Document:

kbio_Ex10_2

		
			Exhibit 10.2
		

		
			 
		

		
			 
		

		
			 
		

		
			KaloBios Pharmaceuticals, Inc.

2012 Equity Incentive Plan
		

		
			(As Amended and Restated July 14, 2015)
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		KaloBios Pharmaceuticals, Inc.
2012 Equity Incentive Plan
		

		
			ARTICLE 1.   INTRODUCTION.
		

		
			The Board adopted the Plan to become effective immediately, although no Awards were eligible to be granted prior to the Registration Date.  The Plan was amended and restated by the Board on May 8, 2015, subject to approval by the Company’s stockholders at the 2015 Annual Meeting. All share numbers herein have been adjusted to reflect the 1-for-8 reverse split of the Common Shares effected on July 14, 2015. 
		

		
			The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Service Providers to focus on critical long-range corporate objectives, (b) encouraging the attraction and retention of Service Providers with exceptional qualifications and (c) linking Service Providers directly to stockholder interests through increased stock ownership.  The Plan seeks to achieve this purpose by providing for Awards in the form of Options (which may constitute ISOs or NSOs), SARs, Restricted Shares, Stock Units and Performance Cash Awards. 
		

		
			ARTICLE 2.   ADMINISTRATION.
		

		
			2.1General.  The Plan may be administered by the Board or one or more Committees.  Each Committee shall have the authority and be responsible for such functions as have been assigned to it.
		

		
			2.2Section 162(m).  To the extent an Award is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m), the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Code Section 162(m).    
		

		
			2.3Section 16.  To the extent desirable to qualify transactions hereunder as exempt under Exchange Act Rule 16b-3, the transactions contemplated hereunder will be approved by the entire Board or a Committee of two or more “non-employee directors” within the meaning of Exchange Act Rule 16b-3.
		

		
			2.4Powers of Administrator.  Subject to the terms of the Plan, and in the case of a Committee, subject to the specific duties delegated to the Committee, the Administrator shall have the authority to (a) select the Service Providers who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) determine whether and to what extent any Performance Goals have been attained, (d) interpret the Plan and Awards granted under the Plan, (e) make, amend and rescind rules relating to the Plan and Awards granted under the Plan, including rules relating to sub-plans established for the purposes of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws, (f) impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant of any Common Shares issued pursuant to an Award, including restrictions under an 
		

		
			 
		

		

		

		 

		

			 

		

 

		insider trading policy and restrictions as to the use of a specified brokerage firm for such resales, and (g) make all other decisions relating to the operation of the Plan and Awards granted under the Plan.  
		

		
			2.5Effect of Administrator’s Decisions.  The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.
		

		
			2.6Governing Law.  The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions).    
		

		
			ARTICLE 3.   SHARES AVAILABLE FOR GRANTS.
		

		
			3.1Basic Limitation.  Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares.  The aggregate number of Common Shares1 issued under the Plan shall not exceed 810,498. Such number consists of (a) 140,391 Common Shares initially reserved under the Plan; (b) 133,371 Common Shares reserved under the Predecessor Plan that were not issued or subject to outstanding awards on the Registration Date plus Common Shares subject to outstanding awards under the Predecessor Plan that subsequently expired or lapsed unexercised, or were forfeited to or repurchased by the Company; (c) an aggregate of 224,236 Common Shares added on the first business day in 2013, 2014, and 2015 pursuant to an automatic share increase provision; and (d) an additional 312,500 Common Shares approved by the stockholders at the 2015 Annual Meeting.  The number of Common Shares that are subject to Stock Awards outstanding at any time under the Plan may not exceed the number of Common Shares that then remain available for issuance under the Plan.  The numerical limitations in this Article 3.1 shall be subject to adjustment pursuant to Article 9.
		

		
			3.2Shares Returned to Reserve.  
		

		
			(a)To the extent that Options, SARs or Stock Units granted under this Plan or under the Predecessor Plan are forfeited or expire for any other reason before being exercised or settled in full, the Common Shares subject to such Options, SARs or Stock Units shall again become available for issuance under the Plan. If Restricted Shares or Common Shares issued upon the exercise of Options or otherwise under the Plan or the Predecessor Plan are reacquired by the Company pursuant to a forfeiture provision, repurchase right at no greater than their original exercise price or purchase price (if any) or for any other reason prior to the shares having become vested, then such Common Shares shall again become available for issuance under the Plan. To the extent that an Award is settled in cash rather than Common Shares, the cash settlement shall not reduce the number of Shares available for issuance under the Plan.  
		

		
			 
		

		
			(b)Prior to the date of the 2015 Annual Meeting, the following Common Shares shall again become available for issuance under this Article 3.2: (i) Common Shares subject to an Award not delivered to a Participant because the Award is exercised through a reduction in the Common Shares subject to the Award (i.e., “net exercised”); (ii) if a SAR is 
		

		

		
			1      All share numbers have been adjusted to reflect the 1-for-3.56147 reverse split of the Common Shares effected on January 15, 2013, and the 1-for-8 reverse split of the Common Shares effected on July 13, 2015.
		

		

		

		 

		

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			settled in Common Shares, the number of Common Shares subject to the SAR that are not delivered to the Participant upon such settlement; (iii) Common Shares subject to an Award not delivered to the Participant because such Common Shares are withheld to satisfy tax withholding obligations related to the Award or are applied to pay the Exercise Price of an Option or SAR; (iv) Common Shares tendered by a Participant (either through actual delivery or attestation) to pay the Exercise Price of an Option or SAR; or (v) Common Shares reacquired by the Company, on the open market or otherwise, using cash proceeds from the exercise of an Option.  
		

		
			(c)Beginning on the date of the 2015 Annual Meeting and thereafter, the Common Shares specified in Article 3.2(b) shall no longer become available for issuance under this Article 3.2.  
		

		
			 
		

		
			3.3Awards Not Reducing Share Reserve in Article 3.1. Any dividend equivalents paid or credited under the Plan with respect to Stock Units shall not be applied against the number of Common Shares that may be issued under the Plan, whether or not such dividend equivalents are converted into Stock Units.  In addition, Common Shares subject to Substitute Awards granted by the Company shall not reduce the number of Common Shares that may be issued under Article 3.1, nor shall shares subject to Substitute Awards again be available for Awards under the Plan in the event of any forfeiture, expiration or cash settlement of such Substitute Awards.
		

		
			3.4Plan Limits.    Subject to adjustment in accordance with Article 9:  
		

		
			(a)The maximum aggregate number of Common Shares subject to Options and SARs that may be granted under this Plan during any calendar year to any one Participant shall not exceed 125,000, except that the Company may grant to a new Employee in the calendar year in which his or her Service as an Employee first commences Options and/or SARs that cover (in the aggregate) up to an additional 125,000 Common Shares; 
		

		
			(b)The maximum aggregate number of Common Shares subject to Restricted Share awards and Stock Units that may be granted under this Plan during any calendar year to any one Participant shall not exceed 125,000, except that the Company may grant to a new Employee in the calendar year in which his or her Service as an Employee first commences Restricted Share awards and Stock Units that cover (in the aggregate) up to an additional 125,000 Common Shares; 
		

		
			(c)No Participant shall be paid more than $2 million in cash in any calendar year pursuant to Performance Cash Awards granted under the Plan; and 
		

		
			(d)No more than 810,498 Common Shares may be issued under the Plan upon the exercise of ISOs.
		

		
			ARTICLE 4.   ELIGIBILITY.
		

