exv10w3



 






Exhibit 10.3




CONSENT AND WAIVER




April 4, 2007




Deutsche Bank, AG

London Branch

c/o Deutsche Bank AG

31 West 52nd Street

New York, New York 10019

Attn: Nick Brumm

        Tracy Fu




Ladies and Gentlemen:



Reference is made to that certain Convertible Note, dated as of June 4, 2003, as amended as of June
13, 2003 (the “Note”) issued by MRV Communications, Inc. (the “Company”) in favor
of Deutsche Bank, AG London Branch (the “Lender”) pursuant to a Securities Purchase
Agreement dated June 4, 2003 (the “Agreement”).



The purpose of this letter is to inform you that the Company is currently engaged in an acquisition
transaction which may impact certain covenants in the Note. As publicly announced, on January 26,
2007, the Company and its newly-formed, wholly-owned subsidiaries, Lighthouse Transition
Corporation and Lighthouse Acquisition Corporation (“LAC”), entered into an Agreement and
Plan of Merger (the “Merger Agreement”) with Fiberxon, Inc., a privately-held Delaware
corporation (“Fiberxon”), under which the Company agreed to acquire Fiberxon. The closing
of the Fiberxon acquisition is subject to the satisfaction of various conditions precedent,
including completion of an audit of Fiberxon’s financial statements for fiscal years 2006, 2005 and
2004, and obtaining necessary governmental and third-party approvals and consents in the U.S. and
China as well as other customary closing conditions. Assuming the transaction closes as expected,
through mergers of Fiberxon with the Company’s wholly owned subsidiaries (the “Mergers”),
LAC will succeed to Fiberxon’s name, business, properties and assets and will assume its
obligations and will remain a wholly-owned subsidiary of the Company. Following the closing of the
acquisition, the Company intends to contribute the capital stock of Fiberxon to Luminent, Inc.
(“Luminent”), a wholly-owned subsidiary of the Company, or otherwise combine Fiberxon’s
business with Luminent’s business.



Pursuant to the Merger Agreement, the total consideration payable to the holders of Fiberxon’s
capital stock is approximately $130,896,170. The merger consideration consists of 21,188,630
shares of the Company’s common stock (including the assumption of shares underlying the outstanding
Fiberxon stock options), an amount of cash equal to approximately $17,396,170, and an amount equal
to approximately $31,500,000 of deferred consideration payment. The number of shares of the
Company’s common stock to be issued is fixed; the calculation of the shares to be issued was
initially determined based on a price of $3.87 per share, however the option exchange ratio to be
used in the assumption of the Fiberxon options will depend on the price of the Company’s common
stock just prior to and at the time of closing. The aggregate deferred consideration payment may be
(i) increased in the event that the portion of the proceeds of the proposed initial public offering
of Luminent (the “Luminent IPO”) apportioned to the Fiberxon stockholders is more than
$31,500,000, or (ii) decreased (a) by any successful


 









 






claims made against the certain funds set aside to provide recourse to MRV for certain matters and
any expenses incurred by the Stockholder’s Agent and (b) in the event the value of the portion of
the proceeds of the Luminent IPO apportioned to the Fiberxon stockholders is less than $31,500,000.



In addition, in the interim period prior to closing of the transactions contemplated by the Merger
Agreement, the Company is also taking actions to assist Fiberxon in procuring additional lines of
credit. In doing so, the Company obtained a letter of credit in favor of one of Fiberxon’s
existing banking creditors on March 29, 2007, and may obtain one or more additional letters of
credit in favor of Fiberxon’s banking creditors, which may or may not require the Company to
provide a deposit account or other security to the issuing bank. Attached is a copy of the
Company’s Current Report on Form 8-K filed on April 3, 2007 with the U.S. Securities and Exchange
Commission reporting this financing arrangement.



In accordance with the terms of Section 8(e) of the Agreement and Section 11 of the Note, the
Company hereby requests, to the extent applicable:





	 	•	 	a waiver from the terms set forth in Section 8 of the Note, including the Lender’s
waiver and release of any Event of Default by the Company under Section 8, as a result
of the incurrence of additional Indebtedness with respect to the Deferred Consideration
Payment at the time of the closing of the Mergers, and as a result of any secured
indebtedness resulting from the Company’s provision of a letter of credit or other
guarantee in support of the issuance of one or more lines of credit of up to $5 million
in the aggregate to Fiberxon; and
	 
	 	•	 	a waiver from the terms set forth in Section 2(e)(iv)(D) of the Note, including the
Lender’s waiver and release of any Event of Default by the Company under Section
2(e)(iv)(D), as a result of any issuances of options at a per share exercise price
lower than $2.32, if applicable at the time of the determination of the option exchange
ratio and the assumption of the Fiberxon options upon closing of the Mergers.




Please indicate your agreement and written consent to the foregoing by signing this letter and
returning the executed original to the undersigned at the address set forth above within three
business days of receipt. Please also send a copy of the executed letter via facsimile to the
undersigned at (818) 407-5656. Please note, the Company intends to file a Current Report on Form
8-K reporting the scope and effect of this waiver within four days of its receipt. Consistent with
the requirements of Section 4(i) of the Agreement, the Company will provide you a copy of the
Current Report prior to its filing.




 









 







If you have any further questions, please contact either the undersigned at (818) 773-0900 or
Shoshannah D. Katz of Kirkpatrick & Lockhart Preston Gates Ellis LLP at (310) 552-5063.




	 	 	 	 	 	 	 
	 	 	Sincerely,
	 
	 	 	 	 	 	 
	 	 	MRV COMMUNICATIONS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Noam Lotan	 	 
	 

	 	 	 	 	 	 
	 	 	Name:   Noam Lotan
	 	 	Title:     Chief Executive Officer






	 	 	 
	cc:

	 	Mark A. Klein
	 

	 	Shoshannah D. Katz








	 	 	 
	AGREED AND ACCEPTED:
	 
	 	 
	DEUTSCHE BANK, AG LONDON BRANCH
	 
	 	 
	By:

	 	/s/ Sunil Hariani /s/ Andrea Leung
	 

	 	 
	 
	 	 
	Title: Director Managing Director









	 	 	 
	4/17/07
	 	 
	 

Date