Exhibit 10.27

 

MRV COMMUNICATIONS, INC.

1997

INCENTIVE STOCK OPTION PLAN

AND

NONSTATUTORY STOCK OPTION PLAN

(AS ADOPTED ON NOVEMBER 11, 1997 AND

AMENDED AUGUST 3, 1998, OCTOBER 25, 1999, OCTOBER 31, 2000

AND NOVEMBER 1, 2001 (SUBJECT TO STOCKHOLDER APPROVAL)

(GIVES EFFECT TO TWO-FOR-ONE STOCK SPLIT EFFECTED MAY 11, 2000)

 

1.  NAME, EFFECTIVE DATE AND PURPOSE.

 

(a) This Plan document is intended to implement and govern two separate stock
option plans of MRV COMMUNICATIONS, INC., a Delaware corporation (the
“Company”): the Incentive Stock Option Plan (“Plan A”) and the Nonstatutory
Stock Option Plan (“Plan B”).  Plan A provides for the granting of options that
are intended to qualify as incentive stock options (“Incentive Stock Options”)
within the meaning of Section 422A(b) of the Internal Revenue Code, as amended. 
Plan B provides for the granting of options that are not intended to so
qualify.  Unless specified otherwise, all the provisions of this Plan relate
equally to both Plan A and Plan B and are condensed for convenience into one
Plan document.

 

(b) Plan A and Plan B are each established effective as of November 11, 1997.
 The purpose of Plan A and Plan B (sometimes together referred to as the “Plan”
or this “Plan”) is to promote the growth and general prosperity of the Company
and its Affiliated Companies.  This Plan will permit the Company to grant
options (“Options”) to purchase shares of its common stock (“Common Stock”).
 The granting of Options will help the Company attract and retain the best
available persons for positions of substantial responsibility and will provide
certain key employees with an additional incentive to contribute to the success
of the Company and its Affiliated Companies.  For purposes of this Plan, the
term “Affiliated Companies” shall mean any component member of a controlled
group of corporations, as defined under Internal Revenue Code Section 1563, in
which the Company is also a component member.

 

2.  ADMINISTRATION.

 

(a) The Plan shall be administered by the Board of Directors of the Company (the
“Board”).

 

(b) The Board shall have sole authority, in its absolute discretion, to
determine which of the eligible persons of the Company and its Affiliated
Companies shall receive Options (“Optionees”), and, subject to the express
provisions and restrictions of this Plan, shall have sole authority, in its
absolute discretion, to determine the time when Options shall be granted, the
terms and conditions of an Option other than those terms and conditions fixed
under this Plan, the number of shares which may be issued upon exercise of an
Option and shall have authority to do everything necessary or appropriate to
administer the Plan.  All decisions, determinations and interpretations of the
Board shall be final and binding on all Optionees.

 

(c) Definitions:

 

(i) Restricted Stockholder: An individual who, at the time an Option is granted
under either Plan A or Plan B, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the employer corporation or of
its Parent Corporation or Subsidiary Corporation, with stock ownership to be
determined in light of the attribution rules set forth in Section 425(d) of the
Internal Revenue Code.

 

(ii) Parent Corporation: A corporation as defined in Section 425(e) of the
Internal Revenue Code.

 

(iii) Subsidiary Corporation: A corporation as defined in Section 425(f) of the
Internal Revenue Code.

 

(iv) Officer: The chief executive officer, president, chief financial officer,
chief accounting officer, any vice president in charge of a principal business
function (such as sales, administration, or finance) and any other person who
performs similar policy-making functions for the Company.

 

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3.  ELIGIBILITY.

 

(a) Plan A: The Board (or the Committee, if so authorized by the Board) may, in
its discretion, grant one or more Options under Plan A to any key management
employee of the Company or its Affiliated Companies, including any employee who
is a director of the Company or of any of its Affiliated Companies presently
existing or hereinafter organized or acquired.  Such Options may be granted to
one or more such employees without being granted to other eligible employees, as
the Board may deem fit.

