the Merger Subject to the Bylaw Amendment, the Company shall
ensure that the Stockholders Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by
the Company in connection with the Stockholders Meeting
are solicited, in compliance with Delaware Law, the Company
Charter Documents, the rules and regulations of NASDAQ and all
other applicable Legal Requirements.
(b) Subject to the terms of
Sections 4.4(d) and
(e)
: (i) the Board shall unanimously recommend that the
Companys stockholders adopt and approve this Agreement and
approve the Merger at the Stockholders Meeting;
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(ii) the Proxy Statement shall include (A) the
fairness opinion referred to in
Section 2.7
and
(B) a statement to the effect that the Board has
unanimously recommended that the Companys stockholders
vote in favor of the Company Stockholder Approval at the
Stockholders Meeting; and (iii) neither the Board nor
any committee thereof shall withdraw, amend, change or modify,
or propose or resolve to withdraw, amend, change or modify in
any manner adverse to Parent, the unanimous recommendation of
the Board that the Companys stockholders vote in favor of
the Company Stockholder Approval For purposes of this Agreement,
said recommendation of the Board shall be deemed to have been
modified in a manner adverse to Parent if said recommendation
shall no longer be unanimous Following the appointment of
Parents designees to the Board pursuant to
Section 4.11(a),
Parent agrees not to take any
action in its capacity as stockholder of the Company that would
cause the Company not to be in compliance with this
Section 4.2(b)
.
(c) At the Stockholders Meeting, Parent shall vote,
and shall cause each of its affiliates to vote, all Common
Shares owned beneficially or of record by Parent, Merger Sub or
any of Parents affiliates, in favor of the adoption of
this Agreement and approval of the Merger, and any other matter
to be approved by the holders of the Common Shares pursuant to
the terms hereof and in connection with the Merger.
4.3
Confidentiality; Access to
Information
.
(a) The parties acknowledge that Parent and the Company
have previously executed a letter agreement, dated as of
September 22, 2005 (the
Confidentiality
Agreement)
, which Confidentiality Agreement will
continue in full force and effect in accordance with its terms,
and each of Parent and the Company will hold, and will cause
their respective directors, officers, employees, agents and
advisors (including attorneys, accountants, consultants,
bankers, and financial advisors) to hold any Confidential
Information (as defined in the Confidentiality Agreement)
confidential in accordance with the terms thereof.
(b) The Company shall: (i) afford Parent and its
accountants, counsel, advisors and other representatives
reasonable access, upon reasonable notice, to the properties
(including for the purpose of performing such environmental
tests and investigations as Parent may desire), books, records
and personnel of the Company during the period prior to the
Effective Time to obtain all information concerning the
business, including the status of product development efforts,
properties, financial positions, results of operations and
personnel of the Company, as Parent may reasonably request, and
(ii) furnish Parent on a timely basis with such financial
and operating data and other information with respect to the
business, operations and properties of the Company and its
subsidiaries as Parent may from time to time reasonably request.
(c) No information or knowledge obtained by Parent in any
investigation pursuant to this
Section 4.3
will
affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the
parties to consummate the Transactions.
4.4
No Solicitation
.
(a)
No Solicitation
.
The Company
and its subsidiaries shall not, nor shall they permit any of
their respective officers and directors (or authorize any
affiliates of any such officers and directors), affiliates, or
employees or any investment banker, attorney, accountant or
other advisor or representative retained by (or otherwise
working on behalf of) the Company or any of its subsidiaries
(collectively,
Representatives
) to directly
or indirectly: (i) solicit, initiate or knowingly
encourage, knowingly facilitate or knowingly induce any inquiry
with respect to, or the making, submission or announcement of,
any Acquisition Proposal (as defined in
Section 4.4(h)(i)
) with respect to the Company or
any of its subsidiaries, (ii) participate or otherwise
engage in any discussions or negotiations regarding, or furnish
to any person any nonpublic information with respect to, or take
any other action (including granting any person a waiver or
release under any standstill or similar agreement with respect
to any class of equity security of the Company or any of its
subsidiaries other than as contemplated by this Agreement) to
facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any
Acquisition Proposal with respect to the Company or any of its
subsidiaries, (iii) engage in discussions with any person
with respect to any Acquisition Proposal with respect to the
Company or any of its subsidiaries, except as to the existence
of these provisions, (iv) approve, endorse or recommend any
Acquisition Proposal with respect to the Company or any of its
subsidiaries (except to the extent specifically permitted
pursuant to
Section 4.4(d)
), or (v) enter into
any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Proposal
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or transaction contemplated thereby with respect to the Company
or any of its subsidiaries The Company and its subsidiaries will
immediately cease, and will cause its Representatives to
immediately cease, any and all existing activities, discussions
or negotiations with any third parties conducted heretofore with
respect to any Acquisition Proposal.
(b)
Notification of Unsolicited Acquisition
Proposals
.
As promptly as practicable (but in
no event more than 1 business day) after receipt of any
Acquisition Proposal or any request for nonpublic information or
inquiry which it reasonably believes would lead to an
Acquisition Proposal, the Company shall provide to Parent a copy
of such Acquisition Proposal, request or inquiry if made in
writing or a written summary of the material terms and
conditions of such Acquisition Proposal, including the identity
of the person or group making any such Acquisition Proposal, to
the extent not made in writing The Company shall provide to
Parent as promptly as practicable (but in no event more than 1
business day thereafter) notice setting forth material
amendments or proposed material amendments of any such
Acquisition Proposal, request or inquiry and shall promptly
provide to Parent a copy of all written materials, if any,
setting forth such amendments.
(c)
Superior
Offers
.
Notwithstanding anything to the
contrary contained in
Section 4.4
, in the event that
the Company or any of its subsidiaries receives a bona fide
written Acquisition Proposal from a third party that is not
solicited or otherwise procured in violation of
Section 4.4(a)
that the Special Committee has in
good faith concluded (following the receipt of the advice of its
outside legal counsel and its financial advisor) is, or is
reasonably likely to lead to, a Superior Offer (as defined in
Section 4.4(h)(ii)
), it may then take the following
actions (but only if and to the extent that the Special
Committee concludes in good faith, after receipt of advice of
its outside legal counsel and financial adviser, that failing to
take such actions is reasonably likely to be a violation of
directors fiduciary duties to the Companys
stockholders under applicable Legal Requirements):
(i) Furnish nonpublic information to the third party making
such Acquisition Proposal,
provided
that (A) it
receives from the third party an executed confidentiality and
standstill agreement, the terms of which are at least as
restrictive as the terms contained in the Confidentiality
Agreement; and (B) contemporaneously with furnishing any
such nonpublic information to such third party, the Company
furnishes such nonpublic information to Parent (to the extent
such nonpublic information has not been previously so
furnished); and
(ii) Engage in negotiations and discussions with the third
party with respect to the Acquisition Proposal.
(d)
Change of Recommendation in Connection with a
Superior Offer
.
In response to receipt of a
Superior Offer, the Board (upon recommendation of the Special
Committee)
and/or
the
Special Committee may change, withhold, withdraw, amend or
modify its recommendation in favor of the Agreement and the
Merger, and, in the case of a tender or exchange offer made
directly to its stockholders, may recommend that its
stockholders accept the tender or exchange offer (any of the
foregoing actions, whether by the Board (upon recommendation of
the Special Committee) or the Special Committee, a
Change of Recommendation)
, if all of the
following conditions in clauses (i) through (iii) are
met and the Board (upon recommendation by the Special Committee)
or the Special Committee has concluded in good faith, after
receipt of advice of its outside legal counsel and financial
adviser, that failing to make such Change of Recommendation is
reasonably likely to be a violation of directors fiduciary
duties to the Companys stockholders under applicable Legal
Requirements:
(i) A Superior Offer with respect to the Company has been
made and has not been withdrawn;
(ii) The Stockholders Meeting has not
occurred; and
(iii) The Company shall have (A) provided to Parent
five business days prior written notice which shall state
expressly (1) that the Company has received a Superior
Offer, (2) the material terms and conditions of the
Superior Offer and the identity of the person or group making
the Superior Offer, and (3) that the Board or the Special
Committee, as the case may be, intends to effect a Change of
Recommendation and the manner in which it intends to do so,
(B) provided to Parent a copy of the relevant proposed
transaction agreements and (C) during such five business
day period, engaged in good faith negotiations to amend this
Agreement in a manner as would enable the Company to proceed
with the Boards recommendation to the Companys
stockholders in favor of the Company Stockholder Approval with
respect to this Agreement, as it may be amended (and the Company
shall make the Chairman of its Special Committee and its senior
executives available for discussions with Parent).
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(e)
Change of Recommendation Not in Connection with a
Superior Offer
.
If the Board (upon
recommendation by the Special Committee) or the Special
Committee, in each case not in connection with receipt of a
Superior Offer or an Acquisition Proposal, has concluded in good
faith, after receipt of advice of its outside legal counsel and
financial adviser, that failing to make such Change of
Recommendation is reasonably likely to be a violation of the
directors fiduciary duties to the Companys
stockholders under applicable Legal Requirements, the Board
and/or
the
Special Committee, as the case may be, may make a Change of
Recommendation.
(f)
Continuing Obligation to Call, Hold and Convene
Stockholders Meeting; No Other
Vote
.
Notwithstanding anything to the
contrary contained in this Agreement, the obligation of the
Company to call, give notice of, convene and hold the
Stockholders Meeting shall not be limited or otherwise
affected by the commencement, disclosure, announcement or
submission to it of any Acquisition Proposal with respect to it,
or by any Change of Recommendation The Company shall not submit
to the vote of its stockholders any Acquisition Proposal, or
propose to do so.
(g)
Compliance with Tender Offer
Rules
.
Nothing contained in this Agreement
shall prohibit the Board from taking and disclosing to its
stockholders a position contemplated by
Rules 14d-9
and
14e-2(a)
promulgated under the Exchange Act;
provided
that the
content of any such disclosure shall be governed by the terms of
this Agreement Without limiting the foregoing proviso, the
Company shall not effect a Change of Recommendation unless
specifically permitted pursuant to the terms of
Section 4.4(d)
.
(h)
Certain Definitions
.
For
purposes of this Agreement, the following terms shall have the
following meanings:
(i)
Acquisition Proposal
shall mean any
offer or proposal (whether written, oral or otherwise), relating
to any transaction or series of related transactions involving:
(A) any purchase or acquisition by any person or
group (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more
than a ten percent (10%) interest in the total outstanding
voting securities of the Company or any tender offer or exchange
offer that if consummated would result in any person or group
beneficially owning ten percent (10%) or more of the total
outstanding voting securities of the Company or any merger,
consolidation, business combination or similar transaction
involving the Company, (B) any sale, lease (other than in
the ordinary course of business), exchange, transfer, license
(other than in the ordinary course of business), acquisition or
disposition of more than ten percent (10%) of the assets of the
Company (including its subsidiaries taken as a whole), or
(C) any liquidation or dissolution of the Company; and
(ii)
Superior Offer
means a bona fide
written offer that is not solicited or otherwise procured in
violation of
Section 4.4(a)
that is made by a third
party to acquire, directly or indirectly, pursuant to a tender
offer, exchange offer, merger, consolidation or other business
combination, all or substantially all of the assets of the
Company or a majority of the total outstanding voting securities
of the Company and as a result of which, if adopted and
approved, the stockholders of the Company immediately preceding
such transaction would hold less than fifty percent (50%) of the
equity interests in the surviving or resulting entity of such
transaction or any direct or indirect parent or subsidiary
thereof, on terms that the Board has in good faith concluded
(following the receipt of advice of its outside legal counsel
and its financial adviser), taking into account, among other
things, all legal, financial, regulatory and other aspects of
the offer and the person making the offer, to be more favorable,
from a financial point of view, to the Companys
stockholders (in their capacities as stockholders) than the
terms of the Merger (as they may be amended in accordance with
Section 4.4(d)(iii)(D
)) and is reasonably capable of
being consummated if adopted and approved and for which
financing, to the extent required, is then fully committed or
reasonably determined by the Special Committee to be available
to consummate such a transaction.