		
			4.1Incentive Stock Options.  Only Employees who are common‐law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.  In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for 
		

		

		

		 

		

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			the grant of an ISO unless the additional requirements set forth in Code Section 422(c)(5) are satisfied.
		

		
			4.2Other Awards.  Awards other than ISOs may only be granted to Service Providers.
		

		
			ARTICLE 5.   OPTIONS.
		

		
			5.1Stock Option Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company.  Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The Stock Option Agreement shall specify whether the Option is intended to be an ISO or an NSO.  The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.  
		

		
			5.2Number of Shares.  Each Stock Option Agreement shall specify the number of Common Shares subject to the Option, which number shall adjust in accordance with Article 9.  
		

		
			5.3Exercise Price.  Each Stock Option Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Common Share on the date of grant.  The preceding sentence shall not apply to an Option that is a Substitute Award granted in a manner that would satisfy the requirements of Code Section 409A and, if applicable, Code Section 424(a).
		

		
			5.4Exercisability and Term.  Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become vested and/or exercisable.  The Stock Option Agreement shall also specify the term of the Option; provided that, except to the extent necessary to comply with applicable foreign law, the term of an Option shall in no event exceed 10 years from the date of grant.  A Stock Option Agreement may provide for accelerated vesting and/or exercisability upon certain specified events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service.  
		

		
			5.5Death of Optionee.  After an Optionee’s death, any vested and exercisable Options held by such Optionee may be exercised by his or her beneficiary or beneficiaries.  Each Optionee may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Optionee’s death.  If no beneficiary was designated or if no designated beneficiary survives the Optionee, then any vested and exercisable Options held by the Optionee may be exercised by his or her estate.
		

		
			5.6Modification or Assumption of Options.  Within the limitations of the Plan, the Administrator may modify, extend or assume outstanding Options, provided that no modification of an Option shall, without the consent of the Optionee, impair his or her rights or obligations under such Option. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Article 9, neither the Administrator nor any other person may: (a) decrease the Exercise Price of any outstanding Option after the date of grant, (b) cancel or allow an Optionee to surrender an outstanding Option to the Company in exchange for cash or as consideration for the grant of a new Option with a lower Exercise Price or the grant of another 
		

		

		

		 

		

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			Award the effect of which is to reduce the Exercise Price of any outstanding Option, or (c) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the Nasdaq Global Market (or such other principal U.S. national securities exchange on which the Common Shares are traded), unless the Company’s stockholders have approved such an action within twelve (12) months prior to such an event.
		

		
			5.7Buyout Provisions.  Except to the extent prohibited by Article 5.6, the Administrator may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Administrator shall establish.  
		

		
			5.8Payment for Option Shares.  The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased.  In addition, the Administrator may, in its sole discretion and to the extent permitted by applicable law, accept payment of all or a portion of the Exercise Price through any one or a combination of the following forms or methods:
		

		
			(a)Subject to any conditions or limitations established by the Administrator, by surrendering, or attesting to the ownership of, Common Shares that are already owned by the Optionee with a  Fair Market Value on the date of surrender equal to the aggregate exercise price of the Common Shares as to which such Option will be exercised;
		

		
			(b)By delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company;  
		

		
			(c)Subject to such conditions and requirements as the Administrator may impose from time to time, through a net exercise procedure;
		

		
			(d)By delivering a full-recourse promissory note, on such terms approved by the Administrator; or
		

		
			(e)Through any other form or method consistent with applicable laws, regulations and rules.
		

		
			ARTICLE 6.   STOCK APPRECIATION RIGHTS.
		

		
			6.1SAR Agreement.  Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company.  Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various SAR Agreements entered into under the Plan need not be identical.  
		

		
			6.2Number of Shares.  Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains, which number shall adjust in accordance with Article 9.  
		

		

		

		 

		

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			6.3Exercise Price.  Each SAR Agreement shall specify the Exercise Price, which shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant.  The preceding sentence shall not apply to a SAR that is a Substitute Award granted in a manner that would satisfy the requirements of Code Section 409A.
		

		
			6.4Exercisability and Term.  Each SAR Agreement shall specify the date when all or any installment of the SAR is to become vested and exercisable.  The SAR Agreement shall also specify the term of the SAR; provided that except to the extent necessary to comply with applicable foreign law, the term of a SAR shall not exceed 10 years from the date of grant.  A SAR Agreement may provide for accelerated vesting and exercisability upon certain specified events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service.  
		

		
			6.5Exercise of SARs.  Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the Administrator shall determine.  The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, not exceed the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.  If, on the date when a SAR expires, the Exercise Price is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion.  A SAR Agreement may also provide for an automatic exercise of the SAR on an earlier date.
		

		
			6.6Death of Optionee.  After an Optionee’s death, any vested and exercisable SARs held by such Optionee may be exercised by his or her beneficiary or beneficiaries.  Each Optionee may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Optionee’s death.  If no beneficiary was designated or if no designated beneficiary survives the Optionee, then any vested and exercisable SARs held by the Optionee at the time of his or her death may be exercised by his or her estate.
		

		
			6.7Modification or Assumption of SARs.  Within the limitations of the Plan, the Administrator may modify, extend or assume outstanding SARs, provided that no modification of a SAR shall, without the consent of the Optionee, impair his or her rights or obligations under such SAR.  Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Article 9, neither the Administrator nor any other person may: (a) decrease the Exercise Price of any outstanding SAR after the date of grant, (b) cancel or allow an Optionee to surrender an outstanding SAR to the Company in exchange for cash or as consideration for the grant of a new SAR with a lower Exercise Price or the grant of another Award the effect of which is to reduce the Exercise Price of any outstanding SAR, or (c) take any other action with respect to a SAR that would be treated as a repricing under the rules and regulations of the Nasdaq Global Market (or such other principal U.S. national securities exchange on which the Common Shares are traded), unless the Company’s stockholders have approved such an action within twelve (12) months prior to such an event.
		

		

		

		 

		

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			ARTICLE 7.    RESTRICTED SHARES.
		

		
			7.1Restricted Stock Agreement.  Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company.  Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.
		

		
			7.2Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Administrator may determine, including (without limitation) cash, cash equivalents, property, cancellation of other equity awards, full-recourse promissory notes, past services and future services, and such other methods of payment as are permitted by applicable law.  
		

		
			7.3Vesting Conditions.  Each Award of Restricted Shares may or may not be subject to vesting and/or other conditions as the Administrator may determine.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement.  Such conditions, at the Administrator’s discretion, may include one or more Performance Goals.  A Restricted Stock Agreement may provide for accelerated vesting upon certain specified events.
		

		
			7.4Voting and Dividend Rights.  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders, unless the Administrator otherwise provides.  A Restricted Stock Agreement, however, may require that any cash dividends paid on Restricted Shares (a) be accumulated and paid when such Restricted Shares vest, or (b) be invested in additional Restricted Shares.  Such additional Restricted Shares shall be subject to the same conditions and restrictions as the shares subject to the Stock Award with respect to which the dividends were paid.  In addition, unless the Administrator provides otherwise, if any dividends or other distributions are paid in Common Shares, such Common Shares shall be subject to the same restrictions on transferability and forfeitability as the Restricted Shares with respect to which they were paid.
		

		
			ARTICLE 8.   STOCK UNITS.
		

		
			8.1Stock Unit Agreement.  Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company.  Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical.  
		

		
			8.2Payment for Awards.  To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.
		

		
			8.3Vesting Conditions.  Each Award of Stock Units may or may not be subject to vesting, as determined by the Administrator.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement.  Such conditions, at the Administrator’s discretion, may include one or more Performance Goals.  A Stock Unit Agreement may provide for accelerated vesting upon certain specified events.  
		

