Exhibit 10.1


 


October 25,
2010


 


Near
Margalit


Chief
Executive Officer


Source
Photonics, Inc.


20550
Nordhoff Street


Chatsworth,
CA  91311


 


Dear
Near:


 


1.             We thank you for your many contributions with Source
Photonics, Inc. (the “Company”), and would like to ensure that you remain
committed to the Company’s goals and targets. 
Therefore, if the Company should complete a Transaction (as defined
below) on or prior to May 21, 2011, then MRV will pay you a lump sum cash
payment of $695,999.  In order to earn
this bonus, you must be employed continuously through the date of the
Transaction, and you must not have provided notice of your termination as of
the date of the Transaction.  The bonus
will be paid, less applicable withholdings, within 30 days after completion of
the Transaction.


 


2.             A “Transaction” is defined as: (a) the acquisition
by any person, other than by the Company, its parent, or any of the parent’s
subsidiaries, of beneficial ownership of 50% or more of the combined voting
power of the Company’s then outstanding voting securities; (b) purchase of
a majority of the shares of the Company’s Common Stock under a tender offer or
exchange offer, other than an offer by the Company; or (c) completion of a
merger, liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company, in each case that does not
result in the Company’s parent retaining direct or indirect control of the
Company.  For purposes of clarification,
a “Transaction” does not include an initial public offering of the Company.


 


3.             Eligibility to earn a bonus under this letter agreement
is not an employment offer or contract by the Company.  Therefore, your employment status remains “employment-at-will,”
which means there is no guarantee of employment for any specified period of
time and both you or the Company can terminate the employment relationship at
any time, with or without cause and for any reason or no reason.  If your employment terminates for any reason
prior to the completion of a Transaction or if a Transaction is not completed
on or prior to May 21, 2011, you will not receive any payment pursuant to
this letter agreement.


 


4.             This letter agreement supersedes any prior agreements or
understandings, oral or written, between you and the Company with respect to
the subject matter hereof, and constitutes the entire agreement of the parties
with respect thereto.  This letter agreement shall be binding upon and
inure to the benefit of you and your estate, and the Company and any successor
of the Company or affiliate of a successor to the Company, but neither this
letter agreement nor any rights arising hereunder may be assigned or pledged by
you.  This letter agreement shall not be
varied, altered, modified, cancelled, changed or in any way amended except by
our mutual agreement in a written instrument executed by both parties or our
legal representatives.  In the event that
any provision or portion of this letter agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions of this
letter agreement shall be unaffected and shall remain in full force and effect.
To the extent not preempted by Federal law, the provisions of this letter
agreement shall be construed and enforced in accordance with the laws of the
State of California.


 

















 


5.             Except with respect to the cash bonus payable to you
pursuant to Paragraph 1 hereof, as a material inducement to the parties to
enter into that certain Stock Purchase Agreement, by and among MRV
Communications, Inc., the Company, Source Photonics Santa Clara, Inc.,
and Magnolia Source B.V., you hereby forever fully and irrevocably waive your
right to receive any other payment or benefit in connection with a Transaction,
whether payable pursuant to the terms of that certain Executive Retention
Agreement, dated as of August 23, 2010, by and between you and the Company
(the “Retention Agreement”), or any other plan, arrangements or agreement with
the Company or any of its affiliates.  To
the extent that you would otherwise become entitled to accelerated vesting,
extended exercisability and/or severance payments and benefits under the
Retention Agreement or any other plan, arrangements or agreement with the
Company or any of its affiliates, in any case entered into prior to the date of
the Transaction, as applicable, the terms and conditions of this Paragraph 5
shall control such payments and/or benefits in their entirety.


 


[Signature Page Follows]


 

















 


We
look forward to a successful completion of 2010 for you and for us as a company
and appreciate your contributions towards this achievement. Please acknowledge
your acceptance of this offer by signing in the space provided below and return
a copy to me.


 


 


	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
  /s/
  Jennifer Hankes Painter

  	
   

  
	
   

  	
   

  
	
  Jennifer
  Hankes Painter

  	
   

  
	
  VP,
  General Counsel for

  	
   

  
	
  Source
  Photonics, Inc. and MRV Communications, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED
  AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Near Margalit

  	
   

  
	
  Near
  Margalit