(i) Without limiting the foregoing, it is understood that
any violation of the restrictions set forth above by any
officer, director, agent, representative or affiliate of the
Company shall be deemed to be a breach of this Agreement by the
Company.
4.5
Public Disclosure
.
(a) The initial press release with respect to the execution
of this Agreement shall be a joint press release to be
reasonably agreed upon by Parent and the Company. Thereafter,
neither Parent nor the Company shall issue or cause
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the publication of any press release or other public
announcement (to the extent not previously issued or made in
accordance with this Agreement) with respect to the Merger, this
Agreement or the other Transactions without consulting in
advance with the other party to the extent reasonably
practicable; provided that the Company or the Board (or any
committee thereof) may issue any press release or other public
announcement pursuant to and consistent with
Sections 4.4(d) and (e)
without consulting with
Parent.
(b) The Company shall consult with Parent before issuing
any press release or otherwise making any public statement with
respect to the Companys earnings or results of operations,
and shall not issue any such press release or make any such
public statement prior to such consultation.
4.6
Reasonable Efforts
.
Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most
expeditious manner practicable, the Transactions, including
using all reasonable efforts to accomplish the following:
(i) the taking of all reasonable acts necessary to cause
the conditions precedent set forth in
Article V
to
be satisfied, (ii) the obtaining of all necessary actions
or non-actions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all
necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental
Entities, if any) and the taking of all reasonable steps as may
be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining
of all consents, approvals or waivers from third parties
required as a result of the Transactions, (iv) the
defending of any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the Transactions,
including seeking to have any stay or temporary restraining
order entered by any Governmental Entity vacated or reversed,
and (v) the execution or delivery of any additional
instruments reasonably necessary to consummate the Transactions,
and to fully carry out the purposes of, this Agreement In
connection with and without limiting the foregoing, subject to
the fiduciary duties of its Board, the Company and its Board
shall, if any state takeover statute or similar statute or
regulation is or becomes applicable to the Transactions or this
Agreement, use all reasonable efforts to ensure that the
Transactions may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the
Transactions and this Agreement.
4.7
Takeover Statutes
.
If any fair price, moratorium,
control share acquisition or other form of
anti-takeover statute or regulation shall become applicable to
the Transactions, the Company and the members of the Board shall
grant such approvals and take such actions as are reasonably
necessary so that the Transactions may be consummated as
promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such
statute or regulation on the Transactions.
4.8
FIRPTA Compliance
.
On the Closing Date, the Company shall deliver to Parent a
properly executed statement prepared in accordance with the
certification requirements set forth in Treasury Regulations
Section 1.1445-2(c)(3)
certifying that the Company Common Stock are not U.S. real
property interests.
4.9
Company Stock Option Plan; Company
ESPP
.
(a) As soon as practicable after the Effective Time, Parent
shall deliver to the participants in the 2000 Stock Incentive
Plan of the Company (the
Company Stock Option
Plan
) an appropriate notice setting forth such
participants rights pursuant to the Assumed Options (or
replacement options permitted by
Section 1.6(d)(ii))
, as provided in
Section 1.6(d)
.
(b) Parent shall take all corporate action reasonably
necessary to reserve for issuance a sufficient number of shares
of Parent Common Stock for delivery upon exercise of the Assumed
Options (or replacement options permitted by
Section 1.6(d)(ii))
and to file all documents
required to be filed to cause the shares of Parent Common Stock
issuable upon exercise of the Assumed Options or replacement
options to be listed on NASDAQ. As soon as reasonably
practicable after the Effective Time or, if sooner, the
termination of this Agreement in accordance with
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its terms, Parent shall file a registration statement on
Form S-8
(or any successor form) or another appropriate form with respect
to the shares of Parent Common Stock subject to such options and
shall use its commercially reasonable efforts to maintain the
effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options
remain outstanding.
(c) Prior to the Effective Time, the Company shall, in
accordance with the requirements of the Companys Employee
Stock Purchase Plan (the
Company ESPP
), take
all actions that are necessary to (i) cause the ending date
of the then current Purchase Period under the Company ESPP (as
such term is defined therein) to occur on or before the last
trading day prior to the Effective Time (the
Final
Purchase Date
), (ii) cause all then existing
offerings under the Company ESPP to terminate immediately
following the purchase on the Final Purchase Date,
(iii) suspend all future offerings that would otherwise
commence under the Company ESPP following the Final Purchase
Date and (iv) cease all further payroll deductions under
the Company ESPP effective as of the Final Purchase Date. On the
Final Purchase Date, the Company shall apply the funds credited
as of such date under the Company ESPP within each
participants payroll withholding account to the purchase
of whole shares of Company Common Stock in accordance with the
terms of the Company ESPP.
(d) The Company shall take all such action, including the
adoption of any necessary resolutions by the Board or any
appropriate committee thereof, necessary or appropriate to
effect the transactions contemplated by this
Section 4.9
.
4.10
Indemnification of Directors and
Officers
.
(a) All rights to indemnification, exculpation and
advancement of expenses existing in favor of those persons who
are or were directors and officers of the Company and its
subsidiaries (the
Indemnified Persons
) for
acts and omissions occurring prior to the Effective Time, as
provided in the Company Charter Documents (as in effect as of
the date of this Agreement) and as provided in any
indemnification agreements between the Company and said
Indemnified Persons (as in effect as of the date of this
Agreement), shall survive the Merger and shall be observed and
fully complied with by the Surviving Corporation, and Parent
shall take all action necessary to cause the Surviving
Corporation to observe such rights, to the fullest extent
permitted by Delaware Law and Parent hereby guarantees the
payment obligations, if any, of the Surviving Corporation to the
Indemnified Persons pursuant to such rights, subject to
applicable Legal Requirements.
(b) The obligations of Parent and the Surviving Corporation
under this
Section 4.10
shall not be terminated or
modified in such a manner as to adversely affect any Indemnified
Person to whom this
Section 4.10
applies without the
consent of such affected Indemnified Person (it being expressly
agreed that the Indemnified Person to whom this
Section 4.10
applies shall be third party
beneficiaries of this
Section 4.10
).
(c) Parent and the Surviving Corporation shall not amend,
repeal or otherwise modify the certificate of incorporation and
bylaws of the Surviving Corporation in any manner that would
adversely affect the rights thereunder of the Indemnified
Persons. If Parent or the Surviving Corporation or any of their
respective successors or assigns (i) shall consolidate with
or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and
assigns of Parent or the Surviving Corporation shall assume all
of the obligations of Parent and the Surviving Corporation set
forth in this
Section 4.10
.
(d) Prior to the Effective Time, the Company shall purchase
an extended reporting period endorsement or tail
policy under the Companys existing directors and
officers liability insurance policy to provide those
persons who are currently covered by such policy with liability
insurance coverage in an amount and scope at least as favorable
to such persons as the Companys existing coverage for six
(6) years following the Effective Time;
provided
,
however
, that if such tail policy is not
available at a cost not greater than two hundred percent (200%)
of the annual premiums paid as of the date hereof under the
Companys existing coverage (the
Insurance
Cap
), then the Company shall obtain as much comparable
insurance as can reasonably be obtained in its good faith
judgment at a cost up to but not exceeding the Insurance Cap.
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4.11
Board of Directors
.
(a) Prior to or simultaneously with the execution and
delivery of this Agreement: (i) the Board shall have
adopted the amendment to the Companys bylaws attached
hereto as
Exhibit A
(the
Bylaw
Amendment
); (ii) the Board shall have fixed the
number of directors on the Board at nine (9);
(iii) Dr. Muoi V. Tran shall resign from the Board
effective immediately; and (iv) the Company shall take all
action necessary in accordance with Delaware Law and the Company
Charter Documents to appoint as directors Joseph Y. Liu, Robert
Shih, Chieh Chang, Leonard J. Leblanc, and Jesse W. Jack.
(b) Parent acknowledges and agrees that following the
appointment of Parents designees to the Board pursuant to
Section 4.11(a)
, and until the termination of this
Section 4.11
pursuant to
Section 4.11(e)
, the approval of a majority of the
Special Committee Directors (as defined below) shall be required
to authorize: (i) any amendment to or termination of this
Agreement by the Company; (ii) any extension of time for
the performance of any of the obligations or other acts of
Parent or Merger Sub; (iii) any waiver of compliance with
any covenant of Parent or Merger Sub or any condition to any
obligation of the Company or any waiver of any right of the
Company under this Agreement; (iv) any Change of
Recommendation (as defined in
Section 4.4(d)
) by the
Board; (v) any other consent or action by the Board with
respect to this Agreement, or any of the Transactions; and
(vi) the filling of any vacancies on the Special Committee.
Special Committee Directors
shall mean Hobart
Birmingham, Stewart Personick and David Warnes.
(c) Following the appointment of Parents designees to
the Board pursuant to
Section 4.11(a)
, until the
termination of this
Section 4.11
pursuant to
Section 4.11(e)
, Parent agrees not to take any
action in its capacity as stockholder of the Company that is
reasonably likely to materially and adversely affect the
supermajority voting requirements of the Board as set forth in
Section 4.11(b)
and in the Bylaw Amendment, and the
delegation of authority to the Special Committee pursuant to the
Bylaw Amendment or otherwise.
(d) Following the appointment of Parents designees to
the Board pursuant to
Section 4.11(a)
, until the
termination of this
Section 4.11
pursuant to
Section 4.11(e)
, Parent agrees (i) not to vote
in its capacity as stockholder of the Company to remove the
members of the Special Committee from the Board or the Special
Committee, or amend the Companys bylaws and (ii) at
any election of directors to vote to reelect the members of the
Special Committee;
provided, however
, that nothing in
this
Section 4.11
, or this Agreement, or the Bylaw
Amendment shall be deemed or construed as limiting or preventing
Parent from voting its shares of Company Common Stock at the
Stockholders Meeting in favor of the election of persons
designated by it to be directors of the Company, or the Merger
and this Agreement.
(e) The provisions of this
Section 4.11
shall
terminate and be of no further force and effect immediately upon
the earlier of (i) any termination of this Agreement in
accordance with its terms and (ii) the Effective Time.
ARTICLE V
CONDITIONS
TO THE MERGER
5.1
Conditions to Obligations of Each Party to
Effect the Merger
.
The respective obligations of each party to this Agreement to
effect the Merger shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions,
any and all of which may be waived in whole or in part by
Parent, Merger Sub and the Company, as the case may be, to the
extent permitted by applicable Legal Requirements:
(a)
Company Stockholder
Approval
.
The Company Stockholder Approval
shall have been obtained.
(b)
No Order
.
No Governmental
Entity shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the
Merger;
provided, however
, that the right to assert this
condition shall not be available to any party whose breach of
any provision of this Agreement results in the imposition of any
such statute, rule,
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regulation, executive order, decree, injunction or other order
or the failure of any the foregoing to be resisted, resolved or
lifted, as applicable.
(c)
Governmental Approvals
.
All
applicable clearances of Governmental Entities under any
applicable material foreign or other Legal Requirements
(including other antitrust laws) in connection with this
Agreement and the transactions contemplated hereby (including
the Merger) (other than the filing of the Certificate of Merger)
shall have been obtained, and if the SEC shall have reviewed
and/or
provided comments to the Proxy Statement, such comments and any
related issues or matters with the SEC shall have been resolved.
5.2
Additional Conditions to Obligations of the
Company
.
The obligation of the Company to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which
may be waived, in writing, exclusively by the Company:
(a)
Representations and
Warranties
.
The representations and
warranties of Parent contained in this Agreement shall be true
and correct at and as of the Closing Date as though made at and
as of the Closing Date, except for such failures to be true and
correct at and as of the Closing Date as would not have, in each
case or in the aggregate, a Material Adverse Effect on Parent
(it being understood and agreed that, all materiality
qualifications and other qualifications based on the word
material, Material Adverse Effect or
similar phrases contained in such representations and warranties
shall be disregarded). The Company shall have received a
certificate to such effect signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of
Parent.