		

		

		 

		

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			8.4Voting and Dividend Rights.  The holders of Stock Units shall have no voting rights.  Prior to settlement or forfeiture, Stock Units awarded under the Plan may, at the Administrator’s discretion, provide for a right to dividend equivalents.  Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Common Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into additional Stock Units.  Settlement of dividend equivalents may be made in the form of cash, in the form of Common Shares, or in a combination of both.  Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions as the Stock Units to which they attach.
		

		
			8.5Form and Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any combination of both, as determined by the Administrator.  The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors, including Performance Goals.  Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days.  Vested Stock Units shall be settled in such manner and at such time(s) as specified in the Stock Unit Agreement.  Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 9.
		

		
			8.6Death of Recipient.  Any Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries.  Each recipient of Stock Units under the Plan may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death.  If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s estate.
		

		
			8.7Modification or Assumption of Stock Units.  Within the limitations of the Plan, the Administrator may modify or assume outstanding stock units or may accept the cancellation of outstanding stock units (whether granted by the Company or by another issuer) in return for the grant of new Stock Units for the same or a different number of shares or in return for the grant of a different type of Award.  The foregoing notwithstanding, no modification of a Stock Unit shall, without the consent of the Participant, impair his or her rights or obligations under such Stock Unit.
		

		
			8.8Creditors’ Rights.  A holder of Stock Units shall have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.
		

		
			ARTICLE 9.   ADJUSTMENTS; DISSOLUTIONS AND LIQUIDATIONS; CORPORATE TRANSACTIONS.
		

		
			9.1Adjustments.  In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares or a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common 
		

		

		

		 

		

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			Shares or any other increase or decrease in the number of issued Common Shares effected without receipt of consideration by the Company, corresponding proportionate adjustments shall automatically be made in each of the following:
		

		
			(a)The number and kind of shares available for issuance under Article 3, including the numerical share limits in Articles 3.1 and 3.4;
		

		
			(b)The number and kind of shares covered by each outstanding Option, SAR and Stock Unit; and
		

		
			(c)The Exercise Price applicable to each outstanding Option and SAR, and the repurchase price, if any, applicable to Restricted Shares.
		

		
			In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a recapitalization, a spin-off or a similar occurrence, the Administrator shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of the foregoing.  Any adjustment in the number of and kind of shares subject to an Award under this Article 9.1 shall be rounded down to the nearest whole share, although the Administrator in its sole discretion may make a cash payment in lieu of a fractional share.  Except as provided in this Article 9, a Participant shall have no rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.
		

		
			9.2Dissolution or Liquidation.  To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.
		

		
			9.3Corporate Transactions.  In the event that the Company is a party to a merger, consolidation, or a Change in Control (other than one described in Article 14.6(d)), all Common Shares acquired under the Plan and all Awards outstanding on the effective date of the transaction shall be treated in the manner described in the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which the Company is party, in the manner determined by the Administrator, with such determination having final and binding effect on all parties), which agreement or determination need not treat all Awards (or portions thereof) in an identical manner. Unless an Award Agreement provides otherwise, the treatment specified in the transaction agreement or by the Administrator shall include (without limitation) one or more of the following with respect to each outstanding Award:
		

		
			(a)The continuation of such outstanding Awards by the Company (if the Company is the surviving entity);
		

		
			(b)The assumption of such outstanding Awards by the surviving entity or its parent, provided that the assumption of an Option or a SAR shall comply with applicable tax requirements;
		

		

		

		 

		

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			(c)The substitution by the surviving entity or its parent of an equivalent  award for outstanding Awards (including, but not limited to, an award to acquire the same consideration paid to the holders of Common Shares in the transaction), provided that the substitution of an Option or a SAR shall comply with applicable tax requirements;
		

		
			(d)The cancellation of outstanding Options and SARs without payment of any consideration. The Optionees shall be able to exercise such Options and SARs (to the extent the Options and SARs are vested or become vested as of the effective date of the transaction) during a period of not less than five full business days preceding the closing date of the transaction, unless (i) a shorter period is required to permit a timely closing of the transaction and (ii) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options and SARs.  Any exercise of such Options and SARs during such period may be contingent on the closing of the transaction;
		

		
			(e)Full exercisability of outstanding Options and SARs and full vesting of the Common Shares subject to Options and SARs, followed by cancellation of such Options and SARs.  The full exercisability of such Options and SARs and full vesting of such Common Shares may be contingent on the closing of the transaction.  The Optionees shall be able to exercise such Options and SARs during a period of not less than five full business days preceding the closing date of such merger or consolidation, unless (i) a shorter period is required to permit a timely closing of such merger or consolidation and (ii) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options and SARs.  Any exercise of such Options and SARs during such period may be contingent on the closing of such merger or consolidation; 
		

		
			(f)The cancellation of the Options and SARs and a payment to the Optionee with respect to each Share subject to the portion of the Award that is vested as of the transaction date equal to the excess of (A) the value, as determined by the Administrator in its absolute discretion, of the property (including cash) received by the holder of a Common Share as a result of the transaction, over (B) the per-share Exercise Price of the Option or SAR (such excess, the “Spread”).  Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent having a value equal to the Spread.  In addition, any escrow, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Common Shares, but only to the extent the application of such provisions does not adversely affect the status of the Option or SAR as exempt from Code Section 409A.  If the Spread applicable to an Option or SAR is zero or a negative number, then the Option or SAR may be cancelled without making a payment to the Optionee; 
		

		
			(g)The cancellation of outstanding Stock Units and a payment to the holder thereof with respect to each Common Share subject to the Stock Unit equal to the value, as determined by the Administrator in its absolute discretion, of the property (including cash) received by the holder of a Common Share as a result of the transaction (the “Transaction Value”).  Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent having a value equal to the Transaction Value.  In addition, such payment may be subject to vesting based on the Participant’s continuing Service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which 
		

		

		

		 

		

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			such Stock Units would have vested, and if required under applicable tax rules, such payment may be deferred until the settlement date specified in the Stock Unit Agreement.    In addition, any escrow, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Common Shares.  In the event that a Stock Unit is subject to Code Section 409A, the payment described in this clause (g) shall be made on the settlement date specified in the applicable Stock Unit Agreement, provided that settlement may be accelerated in accordance with Treasury Regulation Section 1.409A-3(j)(4); or
		

		
			(h)The assignment of any reacquisition or repurchase rights held by the Company in respect of an Award of Restricted Shares to the surviving entity or its parent, with corresponding proportionate adjustments made to the price per share to be paid upon exercise of any such reacquisition or repurchase rights.
		

		
			For avoidance of doubt, the Administrator shall have the discretion, exercisable either at the time an Award is granted or at any time while the Award remains outstanding, to provide for the acceleration of vesting upon the occurrence of a Change in Control, whether or not the Award is to be assumed or replaced in the transaction, or in connection with a termination of the Participant’s Service following a transaction.
		

		
			Any action taken under this Article 9.3 shall either preserve an Award’s status as exempt from Code Section 409A or comply with Code Section 409A.
		

		
			ARTICLE 10.   OTHER AWARDS.
		

		
			10.1Performance Cash Awards.  A Performance Cash Award is a cash award that may be granted subject to the attainment of specified Performance Goals during a Performance Period.  A Performance Cash Award may also require the completion of a specified period of continuous Service.  The length of the Performance Period, the Performance Goals to be attained during the Performance Period, and the degree to which the Performance Goals have been attained shall be determined conclusively by the Administrator.  Each Performance Cash Award shall be set forth in a written agreement or in a resolution duly adopted by the Administrator which shall contain provisions determined by the Administrator and not inconsistent with the Plan.  The terms of various Performance Cash Awards need not be identical.  
		