 

(b) Plan B: The Board (or the Committee, if so authorized by the Board), may, in
its discretion, grant one or more Options under Plan B to any key management
employee, any employee or non-employee director of the Company or its Affiliated
Companies, including any employee who is a Director of the Company or of any of
its Affiliated Companies presently existing or hereinafter organized or acquired
or any person who performs consulting or other services for the Company or its
Affiliated Companies and who is designated by the Board as eligible to
participate in Plan B.  Such Options may be granted to one or more such persons
without being granted to other eligible persons, as the Board may deem fit.

 

4.  STOCK TO BE OPTIONED.

 

(a) The maximum aggregate number of shares which may be optioned and sold under
Plan A and Plan B is four million nine hundred thousand (4,900,000) shares of
authorized Common Stock of the Company.  The foregoing constitutes an absolute
cumulative limitation on the total number of shares that may be optioned under
both Plan A and B.  Therefore, at any particular date the maximum aggregate
number of shares which may be optioned under Plan A is equal to four million
nine hundred thousand (4,900,000) the number of shares previously optioned under
both Plan A and Plan B and the maximum aggregate number of shares which may be
optioned under Plan B is equal to four million nine hundred thousand (4,900,000)
minus the number of shares which have been previously optioned under both Plan A
and Plan B.  All shares to be optioned and sold under either Plan A or Plan B
may be either authorized but unissued shares or shares held in the treasury.

 

(b) Shares of Common Stock that: (i) are repurchased by the Company after
issuance hereunder pursuant to the exercise of an Option, or (ii) are not
purchased by the Optionee prior to the expiration or termination of the
applicable Option, shall again become available to be covered by Options to be
issued hereunder and shall not, as of the effective date of such repurchase or
expiration, be counted as covered by an outstanding Option for purposes of the
above-described maximum number of shares which may be optioned hereunder.

 

5.  OPTION PRICE.

 

The Option Price for shares of Common Stock to be issued under either Plan A or
Plan B shall be 100% of the fair market value of such shares on the date on
which the Option covering such shares is granted by the Board (or the Committee,
if authorized by the Board), except that if on the date on which such Option is
granted the Optionee is a Restricted Stockholder, than such Option Price for
Options granted under Plan A shall be 110% of the fair market value of the
shares of Common Stock subject to the Option on the date such Option is granted
by the Board (or the Committee, if so authorized).  The fair market value of
shares of Common Stock for all purposes of this Plan is to be determined by the
Board (or the Committee, if so authorized by the Board) in its sole discretion,
exercised in good faith.

 

6.  TERM OF PLAN.

 

Plan A and Plan B shall become effective on November 11 1997; both Plan A and
Plan B shall continue in effect until November 10, 2007 unless terminated
earlier by action of the Board.  No Option may be granted hereunder after
November 10, 2007.

 

7.  EXERCISE OF OPTION.

 

Subject to the actions, conditions and/or limitations set forth in this Plan
document and/or any applicable Stock Option Agreement entered into

 

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hereunder, Options granted under this Plan shall be exercisable in accordance
with the following rules:

 

(a) Subject to the specific provisions of this Section 7, Options shall become
exercisable at such times and in such installments (which may be cumulative) as
the Board shall provide in the terms of each individual Option; provided,
however, each Option granted under the Plan shall become exercisable in
installments of not less than 20% of the number of shares covered by such Option
each year from the Option Grant Date; and provided, further, that by a
resolution adopted after an Option is granted the Board may, on such terms and
conditions as it may determine to be appropriate and subject to the specific
provisions of this Section 7, accelerate the time at which such Option or
installment thereof may be exercised.  For purposes of this Plan, any accrued
installment of an Option granted hereunder shall be referred to as an “Accrued
Installment.”

 

(b) Subject to the specific restrictions contained in this Section 7, an Option
may be exercised when Accrued Installments accrue, as provided in the terms
under which such Option was granted, for a period of up to ten (10) years from
the Option Grant Date with respect to Options granted under Plan A and for a
period of up to ten (10) years from the Option Grant Date with respect to
Options granted under Plan B.  In no event shall any Option be exercised on or
after the expiration of said maximum applicable period, regardless of the
circumstances then existing (including but not limited to the death or
termination of employment of the Optionee).