(b)
Agreements and
Covenants
.
Parent and Merger Sub shall have
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing
Date, and the Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of
Parent.
5.3
Additional Conditions to the Obligations of
Parent and Merger Sub
.
The obligations of Parent and Merger Sub to consummate and
effect the Merger shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions,
any of which may be waived, in writing, exclusively by Parent:
(a)
Representations and
Warranties
.
The representations and
warranties of the Company contained in this Agreement shall be
true and correct at and as of the Closing Date as though made at
and as of the Closing Date, except for such failures to be true
and correct as would not have, in each case or in the aggregate,
a Material Adverse Effect on the Company as of the Closing Date
(it being understood and agreed that, all materiality
qualifications and other qualifications based on the word
material, Material Adverse Effect or
similar phrases contained in such representations and warranties
shall be disregarded and any purported update of or modification
to the Company Disclosure Letter made after the execution of
this Agreement shall be disregarded). Parent shall have received
a certificate to such effect signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of
the Company.
(b)
Agreements and Covenants
.
The
Company shall have performed or complied in all material
respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to
the Closing Date, and Parent shall have received a certificate
to such effect signed on behalf of the Company by the Chief
Executive Officer and Chief Financial Officer of the Company.
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ARTICLE VI
TERMINATION,
AMENDMENT AND WAIVER
6.1
Termination
.
This Agreement may be terminated at any time prior to the
Effective Time, and the Merger may be abandoned, notwithstanding
any requisite adoption of this Agreement by the stockholders of
the Company:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if the Effective Time
shall not have occurred on or before October 31, 2007 for
any reason;
provided, however
, that the right to
terminate this Agreement under this
Section 6.1(b)
shall not be available to any party whose action or failure to
act has been a principal cause of or resulted in the failure of
the Effective Time to occur on or before such date and such
action or failure to act constitutes a material breach of this
Agreement;
(c) by either the Company or Parent if any Legal
Requirement makes consummation of the Merger illegal or if a
Governmental Entity of competent jurisdiction shall have issued
an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger, which order, decree, ruling or
other action is final and nonappealable;
(d) by either the Company or Parent if the Company
Stockholder Approval shall not have been obtained by reason of
the failure to obtain the required vote at the
Stockholders Meeting or at any adjournment or postponement
thereof;
provided, however
, that the right to terminate
this Agreement under this
Section 6.1(d)
shall not
be available to any party where the failure to obtain the
Company Stockholder Approval shall have been caused by the
action or failure to act of such party and such action or
failure to act constitutes a material breach by such party of
this Agreement;
(e) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth
in this Agreement, or if any representation or warranty of
Parent shall have become untrue, in either case such that the
conditions set forth in
Section 5.2(a)
or
Section 5.2(b)
would not be satisfied as of the time
of such breach or as of the time such representation or warranty
shall have become untrue;
provided, however
, that if such
inaccuracy in Parents representations and warranties or
breach by Parent is curable by Parent through the exercise of
all reasonable efforts, then the Company may not terminate this
Agreement under this
Section 6.1(e)
for 30 days
after delivery of written notice from the Company to Parent of
such breach or inaccuracy,
provided
Parent continues to
exercise all reasonable efforts to cure such breach or
inaccuracy (it being understood that the Company may not
terminate this Agreement pursuant to this
Section 6.1(e)
if it shall have materially breached
this Agreement or if such breach or inaccuracy by Parent is
cured during such
30-day
period);
(f) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of
the Company shall have become untrue, in either case such that
the conditions set forth in
Section 5.3(a)
or
Section 5.3(b)
would not be satisfied as of the time
of such breach or as of the time such representation or warranty
shall have become untrue;
provided, however
, that if such
inaccuracy in the Companys representations and warranties
or breach by the Company is curable by the Company through the
exercise of all reasonable efforts, then Parent may not
terminate this Agreement under this
Section 6.1(f)
for 30 days after delivery of written notice from Parent to
the Company of such breach or inaccuracy,
provided
the
Company continues to exercise all reasonable efforts to cure
such breach or inaccuracy (it being understood that Parent may
not terminate this Agreement pursuant to this
Section 6.1(f)
if such breach or inaccuracy by the
Company is cured during such
30-day
period); or
(g) by Parent if a Triggering Event (as defined below)
shall have occurred. For the purposes of this Agreement, a
Triggering Event
shall be deemed to have
occurred if: (i) there is a Change of Recommendation;
(ii) the Company shall have failed to include in the Proxy
Statement the unanimous recommendation of the Board that holders
of Company Common Stock vote in favor of the adoption of this
Agreement; (iii) the Special Committee shall have approved
or recommended any Acquisition Proposal; (iv) a tender or
exchange offer relating to securities of the Company shall have
been commenced by a person unaffiliated with
A-18
Parent and the Company shall not have sent to its
securityholders pursuant to
Rule 14e-2
promulgated under the Exchange Act, within ten
(10) business days after such tender or exchange offer is
first published sent or given, a statement disclosing that the
Special Committee recommends rejection of such tender or
exchange offer, or the Special Committee shall subsequently
amend or change its recommendation in a manner adverse to
Parent; or (v) the Company shall have willfully and
materially breached
Section 4.4
;
provided,
however,
that in the event any such action by the Company
(not just the Special Committee) that would otherwise constitute
a Triggering Event shall not be considered a Triggering Event if
such action was approved by any of the directors of the Board
designated by Parent.
6.2
Notice of Termination; Effect of
Termination
.
Any termination of this Agreement under and in accordance with
Section 6.1
will be effective immediately upon
(subject to, in the case of
Section 6.1(e)
or
Section 6.1(f)
, if the proviso therein is
applicable, prior delivery of notice of the breach or inaccuracy
30 days prior to notice of termination) the delivery of
written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement as
provided in
Section 6.1
, this Agreement shall be of
no further force or effect and there shall be no liability to
any party hereunder in connection with the Agreement or the
Transactions, except (i) as set forth in
Section 4.3(a)
,
Section 4.10
(other than
Parents guarantee of the obligations of the Company
contained therein), this
Section 6.2
,
Section 6.3
and
Article VII
, each of
which shall survive the termination of this Agreement, and
(ii) nothing herein shall relieve any party from liability
for any intentional or willful breach of, or any intentional
misrepresentation made in this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained
in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their
terms.
6.3
Fees and Expenses
.
All fees and expenses incurred in connection with this Agreement
and the Transactions shall be paid by the party incurring such
expenses whether or not the Merger is consummated.
6.4
Amendment
.
Subject to applicable law, this Agreement may be amended by the
parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and the Company.
6.5
Extension; Waiver
.
At any time prior to the Effective Time, the Company, on the one
hand, or Parent and Merger Sub, on the other hand, may, to the
extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein;
provided
that any condition set forth in
Section 5.1(a)
may not be waived without the express
written consent of Parent and the Company. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VII
GENERAL
PROVISIONS
7.1
Non-Survival of Representations and
Warranties
.
The representations and warranties of the Company, Parent and
Merger Sub contained in this Agreement and the other agreements,
certificates and documents contemplated hereby shall terminate
and be of no further force or effect at, and as of, the
Effective Time, and only the covenants and agreements of the
Company in this Agreement and the other agreements, certificates
and documents contemplated hereby that by their terms survive
the Effective Time shall survive the Effective Time.
A-19
7.2
Notices
.
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by
commercial delivery service, or sent via telecopy (receipt
confirmed) to the parties at the following addresses or telecopy
numbers (or at such other address or telecopy numbers for a
party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Oplink Communications, Inc.
46355 Landing Parkway
Fremont, California 94538
Attention: Chief Executive Officer
Telephone No.:
(510) 933-7200
Telecopy No.:
(510) 933-7300
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Carmen Chang, Esq.
Scott Anthony, Esq.
Telephone No.:
(650) 493-9300
Telecopy No.:
(650) 493-6811
(b) if to the Company, to:
Optical Communication Products, Inc.
6101 Variel Avenue
Woodland Hills, California 91367
Attention: Philip F. Otto
Telephone No.:
(818) 251-7100
Telecopy No.:
(818) 251-7111
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street, Twenty-fifth Floor
Los Angeles, California 90071
Attention: Kenneth R. Bender, Esq.
Telephone No.:
(213) 683-6000
Telecopy No.:
(213) 996-3060
7.3
Interpretation
.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement
to Articles or Sections, such reference shall be to an Article
or Section, respectively, of this Agreement unless otherwise
indicated. Unless otherwise indicated the words
include, includes and
including when used herein shall be deemed in each
case to be followed by the words without limitation.
As used herein, an item shall be deemed to have been
furnished to Parent if such item has been sent to
Parent or its representatives, provided to Parent or its
representatives or made available to Parent or its
representatives for review, in a data room or otherwise. The
table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is
made herein to the business of an entity, such
reference shall be deemed to include the business of all direct
and indirect subsidiaries of such entity. Reference to the
subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity. Where a reference is
made to a law, such reference is to such law, as amended, and
all rules and regulations promulgated thereunder, unless the
context requires otherwise.
A-20
(b) For purposes of this Agreement, the term
Material Adverse Effect
when used in
connection with any person, means any change, event, violation,
inaccuracy, circumstance or effect (any such item, an
Effect
), individually or when taken together
with all other Effects, that is or is reasonably likely to
(i) be materially adverse to the business, assets
(including intangible assets), liabilities, capitalization,
financial condition or results of operations of such person,
taken as a whole with its subsidiaries, other than any Effect
primarily resulting from (A) changes affecting the United
States or world economy generally which changes do not
disproportionately affect such person taken as a whole with its
subsidiaries when compared to other companies in the same
industry, (B) changes affecting the industry in which such
person and its subsidiaries operate generally which changes do
not disproportionately affect such person taken as a whole with
its subsidiaries, (C) a change in such persons stock
price or the trading volume in such stock, as applicable
(provided that this clause (C) shall not exclude any
underlying Effect which may have caused such change in stock
price or trading volume), (D) acts of terrorism or war
which changes do not disproportionately affect such person taken
as a whole with its subsidiaries when compared to other
companies in the same industry, (E) resulting from the
announcement of this Agreement and the transactions contemplated
hereby (including suspension or delay of customer orders, the
threat of suspension of future customer orders, a slowdown in
the rate of new orders from existing channels or the suspension
of supplier relationships), (F) a failure to meet internal
or published revenue or earnings predictions for such person for
any period ending (or for which revenues or earnings are
released) on or after the date of this Agreement (provided that
this clause (F) shall not exclude the revenues or earnings
of such person itself, as applicable, or any Effect which may
have affected such persons revenues or earnings, as
applicable), or (G) changes in applicable laws or in
United States generally accepted accounting principles
first publicly disclosed after the date hereof; or
(ii) materially and adversely affect the necessary
corporate power and authority of such entity to consummate the
Transactions or Merger in accordance with the terms of this
Agreement and applicable Legal Requirements.
(c) For purposes of this Agreement, the term
person
shall mean any individual, corporation
(including any non-profit corporation), general partnership,
limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability
company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
(d) For purposes of this Agreement, the term
business day
shall mean each day that is not
a Saturday, Sunday or other day on which banking institutions
located in San Francisco, California are authorized or
obligated by law or executive order to close, and the term
day when not immediately preceded by the word
business shall mean a calendar day.
(e) For purposes of this Agreement, the terms
subsidiary
and
subsidiaries
with respect to any party shall
mean any corporation, partnership, association, trust or other
form of legal entity of which (i) more than 50% of the
outstanding voting securities are directly or indirectly owned
by such party, or (ii) such party or any subsidiary of such
party is a general partner (excluding partnerships in which such
party or any subsidiary of such party does not have a majority
of the voting interest of such partnership).
(f) Unless the context of this Agreement otherwise
requires: (i) words of any gender include each other
gender; (ii) words using the singular or plural number also
include the plural or singular number, respectively; and
(iii) the terms
hereof
,
herein
,
hereunder
and
derivative or similar words refer to this entire Agreement.
7.4
Counterparts
.