		
			10.2Awards Under Other Plans.  The Company may grant awards under other plans or programs.  Such awards may be settled in the form of Common Shares issued under this Plan.  Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3.
		

		
			ARTICLE 11.   LIMITATION ON RIGHTS.
		

		
			11.1Retention Rights.  Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain a Service Provider.  The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the Service of any Service Provider at any time, with or without cause, subject to applicable laws, the Company’s certificate of incorporation and by-laws and a written employment agreement (if any).
		

		

		

		 

		

			11

		

 

		
		

		
			11.2Stockholders’ Rights.  Except as set forth in Article 7.4 or 8.4 above, a Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, if applicable, the time when he or she becomes entitled to receive such Common Shares by filing any required notice of exercise and paying any required Exercise Price.  No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan.
		

		
			11.3Regulatory Requirements.  Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed necessary by the Company’s counsel to be necessary to the lawful issuance and sale of any Common Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Common Shares as to which such requisite authority will not have been obtained.
		

		
			11.4Transferability of Awards.  The Administrator may, in its sole discretion, permit transfer of an Award in a manner consistent with applicable law.  Unless otherwise determined by the Administrator, Awards shall be transferable by a Participant only by (a) beneficiary designation, (b) a will or (c) the laws of descent and distribution.  An ISO may only be transferred by will or by the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.
		

		
			11.5Other Conditions and Restrictions on Common Shares.  Any Common Shares issued under the Plan shall be subject to such forfeiture conditions, rights of repurchase, rights of first refusal, other transfer restrictions and such other terms and conditions as the Administrator may determine.  Such conditions and restrictions shall be set forth in the applicable Award Agreement and shall apply in addition to any restrictions that may apply to holders of Common Shares generally.  In addition, Common Shares issued under the Plan shall be subject to such conditions and restrictions imposed either by applicable law or by Company policy, as adopted from time to time, designed to ensure compliance with applicable law or laws with which the Company determines in its sole discretion to comply including in order to maintain any statutory, regulatory or tax advantage.
		

		
			11.6Repayment of Awards as a Result of Certain Improper Conduct.  If an Award has been paid to an Participant who is an “executive officer” within the meaning of Exchange Act Rule 3b-7 (an “Executive Participant”) or to such individual’s spouse or beneficiary, and the Administrator later determines that financial results used to determine the amount of such Award are materially restated and that the Executive Participant engaged in fraud or intentional misconduct, the Company may seek repayment or recovery of the Award, as appropriate, notwithstanding any contrary provision of the Plan. In addition, the Administrator may provide that any Participant and/or any Award, including any Common Shares subject to or issued under 
		

		

		

		 

		

			12

		

 

		
		

		
			an Award, are subject to any other recovery, recoupment, clawback and/or other forfeiture policy maintained by the Company from time to time, including as required by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  
		

		
			ARTICLE 12.   TAXES.
		

		
			12.1General.  As a condition to an Award under the Plan, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any federal, state, local or foreign withholding tax obligations that arise in connection with any Award granted under the Plan.  The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied.
		

		
			12.2Share Withholding.  To the extent that applicable law subjects a Participant to tax withholding obligations, the Administrator may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired.  Such Common Shares shall be valued at their Fair Market Value on the date when they are withheld or surrendered.  Any payment of taxes by assigning Common Shares to the Company may be subject to restrictions including any restrictions required by SEC, accounting or other rules.
		

		
			12.3Section 162(m) Matters  The Administrator, in its sole discretion, may determine whether an Award is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m).  The Administrator may grant Awards that are based on Performance Goals but that are not intended to qualify as performance-based compensation.  With respect to any Award that is intended to qualify as performance-based compensation, the Administrator shall designate the Performance Goal(s) applicable to, and the formula for calculating the amount payable under, an Award within 90 days following commencement of the applicable Performance Period (or such earlier time as may be required under Code Section 162(m)), and in any event at a time when achievement of the applicable Performance Goal(s) remains substantially uncertain.  Prior to the payment of any Award that is intended to constitute performance-based compensation, the Administrator shall certify in writing whether and the extent to which the Performance Goal(s) were achieved for such Performance Period.  The Administrator shall have the right to reduce or eliminate (but not to increase) the amount payable under an Award that is intended to constitute performance-based compensation.
		

		
			12.4Section 409A Matters.  Except as otherwise expressly set forth in an Award Agreement, it is intended that Awards granted under the Plan either be exempt from, or comply with, the requirements of Code Section 409A.  To the extent an Award is subject to Code Section 409A (a “409A Award”), the terms of the Plan, the Award and any written agreement governing the Award shall be interpreted to comply with the requirements of Code Section 409A so that the Award is not subject to additional tax or interest under Code Section 409A, unless the Administrator expressly provides otherwise.  A 409A Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order for it to comply with the requirements of Code Section 409A.  In this regard, if any amount under a 409A Award is payable upon a “separation from service” to an individual who is considered a “specified employee” (as each term is defined under Code Section 409A), then no such payment 
		

		

		

		 

		

			13

		

 

		
		

		
			shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to Code Section 409A(a)(1).  
		

		
			12.5Limitation on Liability.  Neither the Company nor any person serving as Administrator shall have any liability to a Participant in the event an Award held by the Participant fails to achieve its intended characterization under applicable tax law.
		

		
			ARTICLE 13.   FUTURE OF THE PLAN.
		

		
			13.1Term of the Plan.  The Plan, as set forth herein, shall become effective on the Registration Date.  The Plan shall remain in effect until the earlier of (a) the date when the Plan is terminated under Article 13.2 or (b) the 10th anniversary of the date when the Board adopted the Plan.
		

		
			13.2Amendment or Termination.  The Board may, at any time and for any reason, amend or terminate the Plan.  No Awards shall be granted under the Plan after the termination thereof.  The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.
		

		
			13.3Stockholder Approval.  An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.   
		

		
			ARTICLE 14.   DEFINITIONS.
		

		
			14.1“Administrator” means the Board or any Committee administering the Plan in accordance with Article 2.
		

		
			14.2“Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.
		

		
			14.3“Award” means any award granted under the Plan, including as an Option, a SAR, a Restricted Share, a Stock Unit or a Performance Cash Award.
		

		
			14.4“Award Agreement” means a Stock Option Agreement, an SAR Agreement, a Restricted Stock Agreement, a Stock Unit Agreement or such other agreement evidencing an Award granted under the Plan.
		

		
			14.5“Board” means the Company’s Board of Directors, as constituted from time to time.
		

		
			14.6“Change in Control” means:
		

		
			(a)Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; 
		

		

		

		 

		

			14

		

 

		
		

		
			(b)The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; 
		

		
			(c)The consummation of a merger or consolidation of the Company with or into any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or
		

		
			(d)Individuals who are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board over a period of 12 months; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board.
		

		
			A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.    In addition, if a Change in Control constitutes a payment event with respect to any Award which provides for a deferral of compensation and is subject to Code Section 409A, then notwithstanding anything to the contrary in the Plan or applicable Award Agreement the transaction with respect to such Award must also constitute a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A.  
		

		
			14.7“Code” means the Internal Revenue Code of 1986, as amended.
		

		
			14.8“Committee” means a committee of one or more members of the Board, or of other individuals satisfying applicable laws, appointed by the Board to administer the Plan.  
		