 

(c) The Board (or the Committee if so authorized by the Board) shall fix the
expiration date of the Option (the “Option Expiration Date”) at the time the
Option grant is authorized.

 

8.  RULES APPLICABLE TO CERTAIN DISPOSITIONS.

 

(a) Notwithstanding the foregoing provisions of Section 7, in the event the
Company or the Stockholders of the Company enter into an agreement to dispose of
all or substantially all of the assets or capital stock of the Company by means
of a sale, merger, consolidation, reorganization, liquidation, or otherwise, an
Option shall become immediately exercisable with respect to the full number of
shares subject to that Option during the period commencing as of the date of
execution of such agreement and ending as of the earlier of:

 

(i) the Option Expiration Date; or

 

(ii) the date on which the disposition of assets or capital stock contemplated
by the agreement is consummated.  The exercise of any Option that was made
exercisable solely by reason of this Subsection 8(a) shall be conditioned upon
the consummation of the disposition of assets or stock under the above
referenced agreement.  Upon the consummation of any such disposition of assets
or stock, this Plan and any unexercised Options issued hereunder (or any
unexercised portion thereof) shall terminate and cease to be effective.

 

(b) Notwithstanding the foregoing, in the event that any such agreement shall be
terminated without consummating the disposition of said stock or assets:

 

(i) any unexercised non-vested installments that had become exercisable solely
by reason of the provisions of Subsection 8(a) shall again become non-vested and
unexercisable as of said termination of such agreement, and

 

(ii) the exercise of any option that had become exercisable solely by reason of
this Subsection 8(a) shall be deemed ineffective and such installments shall
again become non-vested and unexercisable as of said termination of such
agreement.

 

(c) Notwithstanding the provisions set forth in Subsection 8(a), the Board (or
the Committee, if so authorized by the Board) may, at its election and subject
to the approval of the corporation purchasing or acquiring the stock or assets
of the Company (the “surviving corporation”), arrange for the Optionee to
receive upon surrender of Optionee’s Option a new option covering shares of the
surviving corporation in the same proportion, at an equivalent option price and
subject to the same terms and conditions as the old Option.  For purposes of

 

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the preceding sentence, the excess of the aggregate fair market value of the
shares subject to such new option immediately after consummation of such
disposition of stock or assets over the aggregate option price of such shares of
the surviving corporation shall not be no more than the excess of the aggregate
fair market value of all shares subject to the old Option immediately before
consummation of such disposition of stock or assets over the aggregate Option
Price of such shares of the Company, and the new option shall not give the
Optionee additional benefits which such Optionee did not have under the old
Option or deprive the Optionee of benefits which the Optionee had under the old
Option.  If such substitution of options is effectuated, the Optionee’s rights
under the old Option shall thereupon terminate.

 

9.  MERGERS AND ACQUISITIONS.

 

(a) If the Company at any time should succeed to the business of another
corporation through a merger or consolidation, or through the acquisition of
stock or assets of such corporation, Options may be granted under the Plan to
option holders of such corporation or its subsidiaries, in substitution for
options or rights to purchase stock of such corporation held by them at the time
of succession.  The Board (or the Committee, if so authorized by the Board)
shall have sole and absolute discretion to determine the extent to which such
substitute Options shall be granted (if at all), the person or persons within
the eligible group to receive such substitute Options (who need not be all
option holders of such corporation), the number of Options to be received by
each such person, the Option Price of such Option, and the terms and conditions
of such substitute Options; provided, however, that the terms and conditions of
the substitute Options shall comply with the provisions of Section 425 of the
Code, such that the excess of the aggregate fair market value of the shares
subject to such substitute Option immediately after the substitution or
assumption over the aggregate option price of such shares is not more that the
excess of the aggregate fair market value of all shares subject to the
substitute Option immediately before such substitution or assumption over the
aggregate option price of such shares, and the substitute Option or the
assumption of the old option does not give the holder thereof additional
benefits which he or she did not have under such old option.