This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party,
it being understood that all parties need not sign the same
counterpart.
7.5
Entire Agreement; Third Party
Beneficiaries
.
This Agreement and the documents and instruments and other
agreements among the parties hereto as contemplated by or
referred to herein, (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect and shall survive any
termination of this Agreement as modified by
Section 4.4(a)
; and (b) are not intended to
confer, and shall not be construed as conferring, upon any other
person any rights or
A-21
remedies hereunder provided that (A) the Indemnified
Persons shall be third party beneficiaries of
Section 4.10
and (B) the Special Committee
Directors shall be third-party beneficiaries of
Section 4.11
until the earlier of the termination of
this Agreement in accordance with its terms and the Effective
Time. Notwithstanding the foregoing, no rights of any third
party beneficiaries shall interfere with, limit or constrain in
any manner the rights of any party hereto to terminate or amend
this Agreement in accordance with its terms.
7.6
Severability
.
In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and
effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement
with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of
such void or unenforceable provision.
7.7
Other Remedies; Specific
Performance
.
Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of
any one remedy will not preclude the exercise of any other
remedy, and nothing in this Agreement shall be deemed a waiver
by any party of any right to specific performance or injunctive
relief. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions
without the necessity of proving the inadequacy of money damages
as a remedy and without the necessity of posting any bond or
other security in order to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction,
this being in addition to any other remedy to which they are
entitled at law or in equity.
7.8
Governing Law
.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of
conflicts of law thereof. The parties hereto hereby irrevocably
submit to the exclusive jurisdiction of the Court of Chancery in
the State of Delaware (and any appellate courts therefrom), or
if such jurisdiction shall be unavailable, any court in the
State of Delaware and the Federal courts of the United States of
America, each located within New Castle County in the State of
Delaware, solely in respect of the interpretation, application
and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the
transactions contemplated hereby and thereby, and hereby waive,
and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or
thereof, that it is not subject thereto or that such action,
suit or proceeding may not be brought or is not maintainable in
said courts or that the venue thereof may not be appropriate or
that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that
all claims with respect to such action or proceeding shall be
heard and determined in the Court of Chancery in the State of
Delaware or, if jurisdiction is not available in the Court of
Chancery, any other Delaware state court or Federal court, each
located in New Castle County, Delaware. The parties hereby
consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and
agree that mailing of process or other papers in connection with
any such action or proceeding in the manner provided in
Section 7.2
or in such other manner as may be
permitted by applicable law, shall be valid and sufficient
service thereof. With respect to any particular action, suit or
proceeding, venue shall lie solely in New Castle County,
Delaware.
7.9
Rules of Construction
.
The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party
drafting such agreement or document.
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7.10
Assignment
.
No party may assign or delegate, in whole or in part, by
operation of law or otherwise, either this Agreement or any of
the rights, interests, or obligations hereunder without the
prior written approval of the other parties, and any such
assignment without such prior written consent shall be null and
void, except that Parent may assign its rights (but not its
obligations) under this Agreement to any direct or indirect
wholly-owned subsidiary of Parent without the prior written
consent of the Company. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and
permitted assigns.
7.11
Waiver of Jury Trial
.
EACH OF PARENT, COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
PARENT, COMPANY OR MERGER SUB IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder
of Page Intentionally Left Blank]
A-23
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be executed by their duly
authorized respective officers as of the date first written
above.
OPLINK COMMUNICATIONS, INC.
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Title:
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President and Chief Executive Officer
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OPLINK ACQUISITION CORPORATION
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Title:
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President and Chief Executive Officer
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OPTICAL COMMUNICATION PRODUCTS INC.
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Title:
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President and Chief Executive Officer
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SIGNATURE
PAGE TO AGREEMENT AND PLAN OF MERGER
A-24
EXHIBIT A
AMENDMENT
NUMBER TWO TO
BYLAWS
OF
OPTICAL COMMUNICATION PRODUCTS, INC.
a Delaware corporation
This is to certify that I am the duly elected, qualified and
acting Secretary of Optical Communication Products, Inc., a
Delaware corporation (the
Company
), and that,
by action at a meeting of the Companys Board of Directors
held on June 19, 2007, the Bylaws of the Company were
amended and restated to add Article X as follows:
ARTICLE X
MERGER
AGREEMENT WITH OPLINK COMMUNICATIONS
Section 1.
Merger
Agreement.
Reference is made to that certain
Agreement and Plan of Merger, dated as of June 19, 2007
(the
Agreement
) by and among the corporation,
Oplink Communications, Inc., a Delaware corporation
(
Parent
), and Oplink Acquisition Corporation,
a Delaware corporation and wholly-owned subsidiary of Parent
(
Merger Sub
). Capitalized terms used and not
otherwise defined in this Article X shall have their
respective meanings as set forth in the Agreement. Reference is
also made to the special committee of disinterested directors of
the corporation (the
Special Committee
)
comprised of Hobart Birmingham, Stewart Personick, and David
Warnes (the
Special Committee Directors
).
Section 2.
Special
Committee Delegation.
From the effective date of
this Article X until the Effective Time, the power of the
Board of Directors to take the following actions is, to the
fullest extent permitted by law, delegated to the Special
Committee in addition to all powers previously delegated:
(i) authorize the taking of any action on behalf of the
corporation in connection with the Agreement, including, without
limitation, action (A) to amend, terminate or enforce the
Agreement; (B) to authorize any extension of time for the
performance of any of the obligations or other acts of Parent or
Merger Sub; (C) to waive the compliance with any covenant
by Parent or Merger Sub or any condition to any obligation of
the corporation or waive any right of the corporation under the
Agreement; and (D) to authorize a Change of Recommendation;
(ii) approve and pay all transaction expenses incurred by
the corporation or the Special Committee in connection with the
Agreement and the transactions contemplated thereby; or
(iii) to fill any vacancies on the Special Committee.
Section 3.
Supermajority
Approval.
Notwithstanding any other provision of
these Bylaws, from the effective date of this Article X
until the Effective Time, the Board of Directors of the
corporation shall not, without the approval of at least eight
directors: (i) authorize the taking of any action on behalf
of the corporation in connection with the Agreement, including,
without limitation, action (A) to amend, terminate or
enforce the Agreement; (B) to authorize any extension of
time for the performance of any of the obligations or other acts
of Parent or Merger Sub; (C) to waive the compliance with
any covenant by Parent or Merger Sub or any condition to any
obligation of the corporation or waive any right of the
corporation under the Agreement; (D) to authorize a Change
of Recommendation; (ii) authorize any action inconsistent
with or in contravention of the Agreement, or any of the
transactions contemplated thereby; (iii) change or remove
any of the current or future financial and legal advisors to the
Special Committee or the corporation or retain any new legal
counsel for the corporation; (iv) change or remove any
member of corporations senior management team, including
but not limited to the Chief Executive Officer, the Chief
Financial Officer, the Controller, L.C. Chiu, David Jenkins,
Jacob Tarn or Terry Basehore; (v) terminate or change the
composition of, or terminate the existence of the following
committees of the Board of Directors: the Special Committee, the
audit committee, the compensation committee and the special
stock option committee (provided that any action by the
compensation committee or the special stock option committee
shall be subject to further approval by the Board of Directors);
(vi) amend, or propose to adopt amendments inconsistent or
in contravention with, the charter documents of any committee to
the Board of Directors; (vii) change or remove the
corporations auditors; (viii) change the composition
of the Special Committee or the number of directors of the
corporation; (ix) amend or repeal this Article X of
the Bylaws, (x) change the date, time or place for the
Stockholders Meeting or authorize or approve any
adjournment of such meeting, or (xi) create, authorize or
A-25
otherwise empower any new committee of the Board of Directors.
The requirement of a supermajority vote for certain actions is
not intended to limit the power of the Special Committee to take
those actions to the extent that the power has been delegated to
the Special Committee.
Section 4.
Amendment.
Notwithstanding
Article IX or anything else in these Bylaws to the
contrary, neither Section 2 of Article III of these
Bylaws nor this Article X may be repealed or amended by
stockholders without the approval of the holders of at 80% of
the outstanding shares of stock of the corporation.
Section 5.
Termination.
Notwithstanding
Article IX or anything else in these Bylaws to the
contrary, the provisions of this Article X shall terminate
and be of no further force and effect upon the earliest to occur
of (i) termination of the Agreement in accordance with its
terms and (ii) the Effective Time.
IN WITNESS WHEREOF, I have hereunto set my hand as of
June 19, 2007.
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By:
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/s/ Frederic
T. Boyer
|
Frederic T. Boyer
Senior Vice President, Chief Financial Officer
and Secretary
A-26
ANNEX B
OPINION
OF BEAR, STEARNS & CO., INC. DATED AS OF JUNE 19,
2007
June 19, 2007
The Special Committee of the Board of Directors
Optical Communication Products, Inc.
6101 Variel Avenue
Woodland Hills, CA 91367
Gentlemen:
We understand that Optical Communication Products, Inc.
(OCPI), Oplink Communications, Inc.
(Oplink) and Oplink Acquisition Corporation
(Merger Sub), a wholly-owned subsidiary of Oplink,
intend to enter into an Agreement and Plan of Merger to be dated
as of June 19, 2007 (the Agreement), pursuant
to which Merger Sub shall be merged with and into OCPI and OCPI
shall continue as the surviving corporation, which will become a
wholly-owned subsidiary of Oplink (the Transaction).
Pursuant to the Agreement, each of the issued and outstanding
shares of Class A common stock of OCPI (other than
Class A shares currently owned by Oplink or Merger Sub)
will be converted into the right to receive $1.65 per share in
cash (the Consideration to be Received). You have
provided us with a copy of the Agreement in execution form.
You have asked us to render our opinion as to whether the
Consideration to be Received is fair, from a financial point of
view, to the Class A shareholders of OCPI (excluding Oplink
and Merger Sub).
In the course of performing our review and analyses for
rendering this opinion, we have:
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reviewed the Agreement;
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reviewed OCPIs Annual Reports to Shareholders and Annual
Reports on Form
10-K
for the
fiscal years ended September 2006, 2005 and 2004, its Quarterly
Reports on
Form 10-Q
for the periods ended December 31, 2006 and March 31,
2007 and its Current Reports on
Form 8-K
filed since September 30, 2006;
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reviewed certain operating and financial information relating to
OCPIs business and prospects, including projections for
the three years ended September 30, 2010 and extrapolated
projections for the five years ended September 30, 2015,
all as prepared and provided to us by OCPIs management;
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met with certain members of OCPIs senior management to
discuss OCPIs businesses, operations, historical and
projected financial results and future prospects;
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reviewed the historical prices, trading multiples and trading
volume of the common shares of OCPI;
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reviewed publicly available financial data, stock market
performance data and trading multiples
of
companies which we deemed generally comparable to OCPI;
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reviewed the terms of recent mergers and acquisitions involving
companies which we deemed generally comparable to OCPI;
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performed discounted cash flow analyses based on the projections
for OCPI furnished to us; and
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conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
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The Special Committee of the Board of Directors
Optical Communication Products, Inc.
June 19, 2007
We have relied upon and assumed, without independent
verification, the accuracy and completeness of the financial and
other information provided to or discussed with us by OCPI or
obtained by us from public sources, including, without
limitation, the projections referred to above. With respect to
the projections, we have relied on representations that they
have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the senior
management of OCPI as to the expected future performance of
OCPI. We have not assumed any responsibility for and have not
independently verified any of such information, including,
without limitation, the projections, and we have further relied
upon the assurances of the senior management of OCPI that they
are unaware of any facts that would make the information and
projections incomplete or misleading.
In arriving at our opinion, we have not performed or obtained
any independent appraisal of the assets or liabilities
(contingent or otherwise) of OCPI, nor have we been furnished
with any such appraisals (other than a real estate appraisal of
OCPIs headquarters carried out by third party consultants
at OCPIs instruction). During the course of our
engagement, we were asked by the Special Committee of the Board
of Directors of OCPI (the Special Committee) to
solicit indications of interest from various third parties
regarding a transaction with OCPI, and we have considered the
results of such solicitation in rendering our opinion. We have
assumed that the Transaction will be consummated in a timely
manner and in accordance with the terms of the Agreement without
any limitations, restrictions, conditions, amendments or
modifications, regulatory or otherwise, that collectively would
have a material effect on OCPI.