		
			14.9“Common Share” means one share of the common stock of the Company.
		

		
			14.10“Company” means KaloBios Pharmaceuticals, Inc., a Delaware corporation.
		

		
			14.11“Consultant” means a consultant or adviser who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor and who qualifies as a consultant or advisor under Instruction A.1.(a)(1) of Form S-8 under the Securities Act.
		

		
			14.12“Employee” means a common‐law employee of the Company, a Parent, a Subsidiary or an Affiliate.
		

		
			14.13“Exchange Act” means the Securities Exchange Act of 1934, as amended.
		

		

		

		 

		

			15

		

 

		
		

		
			14.14“Exercise Price,” in the case of an Option, means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.  “Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.
		

		
			14.15“Fair Market Value” means the closing price of a Common Share on any established stock exchange or a national market system on the applicable date or, if the applicable date is not a trading day, on the last trading day prior to the applicable date, as reported in a source that the Administrator deems reliable.  If Common Shares are no longer traded on an established stock exchange or a national market system, the Fair Market Value shall be determined by the Administrator in good faith on such basis as it deems appropriate.  The Administrator’s determination shall be conclusive and binding on all persons.
		

		
			14.16“ISO” means an incentive stock option described in Code Section 422(b).
		

		
			14.17“NSO” means a stock option not described in Code Sections 422 or 423.
		

		
			14.18“Option” means an ISO or NSO granted under the Plan and entitling the holder to purchase Common Shares.
		

		
			14.19“Optionee” means an individual or estate holding an Option or SAR.
		

		
			14.20“Outside Director” means a member of the Board who is not an Employee.
		

		
			14.21“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
		

		
			14.22“Participant” means an individual or estate holding an Award.
		

		
			14.23“Performance Cash Award” means an award of cash granted under Article 10.1 of the Plan.
		

		
			14.24“Performance Goal” means a goal established by the Administrator for the applicable Performance Period based on one or more of the performance criteria set forth in Appendix A.  Depending on the performance criteria used, a Performance Goal may be expressed in terms of overall Company performance or the performance of a business unit, division, Subsidiary, Affiliate or an individual.  A Performance Goal may be measured either in absolute terms or relative to the performance of one or more comparable companies or one or more relevant indices.  The Administrator may adjust the results under any performance criterion to exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation, claims, judgments or settlements, (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results, (d) accruals for 
		

		

		

		 

		

			16

		

 

		
		

		
			reorganization and restructuring programs, (e) extraordinary, unusual or non-recurring items, (f) exchange rate effects for non-U.S. dollar denominated net sales and operating earnings, or (g) statutory adjustments to corporate tax rates; provided, however, that if an Award is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m), such adjustment(s) shall only be made to the extent consistent with Code Section 162(m)..
		

		
			14.25“Performance Period” means a period of time selected by the Administrator over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to a Performance Cash Award or an Award of Restricted Shares or Stock Units that vests based on the achievement of Performance Goals.  Performance Periods may be of varying and overlapping duration, at the discretion of the Administrator.
		

		
			14.26“Plan” means this KaloBios Pharmaceuticals, Inc. 2012 Equity Incentive Plan, as amended from time to time.
		

		
			14.27“Predecessor Plan” means the Company’s 2001 Stock Plan, as amended.
		

		
			14.28“Registration Date” means the effective date of the registration statement filed by the Company with the Securities and Exchange Commission pursuant to Form 10.
		

		
			14.29“Restricted Share” means a Common Share awarded under the Plan.
		

		
			14.30“Restricted Stock Agreement” means the agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share.
		

		
			14.31“SAR” means a stock appreciation right granted under the Plan.
		

		
			14.32“SAR Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR.
		

		
			14.33“Service” means service as an Employee, Outside Director or Consultant.
		

		
			14.34“Service Provider” means any individual who is an Employee, Outside Director or Consultant.
		

		
			14.35“Stock Award” means any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan.
		

		
			14.36“Stock Option Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option.
		

		
			14.37“Stock Unit” means a bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan.
		

		

		

		 

		

			17

		

 

		
		

		
			14.38“Stock Unit Agreement” means the agreement between the Company and the recipient of a Stock Unit that contains the terms, conditions and restrictions pertaining to such Stock Unit.
		

		
			14.39“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date
		

		
			14.40“Substitute Awards” means Awards or Common Shares issued by the Company in assumption of, or substitution or exchange for, Awards previously granted, or the right or obligation to make future awards, in each case by a corporation acquired by the Company or any Affiliate or with which the Company or any Affiliate combines to the extent permitted by Nasdaq Marketplace Rule 5635 or any successor thereto.
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

		

			18

		

 

		Appendix A
		

		
			Performance Criteria
		

		
			The Administrator may establish Performance Goals derived from one or more of the following criteria when it makes Awards of Restricted Shares or Stock Units that vest entirely or in part on the basis of performance or when it makes Performance Cash Awards:
		

			
					
						Earnings (before or after taxes)

					
					
						Sales or revenue (using a measure thereof that complies with Section 162(m))

				
	
					
						 

					
					
						 

				
	
					
						Earnings per share

					
					
						Expense or cost reduction

				
	
					
						 

					
					
						 

				
	
					
						Earnings before interest, taxes and depreciation

					
					
						Working capital

				
	
					
						 

					
					
						 

				
	
					
						Earnings before interest, taxes, depreciation and amortization

					
					
						Economic value added (or an equivalent metric)

				
	
					
						 

					
					
						 

				
	
					
						Total stockholder return

					
					
						Market share

				
	
					
						 

					
					
						 

				
	
					
						Return on equity or average stockholders’ equity

					
					
						Cash measures including cash flow and cash balance 

				
	
					
						 

					
					
						 

				
	
					
						Return on assets, investment or capital employed

					
					
						Operating cash flow

				
	
					
						 

					
					
						 

				
	
					
						Operating income 

					
					
						Cash flow per share

				
	
					
						 

					
					
						 

				
	
					
						Gross margin

					
					
						Share price

				
	
					
						 

					
					
						 

				
	
					
						Operating margin

					
					
						Debt reduction

				
	
					
						 

					
					
						 

				
	
					
						Net operating income

					
					
						Customer satisfaction

				
	
					
						 

					
					
						 

				
	
					
						Net operating income after tax

					
					
						Stockholders’ equity

				
	
					
						 

					
					
						 

				
	
					
						Return on operating revenue

					
					
						Contract awards or backlog

				
	
					
						 

					
					
						 

				
	
					
						Objective corporate or individual strategic goals

					
					
						Objective individual performance goals

				
	
					
						 

				
	
					
						To the extent that an Award is not intended to comply with Code Section 162(m), other measures of performance selected by the AdministratorExhibit 10.1 Shares Purchase Agreement

Exhibit 10.1 

To:
MRV COMMUNICATIONS, INC.
20415 Nordhoff Street
Chatsworth, CA 91311 (USA)
to the kind attention of: Mark Bonney

Vimodrone, August 7, 2015

Dear Sirs, 
we refer to your proposal herebelow, that we copy on our letterhead in sign of full and unconditional acceptance.

*  *  *
To:
MATICMIND S.P.A.
Via B. Croce
Vimodrone (MI)
20090 - (Italy)

to the kind attention of: Luciano Zamuner

Chatsworth, August 7, 2015

Dear Sirs,
further to our recent discussions, we herewith submit to you this agreement, to be executed by way of exchange of commercial letters in accordance with the terms and conditions specified below.

1

MRV COMMUNICATIONS, INC.

and

MATICMIND S.P.A.