 

(b) Notwithstanding anything to the contrary herein, no Option shall be granted,
nor any action taken, permitted or omitted, which could cause the Plan, or any
Options granted hereunder as to which Rule 16b-3 under the Securities Exchange
Act of 1934 may apply, not to comply with such Rule.

 

10.  TERMINATION OF EMPLOYMENT.

 

(a) In the event that the Optionee’s employment, directorship or consulting or
other arrangement with the Company (or Affiliated Company) is terminated for any
reason other than death or disability, any unexercised Accrued installments of
the Option granted hereunder to such terminated Optionee shall expire and become
unexercisable as of the earlier of:

 

(i) the applicable Option Expiration Date; or

 

(ii) a date 30 days after such termination occurs, provided however, that the
Board (or the Committee if empowered to so act) may, in the exercise of its
discretion, extend said date up to and including a date three months following
such termination, with respect to Options granted under Plan A, or up to and
including a date two years following such termination with respect to Options
granted under Plan B.

 

(b) In the event that the Optionee’s employment, directorship or consulting or
other arrangement with the Company is terminated due to the death or disability
of the Optionee, any unexercised Accrued Installments of the Option granted
hereunder to such Optionee shall expire and become unexercisable as of the
earlier of:

 

(i) the applicable Option Expiration Date; or

 

(ii) the first anniversary of the date of death of such Optionee (if
applicable); or

 

(iii) the first anniversary of the date of the

 

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termination of employment, directorship or consulting or other arrangement by
reason of disability (if applicable).  Any such Accrued Installments of a
deceased Optionee may be exercised prior to their expiration by (and only by)
the person or persons to whom the Optionee’s Option right shall pass by will or
by the laws of descent and distribution, if applicable, subject, however, to all
of the terms and conditions of this Plan and the applicable Stock Option
Agreement governing the exercise of Options granted hereunder.

 

(c) For purposes of this Section 10, an Optionee shall be deemed employed by the
Company (or affiliated Company) during any period of leave of absence from
active employment as authorized by the Company (or Affiliated Company).

 

11.  EXERCISE OF OPTIONS.

 

(a) An Option shall be deemed exercised when written notice of such exercise has
been given to the Company at its principal business office by the person
entitled to exercise the Option and full payment in cash or cash equivalents (or
with shares of Common Stock pursuant to Section 14) for the shares with respect
to which the Option is exercised has been received by the Company.

 

(b) An Option may be exercised in accordance with this Section 11 as to all or
any portion of the shares covered by any Accrued Installment of the Option from
time to time during the applicable Option period, but shall not be exercisable
with respect to fractions of a share.

 

(c) As soon as practicable after any proper exercise of an Option in accordance
with the provisions of this Plan, the Company shall, without charging transfer
or issue tax to the Optionee, deliver to the Optionee at the main office of the
Company, or such other place as shall be mutually acceptable, a certificate or
certificates representing the shares of Common Stock as to which the Option has
been exercised.  The time of issuance and delivery of the Common Stock may be
postponed by the Company for such period as may, be required for it with
reasonable diligence to comply with any applicable listing requirements of any
national or regional securities exchange and any law or regulation applicable to
the issuance and delivery of such shares.

 

12.  AUTHORIZATION TO ISSUE OPTIONS AND STOCKHOLDER APPROVAL.

 

Unless in the judgment of counsel to the Company such permit is not necessary
with respect to particular grants, Options granted under the Plan shall be
conditioned upon the Company obtaining any required permit from the California
Department of Corporations and/or other appropriate governmental agencies, free
of any conditions not acceptable to the Board, authorizing the Company to grant
such Options, provided, however, such condition shall lapse as of the effective
date of issuance of such permit(s) in a form to which the Company does not
object within sixty (60) days.  The grant of Options under the Plan also is
conditioned on approval of the Plan by the vote or consent of the holders of a
majority of the outstanding shares of the Company’s Common Stock and no Option
granted hereunder shall be effective or exercisable unless and until the Plan
has been so approved.