We do not express any opinion as to the price or range of prices
at which the shares of common stock of OCPI may trade subsequent
to the announcement of the Transaction.
Bear, Stearns & Co. Inc. (Bear Stearns)
has acted as a financial advisor to the Special Committee in
connection with the Transaction and will receive a customary fee
for such services, a substantial portion of which is contingent
on successful consummation of the Transaction. In addition, OCPI
has agreed to reimburse us for certain expenses and to indemnify
us against certain liabilities arising out of our engagement.
Consistent with applicable legal and regulatory requirements,
Bear Stearns has adopted policies and procedures to establish
and maintain the independence of Bear Stearns research
departments and personnel. As a result, Bear Stearns
research analysts may hold views, make statements or investment
recommendations
and/or
publish research reports with respect to OCPI, Oplink, the
Transaction and other participants in the Transaction that
differ from the views of Bear Stearns investment banking
personnel.
In the ordinary course of business, Bear Stearns and its
affiliates may actively trade for its own account and for the
accounts of its customers equity and debt securities, bank debt
and/or
other
financial instruments issued by OCPI
and/or
Oplink and their respective affiliates, as well as derivatives
thereof, and, accordingly, may at any time hold long or short
positions in such securities, bank debt, financial instruments
and derivatives.
It is understood that this letter is intended for the benefit
and use of the Special Committee and the Board of Directors of
OCPI (the Board of Directors) only in connection
with its evaluation of the Transaction and does not constitute a
recommendation to the Special Committee, the Board of Directors
or any holders of OCPI common stock as to how to vote in
connection with the Transaction or otherwise. This letter is not
to be used for any other purpose, or be reproduced,
disseminated, quoted from or referred to at any time, in whole
or in part, without our prior written consent; provided,
however, that this letter may be included in its entirety in any
proxy statement to be distributed to the holders of OCPI common
stock in connection with the Transaction. This opinion does not
address OCPIs underlying business decision to pursue the
Transaction, the relative merits of the Transaction as compared
to any alternative business strategies that might exist for OCPI
or the effects of any other transaction in which OCPI might
engage. In addition, we do not express any opinion as to the
fairness of the amount or nature of any compensation payable to
any of OCPIs officers, directors or employees, or any
class of such persons, in connection with the Transaction
relative to the Consideration to be Received. Our opinion is
subject to the assumptions, limitations, qualifications and
other conditions contained herein and is necessarily based on
economic, market and other conditions, and the information made
available to us, as of the date hereof. We assume no
responsibility for updating or revising our opinion based on
circumstances or events occurring after the date hereof.
The Special Committee of the Board of Directors
Optical Communication Products, Inc.
June 19, 2007
Based on and subject to the foregoing, it is our opinion that,
as of the date hereof, the Consideration to be Received is fair,
from a financial point of view, to the Class A shareholders
of OCPI (excluding Oplink and Merger Sub).
Very truly yours,
BEAR, STEARNS & CO. INC.
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By:
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Senior Managing Director
OPINION OF SEVEN HILLS PARTNERS LLC DATED AS OF JUNE 18,
2007
S e v e n H i l l s
June 18, 2007
PERSONAL &
CONFIDENTIAL
Board of Directors
Oplink Communications, Inc.
46335 Landing Parkway
Fremont, CA 94538
Members of the Board:
You have requested our opinion as to the fairness, from a
financial point of view, to Oplink Communications, Inc. (the
Company) of the Consideration (as defined below) to
be paid by the Company pursuant to the Agreement and Plan of
Merger (the Agreement) to be entered into among the
Company, Optical Communication Products, Inc. (OCP)
and Oplink Acquisition Corporation (Merger Sub),
pursuant to which Merger Sub will be merged with and into OCP,
with OCP as the surviving entity and thereafter a wholly-owned
subsidiary of the Company (the Transaction). In the
Transaction, each outstanding share of the Class A common
stock of OCP (other than shares owned by the Company or by OCP
and other than dissenting shares as provided in the Agreement)
will be converted into the right to receive $1.65 per share in
cash (collectively, the Consideration). We
understand that the Company currently owns
66,000,100 shares of OCP Class A common stock,
representing approximately 58.1% of the OCP common stock
outstanding, acquired primarily through a stock purchase
transaction with The Furukawa Electric Co., Ltd. (the
Stock Purchase). The terms and conditions of the
Transaction are more fully set forth in the Agreement.
In connection with our opinion, we have reviewed and considered
such financial and other matters as we have deemed relevant,
including, among other things:
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a.
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a draft of the Agreement dated June 14, 2007;
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b.
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certain publicly available financial and other information for
OCP, including Annual Reports on
Form 10-K
for the fiscal year ended September 30, 2006 and Quarterly
Reports on
Form 10-Q
for the quarter ended March 31, 2007;
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c.
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certain financial and operating information with respect to the
business, operations and prospects of OCP furnished to Seven
Hills by OCP, including financial projections of OCP through
fiscal year 2010 prepared by the management of OCP, together
with financial projections for fiscal years 2011 and 2012
reviewed and approved by the Company;
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d.
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certain publicly available financial projections prepared by
Wall Street research analysts for OCP, the Company and certain
other publicly traded companies we deemed relevant;
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e.
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certain operating results, the reported price and trading
histories of the shares of the common stock of OCP, and
operating results, the reported price and trading histories of
certain publicly traded companies we deemed relevant;
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f.
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certain financial terms, to the extent publicly available, of
certain selected business combinations we deemed relevant;
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Seven Hills Partners
LLC
88 Kearny Street San Francisco,
CA 94108
Tel: (415) 869-6200 Fax: (415)
869-6262
Member
of NASD and SIPC
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g.
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pro forma impact of the proposed Transaction on certain
financial and operating metrics, including the impact on cash
balance, for the Company;
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h.
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certain estimates of cost savings and other synergies expected
to result from the Transaction, prepared and provided to Seven
Hills by the Company;
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i.
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discussions with the senior management of the Company and their
strategic and financial rationale for the Transaction;
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j.
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discussions and negotiations among representatives of the
Company, OCP and their respective advisors; and
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k.
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such other information, financial studies, analyses and
investigations and such other factors that we deemed relevant
for the purposes of this opinion.
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We have relied upon the accuracy and completeness of all of the
financial, accounting and other information discussed with or
reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion, and we have not
undertaken any independent verification of such information. We
have relied upon the assurances of management of the Company
that it is not aware of any facts that would make such
information inaccurate or misleading in any respect. We have
assumed with your consent, with respect to the financial
projections for OCP provided to us by OCP or approved by the
Company, that they were reasonably prepared on bases reflecting
the best currently available estimates and judgments of the
management of OCP or the Company, as applicable, of the future
financial performance of OCP on a standalone basis, that they
form a reasonable basis for our opinion and that OCP will
perform substantially in accordance with such projections, and,
with respect to the financial projections for the Company
prepared by Wall Street analysts, that they were reasonably
prepared, that they form a reasonable basis for our opinion and
that the Company will perform substantially in accordance with
such projections. Furthermore, we did not obtain or make, or
assume responsibility for obtaining or making, any independent
evaluation or appraisal of the properties or assets or
liabilities (contingent or otherwise) of OCP, nor were we
furnished with any such evaluations or appraisals, nor have we
evaluated the solvency or fair value of OCP under any state or
federal laws relating to bankruptcy, insolvency or similar
matters.
For purposes of rendering our opinion, we have assumed that the
representations and warranties of each party contained in the
Agreement are true and correct, that each party will perform all
of the covenants and agreements required to be performed by it
under the Agreement and that all conditions to the consummation
of the Transaction will be satisfied without material waiver
thereof. We have further assumed that the final form of the
Agreement will not vary materially from the last draft Agreement
reviewed by us and that the Transaction will be consummated
substantially in accordance with the terms described in such
draft, without any amendment or waiver of material terms or
conditions. We have also assumed that all material governmental,
regulatory or other consents and approvals necessary for the
consummation of the Transaction will be obtained without any
adverse effect on the Company, on OCP or on the contemplated
benefits of the Transaction. We note that we are not legal, tax
or regulatory experts and have relied upon, without assuming any
responsibility for independent verification or liability
therefor, the assessment of the Companys legal, tax and
regulatory advisors with respect to the legal, tax and
regulatory matters related to the Agreement.
Our opinion does not address the underlying business decision to
enter into the Agreement and pursue the Transaction or any other
transaction, or the relative merits of the Transaction or any
other transaction as compared to any alternative business
transaction that might be available to the Company. The opinion
expressed herein is provided solely for the information and
assistance of the Board of Directors of the Company in
connection with its consideration of the Transaction. Our
opinion is limited to the fairness, from a financial point of
view, to the Company of the Consideration in the Transaction.
Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available
to us as of, the date hereof. It should be understood that
subsequent developments may affect this opinion and that we do
not have any obligation to update, revise, or reaffirm this
opinion. In addition, Seven Hills Partners LLC (Seven
Hills) may provide investment banking services to the
Company or OCP or their respective affiliates, in the future, in
connection with matters unrelated to the Transaction, for which
services Seven Hills may receive compensation.
We have acted as financial advisor to the Company with respect
to the Transaction and the Stock Purchase. We received a fee
from the Company for our services with respect to the Stock
Purchase and will receive a fee from the
Company for our services with respect to this Transaction,
including rendering this opinion, a significant portion of which
is contingent on the consummation of the Transaction. The
Company has agreed to reimburse our expenses and to indemnify us
for certain liabilities that may arise out of our engagement.
This opinion shall not be used for any other purpose, and may
not be disseminated, reproduced, quoted from (in whole or in
part) or referred to at any time, without prior written
approval. In furnishing this opinion, Seven Hills does not admit
that we are experts within the meaning of the term
experts as used in the Securities Act of 1933, as
amended (the Securities Act), and the rules and
regulations promulgated thereunder, nor do we admit that this
opinion constitutes a report or valuation within the meaning of
Section 11 of the Securities Act.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, it is our opinion
that, as of the date hereof, the Consideration to be paid by the
Company pursuant to the Agreement and as part of the Transaction
is fair from a financial point of view to the Company.
Very truly yours,
/s/ Seven
Hills Partners LLC
SEVEN HILLS PARTNERS LLC
SECTION 262
OF THE DELAWARE GENERAL CORPORATION LAW (APPRAISAL
RIGHTS)
SECTION 262
OF THE DELAWARE GENERAL CORPORATION LAW (APPRAISAL
RIGHTS)
DELAWARE
CORPORATION AND BUSINESS ENTITY LAWS
TITLE 8
Corporations
CHAPTER 1.
GENERAL CORPORATION LAW
Subchapter IX. Merger, Consolidation or Conversion
§
262. Appraisal rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to
such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to § 228 of this
title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholders shares of stock
under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a
stock corporation and also a member of record of a nonstock
corporation; the words stock and share
mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a nonstock
corporation; and the words depository receipt mean a
receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of
§ 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
D-1
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228 or § 253 of this title, then either a
constituent corporation before the effective date of the merger
or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders
of any class or series of stock of such constituent corporation
who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if
D-2
the notice is given on or after the effective date of the merger
or consolidation, the record date shall be such effective date.