Shares Purchase Agreement

                                      
                                                                   

2

Contents
Clause     Page

		
	1. DEFINITIONS
	4

		
	2. PURCHASE AND SALE; CLOSING
	11

		
	3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
	16

		
	4. WARRANTIES OF PURCHASER
	24

		
	5. COVENANTS OF SELLER
	25

		
	6. COVENANTS OF PURCHASER
	32

		
	7. ADDITIONAL COVENANTS OF SELLER AND PURCHASER
	34

		
	8. CONDITIONS TO CLOSING
	34

		
	9. INDEMNIFICATION
	36

		
	10. TERMINATION
	39

		
	11. MISCELLANEOUS AND GENERAL
	40

3

SHARES SALE AND PURCHASE AGREEMENT
(this “Agreement”)

BETWEEN
MRV Communications, Inc., a company duly incorporated under the laws of Delaware (USA), with its principal offices in Chatsworth, California, USA, represented by Mark J. Bonney, acting in his capacity of Chief Executive Officer, by virtue of the powers granted him by the board of directors’ resolution dated August 7, 2015 (the “Seller”)
AND
Maticmind S.p.A., a company duly incorporated under the laws of Italy, with registered office in Vimodrone (MI), at Via Benedetto Croce, CAP 20090, share capital equal to Euro 10,000,000, registered with the Companies Register of Milan, with registration and VAT number 05032840968, CCIAA/REA number 1790831, represented by Mr. Luciano Zamuner, acting in his capacity of CEO, by virtue of the powers granted him by the board of directors’ resolution dated July 24, 2015 (the “Purchaser” and, together with the Seller, the “Parties”). 

Capitalized terms not otherwise defined herein have the meanings set forth in Section ‎‎1.1.
RECITALS
WHEREAS, Seller owns 2,160 (two thousand one hundred and sixty) ordinary shares, having an aggregate value of Euro 3,600,000 (three million six hundred thousand), fully paid in (collectively, the “Shares”), which constitute all of the outstanding shares of Tecnonet S.p.A., a corporation organized under the laws of Italy, with registered office in 235, Via Appia Pignatelli, Rome, Italy, registered with the Companies Register held by the Chambers of Commerce of Rome, registration number and VAT number 04187501004, R.E.A. 745158 (the “Company”).
WHEREAS, Seller desires to sell the Shares to Purchaser; and
WHEREAS, Purchaser desires to purchase the Shares from Seller upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the Parties agree as follows:
		
	1.
	Definitions

		
	1.1
	In this Agreement, unless the context otherwise requires, the following terms shall have the following respective meanings:

4

	
		
	Accounting Principles
	means the rules of Italian Law applicable to the preparation of financial statements, as integrated by, interpreted and applied in accordance with the accounting principles issued by the Commissione Nazionale dei Dottori Commercialisti e dei Ragionieri and by the OIC (Organismo Italiano di Contabilità), as consistently applied with the past practice by the Company.

	Affiliate
	means, with respect to any Person, any other Person who or that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.

	Agreement
	has the meaning set forth in the Introduction.

	Annual Financial Statement
	has the meaning set forth in Section ‎3.2.7.

	Business Day
	means a day on which banks in Italy and the United States generally have their offices open for business (not including Saturdays and Sundays).

	Business Field
	means the provision of stand-alone network integration services in the Italian market.

	Civil Code
	means the Italian Civil Code, approved by Royal Decree No. 262 of March 16, 1942 as amended from time to time.

	Closing
	has the meaning set forth in Section ‎‎2.5.1.

	Closing Date
	means (i) the third Business Day after the day on which the last of the Conditions Precedent has been satisfied or waived, as applicable (other than those conditions that by their terms are to be satisfied at Closing, but subject to the satisfaction or waiver of such conditions at Closing), or (ii) such other date as the Parties may agree in writing.

	Closing Net Financial Position
	means the amount of Net Financial Position of the Company as of the close of business on the Closing Date.

	Closing Net Financial Position Statement
	has the meaning set forth in Section ‎2.6.2.1.

	Company
	has the meaning set forth in the Recitals.

	Company Continuing Employee
	has the meaning set forth in Section ‎6.3.1.

	Conditions Precedent
	has the meaning set forth in Section ‎‎8.2.

	Confidentiality Agreement
	has the meaning set forth in Section ‎‎5.3.

	Contract
	means any agreement, contract, license, lease, commitment, arrangement or understanding, whether written or oral, including sales orders and purchase orders.

	Debt for Bonuses
	means any amounts due by the Company to certain individuals, pursuant to any bonus or similar agreements, triggered by the Closing of the Transaction, including the Taxes, social security payments and social contributions in connection therewith, as shown on Schedule 1.1.A, which amounts shall be considered as debt for the purposes of calculating the Net Financial Position.

	Deed of Transfer
	has the meaning set forth in Section ‎2.5.2.1(A).

5

	
		
	Disputed Amounts
	has the meaning set forth in Section ‎2.6.3.3.

	Employees
	has the meaning set forth in Section 3.2.12.

	Environmental Laws
	means any and all applicable Laws concerning protection of the environment, including air, soil, subsoil and water pollution control, resource conservation and recovery, waste disposal, and toxic substance control.

	Factoring Threshold
	means an amount equal to (A) 15% (fifteen percent) of the total factored accounts receivable that have not yet matured as of the Closing Date, less (B) an amount equal to any dividend, distribution or other payment by the Company to the Seller or its Affiliates during the period starting from the Signing Date and ending on the Closing Date (other than repayment of the Intercompany Note and other than payments for goods and services in the ordinary course of business).

	Final Proxy Statement
	means the definitive proxy statement of the Seller to be filed with the Securities and Exchange Commission in connection with the Seller Stockholders’ Meeting.

	Governmental Entity
	means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any foreign, federal, state, local, or municipal government, or any international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such body have the force of law.

	Indebtedness
	means all obligations of the Company (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, and (iii) for guarantees of, and other commitments to pay or otherwise cover, the obligations described in clauses (i) through (ii) above for any other Person.

	Independent Accountants
	has the meaning set forth in Section ‎2.6.3.3.

	Intellectual Property
	means all intellectual and industrial property rights including: (a) patents and registered designs; (b) unregistered rights in designs, copyright (including copyright in source code, object code and other computer software and databases) and neighbouring rights, database rights, semiconductor topography rights and rights subsisting in or in relation to confidential information or inventions; (c) registered and unregistered trademarks and service marks, and all other rights in, or goodwill attaching to, trade, business or corporate names, logos, domain names, get-up or other trading insignia; and including (insofar as any of the foregoing rights are obtained by registration), applications for registration and the right to apply for registration; all rights and forms or protection of a similar nature to any of the foregoing recognized in any country of the world.

	Intercompany Note
	means the note issued by the Company to Seller in the principal amount of Euro 4,050,000 together with accrued and unpaid interest pursuant to the loan agreement between the Company and Seller dated 29 October 2010, as amended.

	Intervening Event
	has the meaning set forth in Section 5.2.9.

	Key Employees
	means Messrs. Giuliano Maurizi, Fabio Magi, Roberto Romoli, Fabio Raissi and Maurizio Garonna.

6

	
		
	Law
	means any statute, law, ordinance, code, rule, regulation, decree or order of any Governmental Entity.

	Leases
	has the meaning set forth in Section ‎‎3.2.11.

	Lien
	means any encumbrance, pledge, mortgage, security interest, seizure, lease, charge, option, transfer restriction, privileges, lien, right of pre-emption, rights of first offer, enjoyments (diritti reali minori), easements (servitù) and usufruct or other claims or rights of any third parties restricting the right to use or dispose of an asset.