 

13.  LIMIT ON VALUE OF OPTIONED SHARES.

 

The aggregate fair market value (determined as of the Option Grant Date) of the
shares of Common Stock to which Options granted under Plan A are exercisable for
the first time by any employee of the Company during any calendar year under all
incentive stock option plans of the Company and its Affiliated Companies shall
not exceed $100,000.  The limitation imposed by this Section 13 shall not apply
with respect to Options granted under Plan B.

 

14.  PAYMENT OF EXERCISE PRICE WITH COMPANY STOCK.

 

The Board (or the Committee, if so authorized) may provide that, upon exercise
of the Option, the Optionee may elect to pay for all or some of the shares of
Common Stock underlying the Option with shares of Common Stock of the Company
previously acquired and owned at the time of exercise by the Optionee, subject
to all restrictions and limitations of applicable laws, rules and regulations,
including Section 425(c)(3) of the Internal Revenue Code, and

 

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provided that the Optionee will make representations and warranties satisfactory
to the Company regarding his or her title to the shares used to effect the
purchase, including without limitation representations and warranties that the
Optionee has good and marketable title to such shares free and clear of any and
all liens, encumbrances, charges, equities, claims, security interests, options
or restrictions and has full power to deliver such shares without obtaining the
consent or approval of any person or governmental authority other than those
which have already given consent or approval in a form satisfactory to the
Company.  The equivalent dollar value of the shares used to effect the purchase
shall be the fair market value of the shares on the date of the purchase as
determined by the Board (or the Committee, if so authorized) in its sole
discretion, exercised in good faith.

 

The terms and conditions of Options granted under the Plan shall be evidenced by
a Stock Option Agreement (hereinafter referred to as the ‘Agreement’) executed
by the Company and the person to whom the Option is granted.  Each agreement
shall contain the following provisions:

 

(a) A provision fixing the number of shares which may be issued upon exercise of
the Option;

 

(b) A provision establishing the Option exercise price per share;

 

(c) A provision establishing the times and the installments in which Options may
be exercised, provided, however, such times and installments shall not be less
than 20% of the number of shares covered by such Option each year from the
Option Grant Date;

 

(d) A provision incorporating therein this Plan by reference;

 

(e) A provision clarifying which Options are intended to be Incentive Stock
Options under Plan A and which are intended to be nonstatutory stock options
under Plan B;

 

(f) A provision fixing the maximum duration of the Option as not more than ten
(10) years from the Option Grant Date for Options granted under either Plan A or
Plan B;

 

(g) Such representations and warranties by the Optionee as may be required by
Section 25 of this Plan or as may be required by the Board (or the Committee) in
its discretion;

 

(h) Any other restriction (in addition to those established under this Plan) as
may be established by the Board (or the Committee) with respect to the exercise
of the Option, the transfer of the Option, and/or the transfer of the shares
purchased by exercise of the Option, provided that such restrictions are not in
conflict with this Plan; and

 

(i) Such other terms and conditions not inconsistent with this Plan as may be
established by the Board (or the Committee).

 

15.  TAXES, FEES AND EXPENSES.

 

The Company shall pay all original issue and transfer taxes (but not income
taxes, if any) with respect to the grant of Options and/or the issue and
transfer of shares pursuant to the exercise of such Options, and all other fees
and expenses necessarily incurred by the Company in connection therewith, and
will from time to time use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.

 

16.  WITHHOLDING OF TAXES.

 

The grant of Options hereunder and the issuance of Common Stock pursuant to the
exercise of such Options is conditioned upon the Company’s reservation of the
right to withhold, in accordance with any applicable law, from any compensation
payable to the Optionee any taxes required to be withheld by federal, state or
local law as a result of the grant or exercise of any such Option.

 

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17.  AMENDMENT OR TERMINATION OF THE PLAN.