If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections (a)
and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within
60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
such stockholders demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and
with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written
statement shall be mailed to the stockholder within 10 days
after such stockholders written request for such a
statement is received by the surviving or resulting corporation
or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d)
hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and
who has submitted such stockholders certificates of stock
to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock
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forthwith, and the case of holders of shares represented by
certificates upon the surrender to the corporation of the
certificates representing such stock. The Courts decree
may be enforced as other decrees in the Court of Chancery may be
enforced, whether such surviving or resulting corporation be a
corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation. (8 Del. C. 1953,
§ 262; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186,
§ 24; 57 Del. Laws, c. 148,
§§ 27-29;
59 Del. Laws, c. 106, § 12; 60 Del. Laws, c. 371,
§§ 3-12; 63 Del. Laws, c. 25,
§ 14; 63 Del. Laws, c. 152, §§ 1, 2; 64
Del. Laws, c. 112,
§§ 46-54;
66 Del. Laws, c. 136,
§§ 30-32;
66 Del. Laws, c. 352, § 9; 67 Del. Laws, c. 376,
§§ 19, 20; 68 Del. Laws, c. 337,
§§ 3, 4; 69 Del. Laws, c. 61, § 10; 69
Del. Laws, c. 262, §§ 1-9; 70 Del. Laws, c. 79,
§ 16; 70 Del. Laws, c. 186, § 1; 70 Del.
Laws, c. 299, §§ 2, 3; 70 Del. Laws, c. 349,
§ 22; 71 Del. Laws, c. 120, § 15; 71 Del.
Laws, c. 339,
§§ 49-52;
73 Del. Laws, c. 82, § 21.)
D-4
ANNEX E
INFORMATION
RELATING TO THE COMPANY, OPLINK AND
OPLINK ACQUISITION
INFORMATION
RELATING TO THE COMPANY, OPLINK AND
OPLINK ACQUISITION
The following sets forth certain information relating to Optical
Communication Products, Inc., a Delaware corporation (the
Company), Oplink Communications, Inc., a Delaware
corporation (Oplink) and Oplink Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary
of Oplink (merger sub or Oplink
Acquisition) and directors and officers of each such party
that is required under certain rules of the Securities and
Exchange Commission.
Optical
Communication Products, Inc.
The Company is a Delaware corporation with its corporate
headquarters located at 6101 Variel Avenue, Woodland Hills,
California 91367;
(818) 251-7100.
The names and positions of the directors and executive officers
of the Company are set forth below. Each director and executive
officer of the Company is a citizen of the United States. Except
where indicated, each directors and executive
officers principal occupation is as listed below and
principal business address is 6101 Variel Avenue, Woodland
Hills, California 91367. During the last five years, neither the
Company, nor, any of its directors or executive officers
(i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was a
party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining further
violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of such
federal or state securities laws.
Executive
Officers and Directors of the Company
The following table sets forth information regarding our
executive officers and directors as of September 29, 2007:
|
|
|
Name
|
|
Position
|
|
Philip F. Otto
|
|
Director, Chief Executive Officer and President
|
Frederic T. Boyer
|
|
Senior Vice President and Chief Financial Officer
|
Dr. Liew-Chuang Chiu
|
|
Vice President of Worldwide Operations
|
Stewart D. Personick
|
|
Director
|
Hobart Birmingham
|
|
Director
|
David Warnes
|
|
Director
|
Joseph Y. Liu
|
|
Director
|
Leonard J. Leblanc
|
|
Director
|
Chieh Chang
|
|
Director
|
Jesse W. Jack
|
|
Director
|
Business
and Background of Executive Officers and Directors of the
Company
Philip F. Otto
has been a director and our Chief
Executive Officer and President since July 2006. Mr. Otto
served as our Interim Chief Financial Officer from May 2006 to
August 2006. Prior to joining our company, Mr. Otto had
been an independent corporate strategic and financial advisor
since 2003. From 2000 to 2003, Mr. Otto was chairman and
chief executive officer of MedioStream, Inc., a California
software company. From 1998 to 1999, Mr. Otto worked as an
independent consultant providing financial and strategic
advisory services to small technology-oriented companies and
investors. From 1992 to 1997, Mr. Otto served as chairman
and chief executive officer of California Microwave, Inc (after
having been its chief financial officer). Mr. Otto earned a
bachelor of science degree from the Yale School of Engineering
and a masters degree in business administration from
Harvard Business School.
E-1
Frederic T. Boyer
has been our Senior Vice President and
Chief Financial Officer since August 2006. From October 2002 to
August 2006, Mr. Boyer served as Vice President and Chief
Financial Officer of Qualstar Corporation, a NASDAQ-traded data
storage solutions company. Mr. Boyer was Vice President and
Chief Financial Officer of Accelerated Networks, Inc. from 1998
to 2001. From 1996 to 1998, Mr. Boyer was the Senior Vice
President, Finance and Administration and Chief Financial
Officer of Software Dynamics, Incorporated. From 1990 to 1996,
Mr. Boyer was Vice President and Chief Financial Officer of
Fibermux Corporation, a networking company later acquired by ADC
Telecommunications. Mr. Boyer holds an M.B.A. from Loyola
Marymount University, a B.S. in Accounting from California State
University, Los Angeles, and a B.S. in Economics from California
State Polytechnic University, Pomona.
Liew-Chuang Chiu
has been our Vice President of Worldwide
Operations since January 24, 2007. Dr. Chiu was our
Vice President of Manufacturing from April 2006 to
January 24, 2007. From July 2005 to April 2006,
Dr. Chiu was our Director of Manufacturing. From 2004 to
2005, Dr. Chiu was a Director of Operations of JDS Uniphase
Corporation. From 1998 to 2004, Dr. Chiu served as Vice
President of Operations of E2O, a fiber optics sub-systems
company acquired by JDS in 2004. Previously, Dr. Chiu was
Manager of Research and Development with Hewlett Packards
components operation in Singapore. Dr. Chiu holds B.S.,
M.S. and Ph.D degrees in Applied Physics from the California
Institute of Technology.
Stewart D. Personick
has been a director and member of
our audit and compensation committees since November 2000. In
addition, Dr. Personick has served as a member of our
special stock option committee since April 2002 and nominating
committee from July 2002 to February 2006, respectively. Since
March 2006, Dr. Personick has been an independent
consultant. From December 2005 to March 2006, Dr. Personick
was the Director of the Secure Infrastructure Laboratory at
Stevens Institute of Technology in Hoboken, New Jersey. From
September 2004 to December 2005, Dr. Personick was a
College of Engineering Distinguished Professor at Drexel
University in Philadelphia, PA. From September 2003 to August
2004, Dr. Personick was an independent consultant. From
September 1998 to August 2003, he was the E. Warren Colehower
Chair Professor of Telecommunications and Information Networking
at Drexel University, and the Director of Drexels Center
for Telecommunications and Information Networking. From January
1984 to July 1998, Dr. Personick was Vice President at Bell
Communication Research, a research and development company.
Dr. Personick has been a fellow of the Institute of
Electrical and Electronics Engineers since 1983, a fellow of the
Optical Society of America since 1988, a member of the
U.S. National Academy of Engineering since 1992 and he
received the IEEE/OSA John Tyndall Award in 2000.
Dr. Personick earned his bachelor of electrical engineering
from The City College of New York and his master of science and
doctor of science in electrical engineering from the
Massachusetts Institute of Technology.
Hobart Birmingham
has been a director and member of our
audit, compensation and special stock option committees since
December 2002. Since November 2002, Mr. Birmingham has been
a Managing Director of The Perreault Birmingham Group LLC, a
company providing business consulting, strategic advisory and
investment banking services to software and other high
technology companies. Mr. Birmingham is also a registered
representative of ePLANNING Securities, Inc., member of
NASD/SIPC. From July 2000 to June 2003, Mr. Birmingham was
a Managing Director of Hultquist Capital LLC, a firm providing
strategic and financial advisory services. From February 1997 to
July 2000, Mr. Birmingham was an executive officer of
Inprise/Borland Software Corporation, working first as General
Counsel and from April 1999 as Chief Administrative Officer.
Before Inprise/Borland, Mr. Birmingham was Associate
General Counsel of Apple Computer. Prior to Apple Computer,
Mr. Birmingham was in private practice with law firms in
San Francisco and Tokyo. Mr. Birmingham earned his
J.D. from the University of Michigan Law School and holds a
bachelors degree in East Asian Studies from Princeton
University.
David Warnes
has been a director and member of our audit
committee since December 2002, and a member of our nominating
committee from February 2004 to February 2006. From September
2006, Mr. Warnes has been an independent consultant. From
December 2002 to August 2006, Mr. Warnes was President and
CEO of BEST Direct Networks, a wireless broadband provider and
billing transaction company in the telecom and IT/IP industry.
From May 2000 to June 2002, Mr. Warnes was Chief Executive
Officer of New World Network, Ltd. where he was responsible for
introducing the ARCOS Cable System into service through New
Worlds majority ownership. The ARCOS Cable System is an
undersea broadband fiber-optic cable network that is 8,600 km in
length which connects 14 countries throughout the Caribbean,
Central America and the Yucatan to the United States. From July
E-2
1996 to May 2000, Mr. Warnes was Chief Operating Officer of
Global Light Telecommunications, Inc., a public international
telecommunications investment company. Prior to Global Light
Telecommunications, Mr. Warnes was Principal Consultant and
General Manager Business Development of International Digital
Communications, Japan, an international communications company.
Mr. Warnes holds an electrical engineering degree from the
University of East London. Mr. Warnes is a Chartered
Engineer and a Fellow of the Institution of Electrical Engineers.
Joseph Y. Liu
has been a director since has June 2007.
Mr. Liu is the Chief Executive Officer and President of Oplink,
and is a member of Oplinks board of directors, on which he
has served since Oplinks inception in 1995. From 1994 to
1995, Mr. Liu was the General Partner of Techlink
Technology Ventures. Prior to 1994, Mr. Liu spent ten years
as Chairman and Chief Executive Officer of Techlink
Semiconductor and Equipment Corp., a semiconductor equipment and
technology company. Mr. Liu also serves as a director of
InterVideo, Inc., a DVD software provider. Mr. Liu received
his B.S. from Chinese Cultural University, Taiwan and his M.S.
from California State University, Chico.
Leonard J. LeBlanc
has been a director since June 2007.
Mr. LeBlanc is a director and chairman of the board of
Oplink. Since August 2000, Mr. LeBlanc has also been on the
Board of Directors of eBest Inc., a private software company
providing collaborative business management solutions. From
February 2001 to September 2003, Mr. LeBlanc was Vice
President of Corporate Development and Acting Chief Financial
Officer of eBest Inc. Mr. LeBlanc was the Executive Vice
President and Chief Financial Officer of Vantive Corporation, a
customer relationship management software and solution company,
from August 1998 to January 2000. From March 1996 to July 1997,
Mr. LeBlanc was the Executive Vice President of Finance and
Administration and Chief Financial Officer at Infoseek
Corporation, an Internet search and navigation company. From
September 1993 to December 1994, Mr. LeBlanc served as
Senior Vice President, Finance and Administration of GTECH
Corporation, a manufacturer of lottery equipment and systems.
From May 1987 to December 1992, Mr. LeBlanc served as
Executive Vice President, Finance and Administration and Chief
Financial Officer of Cadence Design Systems, Inc., an electronic
design automation software company. Mr. LeBlanc also serves
on the board of directors of AXT, Inc., a company involved with
the manufacture and sale of high-performance compound
semiconductor substrates. Mr. LeBlanc received his B.S. and
M.S. from the College of Holy Cross, and his masters
degree in finance from George Washington University.
Chieh Chang
has been a director since June 2007.
Mr. Chang has been a member of Oplinks board of
directors since September 1995. From February 2000 to February
2003, Mr. Chang served as Chief Executive Officer of
Programmable Microelectronics Company, Inc. (now Gingistek,
Inc.), a fabless semiconductor design company. From April 1992
to August 1996, Mr. Chang was the Director of Technology at
Cirrus Logic, Inc., a semiconductor company. Mr. Chang
serves on the board of directors of Genesis Microchip, Inc., a
semiconductor company. Mr. Chang received his B.S. in
Electrical Engineering from the National Taiwan University and
his M.S. in Electrical Engineering from UCLA.
Jesse W. Jack
has been a director since June 2007.
Mr. Jack has been a member of Oplinks board of
directors since July 2002. Since January 2003, Mr. Jack has
been self-employed as an attorney with The Law Offices of Jesse
Jack. He is also the Vice President and General Counsel for
I-Bus Corporation, a privately held company. From 1994 until
January 2003, Mr. Jack was a partner in the law firm of
Jack & Keegan, a California Limited Liability
Partnership. Mr. Jack served on the board of directors of
The Parkinsons Institute from 1988 through 2000.