	Long Stop Date
	has the meaning set forth in Section 10.1.4.

	Loss
	means any and all direct damages and losses, fines, penalties, deficiencies and expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts or other reasonable expenses of litigation or other proceedings or of any claim, default or assessment). The term “Loss” shall not include any indirect, consequential, incidental or punitive damages.

	Material Adverse Effect
	means any event, condition, fact, change, occurrence, effect or set of circumstances (regardless of whether foreseeable at the time of the Parties’ execution of this Agreement) that, individually or in the aggregate with any other event, fact, change, occurrence, effect or set of circumstances, (a) has had, or could reasonably be expected to have, a materially adverse effect on the business, assets, properties, liabilities, results of operations or condition (financial or otherwise) of the Company, or (b) could reasonably be expected to prevent or materially impede the performance by the Seller of its obligations hereunder; provided, however, that, with respect to clause (a), none of the following shall constitute, and none of the following shall be taken into account when determining whether there has been, a Material Adverse Effect: (i) any changes, conditions or effects in the economies or securities or financial markets in general; (ii) changes, conditions or effects that affect the industries in which the Company operates, in each case, other than to the extent such changes, conditions or effects disproportionately affect (relative to other industry participants) the Company; (iii) any change, effect or circumstance resulting from an action required or permitted by this Agreement; (iv) the effect of any changes in applicable Laws or accounting rules; (v) any change, effect or circumstance resulting from the announcement of this Agreement; or (vi) conditions caused by acts of terrorism or war (whether or not declared) or any natural or man-made disaster or acts of God.

	Material Contracts
	has the meaning set forth in Section ‎‎3.2.23.1.

7

	
		
	Net Financial Position
	Net Financial Position is calculated as the sum of:
positive:
(i)   cash: any credit balance on bank or postal accounts, saving accounts or current counts, held by any bank and the liquid assets;
(ii)   the negotiable securities;
(iii)   positive fair value of derivative instruments;
minus:
(iv)   financial debts, interests-bearing or not, of any kind: for example, but not limited to, including the interest bearing debts, the loans, debts vis-à-vis the banks, any other loan for deposits, any other debt in order to finance acquisitions of interests in companies, businesses and/or business branches, debts vis-à-vis banks for advances on invoices, the debt deriving from financial lease (determined by applying IAS 17) (provided that this sub-clause (iv) does not include any amounts in respect of the Company’s factoring facility, other than actual drawdowns in respect of factored accounts receivable that have not yet matured exceeding the Factoring Threshold, which excess will be considered to be debt);
(v)   negative fair value of derivative instrument;
(vi)   TFR – employees termination indemnity;
(vii)   outstanding (older than 60 days) and collectable interest-bearing commercial debts;
(viii)   overdue tax debts; and
(ix)   Debt for Bonuses.
Attached as Schedule 1.1.B is an example calculation of the Net Financial Position, calculated as of June 30, 2015. 

	Notice of Superior Proposal
	has the meaning set forth in Section 5.2.4.2.

	Organizational Documents
	means, with respect to a legal entity, such entity’s articles or certificate of incorporation and bylaws, or analogous documents, in each case as amended through the date hereof.

	Party
	has the meaning set forth in the Introduction.

	Permit
	means a license or any other document or authorization given by an authorized Governmental Entity to allow a Person to perform certain acts or business.

	Person
	means any individual, corporation, partnership, limited liability company, joint venture, association, trust, organization or other entity or natural or legal person.

	Post-Closing Adjustment
	has the meaning set forth in Section 2.6.2.2.

	Purchase Price
	has the meaning set forth in Section 2.2.

	Purchaser
	has the meaning set forth in the Introduction.

	Reference Amount
	means an amount equal to Euro (3,376,000) (negative three million three hundred seventy-six thousand).

	Representations and Warranties
	has the meaning set forth in Section 3.1.1.

	Representatives
	has the meaning set forth in Section ‎5.3.

	Resolution Period
	has the meaning set forth in Section ‎2.6.3.2.

8

	
		
	Review Period
	has the meaning set forth in Section ‎2.6.3.1.

	Seller
	has the meaning set forth in the Introduction.

	Seller Adverse Recommendation Change
	has the meaning set forth in Section ‎5.2.3.

	Seller Board
	means the board of directors of the Seller.

	Seller Board Recommendation
	has the meaning set forth in Section ‎5.1.

	Seller Stockholders’ Meeting
	has the meaning set forth in Section ‎‎5.1.

	Seller’s Knowledge
	or any similar phrase means the actual knowledge of the Key Employees or of the directors of the Seller or the Company,  or the knowledge that they would have obtained after conducting due and appropriate inquiries, including inquiries of the Employees with responsibility for the matter in question.

	Shares
	has the meaning set forth in the Recitals.

	Statement of Objections
	has the meaning set forth in Section ‎2.6.3.2.

	Stockholder Approval
	has the meaning set forth in Section 5.1.

	Superior Proposal
	has the meaning set forth in Section 5.2.8.

	Takeover Proposal
	has the meaning set forth in Section 5.2.7.

	Taxes
	means (i) all income taxes, corporate taxes, capital gains taxes, transfer taxes, social security contribution expenses, employer’s taxes, duties, sales taxes, value added taxes, withholding taxes and any other taxes and official charges and impositions of any kind which may be payable to or imposed by any Governmental Entity together with any interest, penalties, surcharges, interest or additions thereto; and (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement with any other Person with respect to such amounts and including any liability for taxes of a predecessor or transferor or otherwise by operation of Law.

	Tax Returns
	means all returns, reports, declarations, elections, notices, filings, forms, statements and other documents (whether in written, electronic or other form) and any amendments, schedules, attachments, supplements, appendices and exhibits thereto, which have been prepared or filed or required to be prepared or filed in respect of Taxes.

	Termination Fee
	means an amount equal to Euro 250,000 (two hundred fifty thousand) or, in case of an extension of the Long Stop Date to December 31, 2015, Euro 350,000 (three hundred fifty thousand).

	Third Party Claim
	has the meaning set forth in Section ‎‎9.2.1.

	Transaction
	has the meaning set forth in Section ‎‎2.1.

	Undisputed Amounts
	has the meaning set forth in Section ‎2.6.3.3.

		
	2.
	Purchase and Sale; Closing

		
	2.1
	Purchase and Sale

9

Upon the terms and subject to the conditions set forth in this Agreement, Seller sells and, at the Closing, will convey, assign, transfer and deliver to Purchaser, free and clear of all Liens, and Purchaser purchases and, at the Closing, will acquire and accept from Seller, all of Seller’s right, title and interest in and to the Shares, including for the avoidance of doubt the right to receive dividends or other distributions in connection with the Shares to the extent not yet paid by the Company to the Seller as of the Closing Date (the “Transaction”).
		
	2.2
	Consideration

The aggregate purchase price for the Shares shall be equal to Euro 15,624,000 (fifteen million six hundred twenty four thousand), subject to adjustment in the manner set forth in Section 2.6 below (the “Purchase Price”).
		
	2.1
	[Reserved.]

		
	2.2
	Payment of the Purchase Price

The Purchase Price will be paid in full at the Closing Date, by Purchaser to Seller by wire transfer, in immediately available funds, to the bank account whose details will be communicated in writing by the Seller to the Purchaser at least two (2) Business Days before the Closing Date.
		