 

(a) The Board may amend this Plan from time to time in such respects as the
Board may deem advisable, provided, however, that no such amendment shall
operate to (i) affect adversely an Optionee’s rights under this Plan with
respect to any Option granted hereunder prior to the adoption of such amendment,
except as may be necessary, in the judgment of counsel to the Company, to comply
with any applicable law, (ii) increase the maximum aggregate number of shares
which may be optioned and sold under the Plan (unless Stockholders approve such
increase), (iii) change the manner of determining the Option exercise price,
(iv) change the classes of persons eligible to receive Options under the Plan,
or (v) extend the maximum duration of the Option or the Plan.

 

(b) The Board may at any time terminate this Plan.  Any such termination of the
Plan shall not, without the written consent of the Optionee, alter the terms of
Options already granted and such Options shall remain in full force and effect
as if this Plan had not been terminated.

 

18.  OPTIONS NOT TRANSFERABLE.

 

Options granted under this Plan may not be sold, pledged, hypothecated,
assigned, encumbered, gifted or otherwise transferred or alienated in any
manner, either voluntarily or involuntarily by operation of law, otherwise than
by will or the laws of descent of distribution, and may be exercised during the
lifetime of an Optionee only by such Optionee.

 

19.  NO RESTRICTIONS ON TRANSFER OF STOCK.

 

Common Stock issued pursuant to the exercise of an Option granted under this
Plan (hereinafter “Optioned Stock”), or any interest in such Optioned Stock, may
be sold, assigned, gifted, pledged, hypothecated, encumbered or otherwise
transferred or alienated in any manner by the holder(s) thereof, subject,
however, to any representations or warranties requested under Section 25 of this
Plan and also subject to compliance with any applicable federal, state or other
local law, regulation or rule governing the sale or transfer of stock or
securities.

 

20.  RESERVATION OF SHARES OF COMMON STOCK.

 

The Company, during the term of this Plan, will at all times reserve and keep
available such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements of the Plan.

 

21.  RESTRICTIONS ON ISSUANCE OF SHARES.

 

The Company, during the term of this Plan, will use its best efforts to seek to
obtain from the appropriate regulatory agencies any requisite authorization in
order to grant Options or issue and sell such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of the Plan.  The
inability of the Company to obtain from any such regulatory agency having
jurisdiction thereof the authorization deemed by the Company’s counsel to be
necessary to the lawful grant of Options or the issuance and sale of any shares
of its stock hereunder or the inability of the Company to confirm to its
satisfaction that any grant of Options or issuance and sale of any shares of
such stock will meet applicable legal requirements shall relieve the Company of
any liability in respect of the non-issuance or sale of such stock as to which
such authorization or confirmation have not been obtained.

 

22.  NOTICES.

 

Any notice to be given to the Company pursuant to the provisions of this Plan
shall be addressed to the Company in care of its Secretary at its principal
office, and any notice to be given to a person to whom an Option is granted
hereunder shall be addressed to him or her at the address given beneath his or
her signature on his or her Stock Option Agreement, or at such other address as
such person or his or her transferee (upon the transfer of Optioned

 

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Stock) may hereafter designate in writing to the Company.  Any such notice shall
be deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered or certified, and deposited, postage and
registry or certification fee prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service.  It shall be the
obligation of each Optionee and each transferee holding Optioned Stock to
provide the Secretary of the Company, by letter mailed as provided hereinabove,
with written notice of his or her correct mailing address.

 

23.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

 

If the outstanding shares of Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares of
the Company through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, then an appropriate and
proportionate adjustment shall be made in the number or kind of shares which may
be issued upon exercise of Options granted under the Plan; provided, however
that no such adjustment need be made if, upon the advice of counsel, the Board
determines that such adjustment may result in the receipt of federally taxable
income to holders of Options granted hereunder or the holders of Common Stock or
other classes of the Company’s securities.