Mr. Jack received his B.S. from California State
University, San Jose and his J.D. from Hastings College of
Law.
Oplink
and Oplink Acquisition
Incorporated in 1995, Oplink is a Delaware corporation with its
executive offices at 46335 Landing Parkway, Fremont CA 94538.
Its telephone number is
(510) 933-7200.
Oplink Acquisition, a Delaware corporation and wholly-owned
subsidiary of Oplink, was organized solely for the purpose of
entering into the merger agreement with OCP and completing the
merger. Oplink Acquisition was incorporated on June 13,
2007 and has not conducted any business operations. Oplink
Acquisitions principal executive offices are located at
c/o Oplink
Communications, Inc., 46355 Landing Parkway, Fremont, California
94538.
E-3
Set forth below is certain information for each director and
executive officer of Oplink and Oplink Acquisition. Each person
identified below is a United States citizen except as otherwise
stated below. During the last five years, none of Oplink, Oplink
Acquisition or any of the directors and executive officers
listed below (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors), or (ii) was a party to any judicial or
administrative proceedings (except for matters that were
dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining such person from
future violations of, or prohibiting activities subject to,
federal or state laws, or a finding of a violation of federal or
state securities laws. The principal business address of each
director and executive officers listed below is
c/o Oplink
Communications, Inc., 46335 Landing Parkway, Fremont, CA 94538.
Executive
Officers and Directors of Oplink and Oplink
Acquisition
The following table set forth information regarding
Oplinks executive officers and directors as of
September 29, 2007:
|
|
|
Name
|
|
Position
|
|
Joseph Y. Liu*
|
|
Director, Chief Executive Officer and President
|
Leonard J. Leblanc
|
|
Director and Chairman of the Board
|
Chieh Chang
|
|
Director
|
Jesse W. Jack
|
|
Director
|
Hua Lee
|
|
Director
|
Shirley Yin
|
|
Chief Financial Officer
|
River Gong
|
|
Vice President of Sales
|
James Cheng
|
|
General Manager, China-Macau
|
|
|
|
*
|
|
Director, Chief Executive Officer and President of Oplink
Acquisition
|
Business
and Background of Executive Officers and Directors of Oplink and
Oplink Acquisition
Joseph Y. Liu
See information provided in this
Annex E Information Relating to the Company,
Oplink and Oplink Acquisition Business and
Background of Executive Officers and Directors of the Company.
Leonard J. LeBlanc
See information provided in this
Annex E Information Relating to the Company,
Oplink and Oplink Acquisition Business and
Background of Executive Officers and Directors of the Company.
Chieh Chang
See information provided in this
Annex E Information Relating to the Company,
Oplink and Oplink Acquisition Business and
Background of Executive Officers and Directors of the Company.
Jesse W. Jack
See information provided in this
Annex E Information Relating to the Company,
Oplink and Oplink Acquisition Business and
Background of Executive Officers and Directors of the Company.
Hua Lee
has been a member of Oplinks Board of
Directors since February 2006. Dr. Lee has been Professor
of Electrical and Computer Engineering at the University of
California, Santa Barbara since 1990. Prior to his tenure
at the University of California, Santa Barbara,
Dr. Lee was on the faculty of the University of Illinois at
Urbana-Champaign. Dr. Lee received his B.S. degree in
Electrical Engineering from the National Taiwan University, and
M.S. and PhD in Electrical Engineering from University of
California, Santa Barbara.
Shirley Yin
has served as Oplinks Chief Financial
Officer since August 2007. Prior to that, Ms. Yin was Vice
President Finance and Acting Chief Financial Officer and was
also Oplinks controller for five years. She is a Certified
Public Accountant and has more than 10 years of experience
in finance and accounting in a wide variety of roles. Before
joining Oplink, Ms. Yin spent three years at
PricewaterhouseCoopers. Ms. Yin received her Master Degree
in Accountancy from the University of Southern California.
River Gong
has served as Oplinks Vice President of
Sales since February 2003. From January 2001 to February 2003,
Ms. Gong served as Oplinks Sr. Director of Sales,
from May 1999 to January 2001 she was Director of Sales, and
from January 1998 to May 1999 she was Sales Manager. Prior to
joining Oplink, Ms. Gong was
E-4
Division Manager and Sales Manager of MP Fiber Optics (now
Global Opticom), a fiber optics company, from January 1995 to
December 1997. Prior to that, she was an architect in China for
five years. Ms. Gong received her B.S. in Architecture from
Harbin Institute University.
James Cheng
has served as Oplinks General Manager,
China/Macau since May 2005. From June 2003 to February 2005,
Mr. Cheng was as a consultant for Stratum Technologies,
Inc. in Cleveland, Ohio. From June 1997 to June 2003,
Mr. Cheng served as the Country Manager and Factory General
Manager at RAE Systems Inc. in Shanghai (Jiading) China.
Mr. Cheng received his B.S. in Mechanical Engineering from
Taugtong University, Taiwan. Mr. Cheng is a citizen of
China.
E-5
PROJECTED
FINANCIAL INFORMATION
PROJECTED
FINANCIAL INFORMATION
On June 1, 2007, the Company prepared certain financial
projections of future operating results of the Company (the
projected financial information). The Company does
not as a matter of course publish its business plans and
strategies or make public projections as to anticipated
financial position, results of operations or other results
beyond the current fiscal year, if at all, and is especially
wary of making projected financial information for extended
earnings periods due to the unpredictability of the underlying
assumptions and estimates. The projected financial information
for the fiscal years 2007-2010 (the base case projected
financial information) was provided to the board of
directors, the special committee, its advisor, Bear Stearns, and
on or about June 1, 2007 (after Oplink had agreed to
purchase the Companys shares from Furukawa and made the
offer for the remaining shares of the Company) Oplink, its
advisor, Seven Hills, and on or about June 13, 2007, Oplink
Acquisition (collectively, the projected financial
information recipients), for use in connection with their
respective considerations of the merger. The projected financial
information for the fiscal years 2011-2015 (the extended
case projected financial information) were derived from
the base case projected financial information and was provided
to the board of directors, the special committee, and Bear
Stearns.
We have included a subset of this projected financial
information to give our stockholders access to certain nonpublic
information considered by projected financial information
recipients for purposes of considering and evaluating the
merger. The projections included below constitute all projected
financial information deemed material to Bear Stearns in
rendering its opinions described under Special
Factors Opinion of the Special Committees
Financial Advisor beginning on page 16. The inclusion
of this information should not be regarded as an indication that
the projected financial information recipients or any other
recipient of this information considered, or now considers, it
to be a reliable prediction of future results. The projected
financial information was prepared for internal use and to
assist the projected financial information recipients with their
respective due diligence investigations of the Company and for
purposes of considering and evaluating the merger. The projected
financial information was not prepared with a view toward public
disclosure or with a view toward complying with published
guidelines of the Securities and Exchange Commission or the
American Institute of Certified Public Accountants or generally
accepted accounting principles with respect to prospective
financial information, but, in the view of the Companys
management, was prepared on a reasonable basis, reflects the
best then-currently available estimates and judgments, and
presents, to the best of the Companys managements
knowledge and belief, the expected course of action and the
expected future financial performance of the Company, as of the
date of the projected financial information.
The projected financial information is included in this proxy
statement solely because such information was furnished to the
projected financial information recipients. This information is
not fact and should not be relied upon as being necessarily
indicative of future results, and readers of this proxy
statement are cautioned not to place undue reliance on the
projected financial information.
The Company advised projected financial information recipients
that its internal financial forecasts, upon which the projected
financial information was based, are subjective in many
respects. While presented with numerical specificity, the
projected financial information was based upon a variety of
assumptions relating to the business of the Company at the time
it was prepared. The Companys management considered such
assumptions reasonable as of the time they were made. Such
assumptions and estimates underlying the projected financial
information are inherently uncertain and are subject to a wide
variety of significant business, economic, and competitive
risks, uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond the
Companys control which could cause actual results to
differ materially from those contained in the projected
financial information or cause the underlying assumptions to be
inaccurate, including, among others: industry performance,
general business, economic, regulatory, market and financial
conditions, as well as changes to the business, financial
condition or results of operations of the Company, including the
factors described under Cautionary Statement Concerning
Forward-Looking Information beginning on page 35.
Since the projected financial information covers multiple years,
such information by its nature becomes less reliable with each
successive year. As a result, there can be no assurance that the
projected financial information is indicative of the future
performance of the Company or that actual results will not
differ materially from those presented in the projected
financial information or prove to be wholly inaccurate.
F-1
The inclusion of the projected financial information herein
should not be regarded as a representation by the Company,
Oplink, or Oplink Acquisition or any other entity or person that
the projected results will be achieved, and none of the Company,
Oplink, or Oplink Acquisition assumes any responsibility for the
accuracy of such information. The Companys independent
auditors have not examined or compiled the projected financial
information presented herein and, accordingly, assume no
responsibility for them. Readers are cautioned not to place
undue reliance on this data. Neither the Companys
independent auditors, nor any other independent accountants,
have compiled, examined, or performed any procedures with
respect to the projected financial information contained herein,
nor have they expressed any opinion or any other form of
assurance on such information or its achievability, and assume
no responsibility for, and disclaim any association with, the
projected financial information.
The Company does not intend to update or otherwise revise the
projected financial information to reflect circumstances
existing since the date of preparation or to reflect the
occurrence of future events, including, changes in general
economic or industry conditions, even in the event that any or
all of the underlying assumptions are shown to be in error. The
projected financial information does not take into account any
circumstances or events occurring after the date it was prepared.
For the foregoing reasons, as well as the bases and assumptions
on which the financial projected financial information was
compiled, the inclusion of specific portions of the projected
financial information in this proxy statement should not be
regarded as an indication that such projected financial
information will be an accurate prediction of future events, and
they should not be relied on as such.
Projected financial information for fiscal years 2007 through
2015 is set forth below. Since the date of the projected
financial information, the Company has made publicly available
its actual results of operations for the quarter ended
June 30, 2007. You should review the Companys
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 to obtain this
information. Readers of this proxy statement are cautioned not
to place undue reliance on the specific portions of the
projected financial information set forth below. The projected
financial information should be read together with the
information contained in the consolidated financial statements
of the Company available in its filings with the Securities and
Exchange Commission, and the information set forth above.
Additional information relating to the principal assumptions
used in preparing the projected financial information is set
forth below.
No one has made or makes any representation to
any stockholder regarding the information included in this
projected financial information.
Projected Financial Information as of June 1, 2007
Base Case Projected Financial Information
Summary Operating Statement
Fiscal Years 2007-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending September 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
REVENUE
|
|
$
|
70.6
|
|
|
$
|
82.1
|
|
|
$
|
99.6
|
|
|
$
|
120.5
|
|
COST OF REVENUE
|
|
|
62.4
|
|
|
|
60.2
|
|
|
|
68.0
|
|
|
|
84.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
8.2
|
|
|
|
21.9
|
|
|
|
31.6
|
|
|
|
35.7
|
|
OPERATING EXPENSES
|
|
|
44.6
|
|
|
|
29.7
|
|
|
|
30.7
|
|
|
|
31.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS
|
|
|
(36.4
|
)
|
|
|
(7.8
|
)
|
|
|
0.9
|
|
|
|
3.8
|
|
OTHER INCOME, NET
|
|
|
6.1
|
|
|
|
10.8
|
|
|
|
6.4
|
|
|
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
$
|
(30.3
|
)
|
|
$
|
3.0
|
|
|
$
|
7.3
|
|
|
$
|
10.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA*
|
|
$
|
(31.2
|
)**
|
|
$
|
(3.8
|
)
|
|
$
|
5.2
|
|
|
$
|
8.3
|
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*
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EBITDA is a measure that is not derived in accordance with GAAP.