 

24.  REPRESENTATIONS AND WARRANTIES.

 

As a condition to the grant of any Option hereunder or the exercise of any
portion of an Option, the Company may require the person to be granted or
exercising such Option to make any representation and/or warranty to the Company
as may, in the judgment of counsel to the Company, be required under any
applicable law or regulation, including, but not limited to, a representation
and warranty that the Option and/or shares issuable or issued upon exercise of
such Option are being acquired only for investment, for such person’s own
account and without any present intention to sell or distribute such Option or
shares, as the case may be, if, in the opinion of counsel for the Company, such
representation is required under the Securities Act of 1933, the California
Corporate Securities Law of 1968 or any other applicable law, regulation or
rule of any governmental agency.

 

25.  NO ENLARGEMENT OF EMPLOYEE RIGHTS.

 

This Plan is purely voluntary on the part of the Company, and while the Company
hopes to continue it indefinitely, the continuance of the Plan shall not be
deemed to constitute a contract between the Company and any employee, or to be
consideration for or a condition of the employment of any employee.  Nothing
contained in the Plan shall be deemed to give any employee the right to be
retained in the employ of the Company or its Affiliated Companies, or to
interfere with the right of the Company or an Affiliated Company to discharge or
retire any employee thereof at any time.  No employee shall have any right to or
interest in Options authorized hereunder prior to the grant of such an Option to
such employee, and upon such grant he or she shall have only such rights and
interests as are expressly provided herein, subject, however, to all applicable
provisions of the Company’s Certificate of Incorporation, as the same may be
amended from time to time.

 

26.  INFORMATION TO OPTION HOLDERS.

 

During the period any options granted to employees of the Company remain
outstanding, such employee-option holders shall be entitled to receive, on an
annual or other periodic basis, financial and other information regarding the
Company.  The Board (or the Committee, if so authorized) shall exercise its
discretion with regard to the nature and extent of the financial information so
provided, giving due regard to the size and circumstances of the Company and, if
the Company provides annual reports to its Stockholders, the Company’s practice
in connection with such annual reports.  Notwithstanding the above, if the
issuance of options under either Plan A or Plan B is limited to key employees
whose duties in connection with the Company assure their access to equivalent
information, this Section 27 shall not apply to such employees and plan.

 

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27.  LEGENDS ON STOCK CERTIFICATES.

 

Each certificate representing Common Stock issued under this Plan shall bear
whatever legends are required by federal or state law or by any governmental
agency.  In particular, unless an appropriate registration statement is filed
pursuant to the federal Securities Act of 1933, as amended, with respect to the
shares of Common Stock issuable under this Plan, each certificate representing
such Common Stock shall be endorsed on its face with the following legend or its
equivalent:

 

“Neither the Option pursuant to which the shares represented by this certificate
are issued nor said shares have been registered under the Securities Act of
1933, as amended (the “Act”).  Transfer or sale of such securities or any
interest therein is unlawful except after registration, or pursuant to an
exemption from the registration requirements, as provided in the Act and the
regulations thereunder.”

 

A copy of this Plan shall be delivered to the Secretary of the Company and shall
be shown by him or her to each eligible person making reasonable inquiry
concerning it.  A copy of this Plan also shall be delivered to each Optionee at
the time his or her Options are granted.

 

28.  INVALID PROVISION.

 

In the event that any provision of this Plan is found to be invalid or otherwise
unenforceable under any applicable law, such invalidity or unenforceability
shall not be construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be given full
force and effect to the same extent as though the invalid or unenforceable
provision was not contained herein.

 

29.  APPLICABLE LAW.

 

This Plan shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware.

 

30.  SUCCESSORS AND ASSIGNS.

 

This Plan shall be binding on and inure to the benefit of the Company and the
employees to whom an Option is granted hereunder, and such employees’ heirs,
executors, administrators, legatees, personal representatives, assignees and
transferees.

 

IN WITNESS WHEREOF, pursuant to the due authorization and adoption of this plan
by the Board on November 11, 1997 and amended on August 3, 1998, October 25,
1999, October 31, 2000 and November 1, 2001, the Company has caused this Plan to
be duly executed by its duly authorized officer.

 

 

MRV COMMUNICATIONS, INC.

 

 

 

 

BY

/s/ Noam Lotan

 

 

Noam Lotan

 

 

President and Chief Executive Officer

 

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