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**
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Does not reflect impairment of goodwill ($8.5) or inventory
write-down ($4.5) as non-cash items.
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In preparing the projected financial information, the Company
assumed revenue would increase 7% in fiscal year 2008, 18% in
fiscal year 2009, and 14% in fiscal year 2010. The Company
assumed revenue for existing
F-2
products would be $68.2 million, $71.6 million,
$72.0 million, and $73.3 million in fiscal years 2007,
2008, 2009 and 2010, respectively. Increased revenue for
existing products is attributed to increased revenue projections
from the Companys operations in Hsinchu, Taiwan, which are
slightly offset by decreased revenue projections from the
Companys operations in Woodland Hills, California of
existing products principally due to reduced average selling
prices. The Company assumed revenue for new products would be
$2.4 million, $10.5 million, $27.6 million and
$47.2 in fiscal years 2007, 2008, 2009 and 2010, respectively.
In preparing the projected financial information, the Company
assumed gross profit would increase $13.7 million, or 167%,
for the fiscal year 2008, $9.7 million, or 44%, for fiscal
year 2009, and $4.1 million, or 13%, for fiscal year 2010.
The increase in gross profit,
year-over-year,
is primarily attributed to anticipated higher revenues and lower
cost of revenues. The Companys cost of revenue consists
principally of materials, as well as salaries and related
expenses for manufacturing personnel as well as stock-based
compensation, manufacturing overhead and provisions for lower of
cost or market, excess and obsolete inventory. The lower cost of
revenue is due to a reduction in the cost of laser components
(FP TOSA and DFB lasers to be manufactured at the Companys
operations in Hsinchu, Taiwan) and lower costs related to the
transfer of manufacturing to China.
In preparing the projected financial information, the Company
assumed the income (loss) from operations would increase
from $(36.4) million in fiscal 2007 to
$(7.8) million in fiscal 2008 and increase to
$0.9 million in fiscal 2009 and $3.8 million in
fiscal 2010. The income (loss) from operations is
defined as gross profit less operating expenses. Operating
expenses include research and development, sales and marketing,
general and administrative, transitional costs for contract
manufacturing and impairment of goodwill. The Company assumed
research and development expenses for its operations in Woodland
Hills, California would increase 3.5% year-over-year, from
$10.8 million in fiscal 2007 to $11.9 million in
fiscal 2010. Research and development expenses for the
Companys Hsinchu, Taiwan operations would increase
$0.3 million, or 18% to $2.0 million, in
fiscal 2008, and then 3.5%, year-over-year, in
fiscal 2009 and 2010. The Company assumed sales and
marketing expenses, on a consolidated basis, would increase 3.5%
year-over-year, from $5.6 million in fiscal 2007 to
$6.4 million in fiscal 2010. The Company assumed
general and administrative expenses would decrease from
$14.8 million in fiscal 2007 to $10.7 million in
fiscal 2008, primarily due to a reduction in severance,
legal and accounting expenses, and then increase 3.5%,
year-over-year, in fiscal 2009 and 2010. Transitional costs
for contract manufacturing of $3.2 million in
fiscal 2007 are not projected in fiscal 2008 through
2010 as it relates solely to the then expected transfer of
manufacturing to China by the end of fiscal 2007.
Impairment of goodwill of $8.5 million represents the
impairment charge taken in fiscal 2007 on the
Companys Woodland Hills, California operations.
In preparing the projected financial information, the Company
assumed other income, net would increase from $6.1 million
in fiscal 2007 to $10.8 million in fiscal 2008
and decrease to $6.4 million in 2009 and $6.7 million
in fiscal 2010. Other income in fiscal 2008 included
$5.6 million of interest income and $5.2 million of
projected gain on the sale of the Companys Woodland Hills,
California facility. The Company assumed interest income of
$5.6 million, $6.4 million and $6.7 million in
fiscal 2008, 2009 and 2010, respectively, based upon
investing the Companys available cash, cash equivalents
and marketable securities.
EBITDA is defined as income (loss) from operations before
depreciation and amortization. In preparing the EBITDA
projections, the Company assumed income (loss) from operations
to be ($30.3) million ($7.8) million,
$0.9 million and $3.8 million in fiscal years 2007,
2008, 2009 and 2010, respectively. The Company assumed
depreciation and amortization to be $5.2 million,
$4.0 million, $4.3 million and $4.5 million in
fiscal years 2007, 2008, 2009 and 2010, respectively.
F-3
Summary Balance Sheet
Fiscal Years 2007-2010
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September 30,
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2007
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2008
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2009
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2010
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(In millions)
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CURRENT ASSETS
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$
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140.5
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$
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166.0
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$
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177.8
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$
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192.5
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PROPERTY, PLANT AND EQUIPMENT, NET
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29.7
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8.7
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7.0
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5.3
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OTHER ASSETS
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7.9
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7.2
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6.6
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6.2
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TOTAL ASSETS
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$
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178.1
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$
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181.9
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$
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191.4
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$
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204.0
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CURRENT LIABILITIES
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$
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15.4
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$
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14.4
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$
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15.0
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$
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15.3
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OTHER LONG TERM LIABILITIES
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0.2
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0.2
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0.2
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0.2
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TOTAL EQUITY
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162.5
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167.3
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176.2
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188.5
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TOTAL LIABILITY & EQUITY
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$
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178.1
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$
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181.9
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$
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191.4
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$
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204.0
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The Companys current assets includes cash and cash
equivalents, short-term marketable securities, accounts
receivable, inventories, prepaid expenses and other current
assets. The Company assumed that cash and cash equivalents would
increase from $65.6 million as of September 30, 2007
to $94.5 million, $101.4 million and
$108.1 million as of September 30, 2008, 2009 and
2010, respectively, based upon net income less non-cash items,
primarily depreciation and amortization expense, changes in
working capital, the purchase of property, plant and equipment
and net proceeds received from the sale of the Companys
Woodland Hills, California facility in fiscal 2008. The Company
assumed that marketable securities and prepaid and other current
assets of $36.9 million would remain constant during fiscal
2008 through 2010. The Company assumed that accounts receivable
of $12.4 million, $15.0 million and $18.1 million
as of September 30, 2008, 2009 and 2010, respectively,
would be based upon an average day sales outstanding of
57 days, based upon a 365 day fiscal year. The Company
assumed that inventory of $22.2 million, $24.5 million
and $29.3 million as of September 30, 2008, 2009 and
2010, respectively, would be based upon turnover of
2.7 times in fiscal 2008, 2.8 times in fiscal 2009 and
2.9 times in fiscal 2010.
The Company assumed property, plant and equipment would decrease
by $21.0 million in fiscal 2008 to $8.7 million,
primarily due to the sale of the Companys Woodland Hills,
California facility with a projected net book value of
$19.4 million. The Company assumed capital expenditures of
$1.6 million, $2.0 million and $2.4 million in
fiscal 2008, 2009 and 2010, respectively.
The Companys other non-current assets primarily consists
of intangible assets and a $5.0 million minority interest
in StrataLight Communications, Inc.
The Companys current liabilities include accounts payable,
accrued payroll related expenses, accrued bonuses and other
accrued expenses. The Company assumed that current liabilities
would decrease 6.1% in fiscal 2008 and increase 3.8% and 2.2% in
fiscal 2009 and 2010, respectively.
Projected Financial Information as of June 1, 2007
Extended Case Projected Financial Information
Revenue,
EBITDA and EBIT
Fiscal Years 2011-2015*
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Fiscal Year Ending September 30,
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2011
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2012
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2013
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2014
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2015
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(in millions)
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REVENUE
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$
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144.6
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$
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170.6
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$
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197.9
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$
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225.6
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$
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252.7
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EBITDA
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$
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10.8
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$
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13.2
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$
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15.8
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$
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18.6
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$
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21.5
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EBIT
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$
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6.7
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$
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9.3
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$
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11.9
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$
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14.1
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$
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16.4
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*Additional projections for Years 2011-2015 are included in
Exhibit (c)(2) of Schedule 13E-3.
In preparing the projected financial information, the Company
assumed revenues would increase 20% in fiscal year 2011, 18% in
fiscal year 2012, 16% in fiscal year 2013, 14% in fiscal year
2014 and 12% in fiscal year 2015.
F-4
The Company assumed that the annual revenue dollar increase
would remain relatively constant after an increase in new
product revenues from 2007 through 2010 offset by a reduction in
the average selling prices of existing products.
In preparing the EBITDA projections, the Company assumed that
EBITDA, as a percentage of revenues, would be 7.5% in fiscal
2011, 7.8% in fiscal 2012, 8.0% in fiscal 2013, 8.3% in fiscal
2014 and 8.5% in fiscal 2015. The percentages were based upon a
normalization of the percentages from (44.2)% in fiscal 2007,
(4.6)% in fiscal 2008, 5.2% in fiscal 2009 and 6.9% in fiscal
2010.
EBIT is defined as EBITDA plus depreciation and amortization.
The Company assumed depreciation and amortization to be
$4.2 million, $3.9 million, $4.0 million,
$4.5 million and $5.1 million in fiscal years 2011,
2012, 2013, 2014 and 2015, respectively.
F-5
PRELIMINARY
COPY
SUBJECT TO COMPLETION, DATED OCTOBER 1, 2007
PLEASE
DETACH AND MAIL IN THE ENVELOPE PROVIDED
OPTICAL
COMMUNICATION PRODUCTS, INC.
PROXY
Special Meeting of Stockholders, October 31, 2007
This Proxy is Solicited on Behalf of the Board of Directors
of
Optical Communication Products, Inc.
The undersigned revokes all previous proxies, acknowledges
receipt of the Notice of the Special Meeting of Stockholders to
be held October 31, 2007 and the Proxy Statement and
appoints Philip F. Otto and Frederic T. Boyer, and each of them,
the Proxy of the undersigned, with full power of substitution,
to vote all shares of Common Stock of Optical Communication
Products, Inc. (the
Company
) which the
undersigned is entitled to vote, either on his or her own behalf
or on behalf of any entity or entities, at the Special Meeting
of Stockholders of the Company to be held at 6101 Variel Avenue,
Woodland Hills, California 91367 on October 31, 2007 at
10:00 a.m. Pacific Time (the
Special
Meeting
), and at any adjournment or postponement
thereof, with the same force and effect as the undersigned might
or could do if personally present thereat. The shares
represented by this Proxy shall be voted in the manner set forth
on the reverse side.
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SEE REVERSE SIDE
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CONTINUED AND TO BE
SIGNED AND DATED ON REVERSE SIDE
|
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SEE REVERSE SIDE
|
PRELIMINARY
COPY
SUBJECT TO COMPLETION, DATED OCTOBER 1, 2007
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND
2.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
þ
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1. Approval and Adoption of Merger Agreement
|
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FOR
Approval and
Adoption of Merger
Agreement
o
|
|
AGAINST
Approval and
Adoption of Merger
Agreement
o
|
|
2. Adjournment of the Special Meeting, if necessary
to solicit additional proxies.
|
|
FOR
Adjournment of the
Special Meeting, if
necessary to solicit
additional proxies
o
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AGAINST
Adjournment of the
Special Meeting, if
necessary to solicit
additional proxies
o
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|
3. In accordance with the discretion of the proxy
holders, to act upon all matters incident to the conduct of the
meeting and upon other matters as may properly come before the
Special Meeting.
|
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This Proxy when properly executed, will be vote as specified
above.
If no specification is made, this Proxy will be voted
FOR approval and adoption of the merger agreement
and For the other listed proposals.
WHETHER OR NOT YOU ATTEND THE SPECIAL MEETING IN PERSON, YOU
ARE URGED TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN
ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE SPECIAL
MEETING.
|
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Please print the name(s) appearing on each share certificate(s)
over which you have voting authority:
|
To change your address on your account, please check the box at
the right and indicate your new address in the address space
below. Please note that changes to the registered name(s) on the
account may not be submitted via this method
|
|
o
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Please check the box at the right if you plan to attend the
meeting
|
|
o
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|
Dated:
Signature
Name and Title
Optical Communication (NASDAQ:OCPI)
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