	2.3
	Closing.

		
	2.3.1
	The consummation of the Transaction (the “Closing”) shall take place at 10.00 am CET on the Closing Date at the offices of DLA Piper Italy, Via dei Due Macelli 66, Rome, before the notary public selected by the Purchaser.

		
	2.3.2
	At the Closing, the following actions shall be taken:

		
	2.3.2.1
	The Seller shall:

(A)    execute the notarial deed, in the form attached hereto as Schedule 2.5.2.1(A), to transfer to the Purchaser the ownership of the Shares, in compliance with article 2355 of the Civil Code (hereinafter the "Deed of Transfer"), it being understood that such Deed of Transfer shall have no novative effect with respect to any of the terms and conditions of this Agreement;
(A)    deliver to the Purchaser the written resignations of the members of the board of directors of the Company, effective as of the Closing Date, substantially in the form set out in Schedule 2.5.2.1‎(B), confirming that the said directors have no claims for compensation for termination, loss of office, unpaid remuneration or otherwise, except for claims in relation to compensation and expenses accrued until Closing and not paid.
(B)    use its best efforts to procure and deliver to the Purchaser the written resignations of the members, as well as any substitute members, of the board of statutory auditors (Collegio Sindacale), legal auditors (Revisore Legale) and surveillance committee (Organismo di 

10

Vigilanza) of the Company to resign from their office, effective as of the Closing Date, substantially in the form set out in Schedule 2.5.2.1(C) confirming that the said statutory auditors, legal auditors and members of the committee have no claims for compensation for termination, loss of office, unpaid remuneration or otherwise, except for claims in relation to compensation and expenses accrued until the date of resignation and not paid;
(C)    cause a shareholders' meeting of the Company to be validly held for the purpose of: (i) appointing new directors, statutory auditors and legal auditors in substitution of the directors and (if appropriate) statutory auditors and legal auditors, ceased from their office and according to the instructions which will be timely supplied by the Purchaser; and (ii) ratify all the actions and operations made by the directors ceased from their office, without prejudice to the Representations and Warranties released by the Seller;
(D)    deliver to the Purchaser, the Company’s ledgers books and the Company’s shareholders meeting book and all compulsory books provided by the relevant laws;
(E)    deliver to the Purchaser the confirmation in writing that either (i) the intercompany debt owing  by the Company to the Seller and its Affiliates including the Intercompany Note has been repaid in full together with any other document necessary to memorialize the retirement in full of the same or (ii) that the terms of the same debt have been amended in accordance with Section 5.5 of this Agreement; 
(F)    cause a director to register the Purchaser in the shareholders ledger (libro soci) as the new owner of the Shares and deliver a notarial copy of the ledger showing such registration;
(G)    cause a director to delegate the notary public to file the declaration required under article 2362 of the Civil Code;
(H)    execute and deliver, or cause to be executed and delivered, such other instruments as may be necessary, under applicable Laws, to properly effect the transfer of the Shares; 
(I)    deliver to the Purchaser a written statement whereby the Seller confirms that all the agreements between the Company and its Affiliates (except for the Intercompany Note and any agreements listed in Schedule ‎3.2.9) are duly terminated without any residual liability for the Company.  
		
	2.3.2.2
	The Purchaser shall:

(A)    execute the Deed of Transfer;
(B)    pay to the Seller the Purchase Price; and

11

(C)    execute and deliver, or cause to be executed and delivered, such other instruments as may be necessary, under applicable Law, to properly effect the transfer of the Shares.
		
	2.3.3
	All actions and transactions constituting the Closing pursuant to Section ‎2.5.2 above shall be regarded as one single transaction so that, at the option of the Party having interest in the performance of the relevant specific action or transaction, no action or transaction constituting the Closing shall be deemed to have taken place if and until all other actions and transactions constituting the Closing shall have been properly performed in accordance with the provisions of this Agreement. 

		
	2.4
	Purchase Price Adjustment. 

		
	2.4.1
	[Reserved]

		
	2.4.2
	Post-Closing Adjustment.

		
	2.4.2.1
	Within 60 days after the Closing Date, Purchaser shall prepare and deliver to Seller a statement setting forth its calculation of Closing Net Financial Position, which statement shall contain a balance sheet of the Company as of the Closing Date (including the Debt for Bonuses), a calculation of Closing Net Financial Position (the “Closing Net Financial Position Statement”) and a certificate of the Chief Financial Officer of Purchaser that the Closing Net Financial Position Statement was prepared in accordance with the Accounting Principles and consistent with the manner of preparation of the balance sheet contained in the Annual Financial Statements.

		
	2.4.2.2
	The post-closing adjustment shall be an amount equal to the Closing Net Financial Position minus the Reference Amount (the “Post-Closing Adjustment”). If the Post-Closing Adjustment is a positive number, Purchaser shall pay to Seller an amount equal to the Post-Closing Adjustment. If the Post-Closing Adjustment is a negative number, Seller shall pay to Purchaser an amount equal to the Post-Closing Adjustment.

		
	2.4.2.3
	Notwithstanding the provisions set forth by article 1499 of the Civil Code, the Parties agrees that no interest shall accrue on the amount of the Post-Closing Adjustment up to its due date of payment.

		
	2.4.3
	Examination and Review

		
	2.4.3.1
	After receipt of the Closing Net Financial Position Statement, Seller shall have 30 (thirty) days (the “Review Period”) to review the Closing Net Financial Position Statement. During the Review Period, Seller and Seller’s accountants shall have full access to the books and records of the Company, the personnel of, and work papers prepared by, Purchaser and/or 

12

Purchaser's accountants to the extent that they relate to the Closing Net Financial Position Statement and to such historical financial information (to the extent in Purchaser’s possession) relating to the Closing Net Financial Position Statement as Seller may reasonably request for the purpose of reviewing the Closing Net Financial Position Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Purchaser or the Company.
		
	2.4.3.2
	On or prior to the last day of the Review Period, Seller may object to the Closing Net Financial Position Statement by delivering to Purchaser a written statement setting forth Seller's objections in reasonable detail, indicating each disputed item or amount and the basis for Seller's disagreement therewith (the “Statement of Objections”). If Seller fails to deliver the Statement of Objections before the expiration of the Review Period, the Closing Net Financial Position Statement and the Post-Closing Adjustment, as the case may be, reflected in the Closing Net Financial Position Statement shall be deemed to have been accepted by Seller. If Seller delivers the Statement of Objections before the expiration of the Review Period, Purchaser and Seller shall negotiate in good faith to resolve such objections within 30 days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Net Financial Position Statement with such changes as may have been previously agreed in writing by Purchaser and Seller, shall be final and binding.

		
	2.4.3.3
	If Seller and Purchaser fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“Disputed Amounts” and any amounts not so disputed, the “Undisputed Amounts”) shall be submitted for resolution to the office of Milan of one of the following firms to be mutually selected by the Parties: (i) KPMG or (ii) PricewaterhouseCoopers. If the Parties do not reach an agreement concerning the appointment of one of the aforementioned firms within 7 calendar days from the written request of the most diligent Party, the Parties shall meet within the following 10 calendar days before the notary public appointed for the Closing (or should him/her be unavailable or not willing to serve, before another notary public selected by the Purchaser) and the notary public will select the relevant firm by drawing the name from the 2 names under (i) and (ii) above. If the so selected firm is unable to serve each of the Purchaser and the Seller shall have the right to request to the chairman of the chartered accountants of Milan (presidente dell'ordine dei dottori commercialisti di Milano) to appoint an impartial internationally recognized firm of independent certified public accountants (the “Independent 

13

Accountants”) who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Net Financial Position Statement. The Parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountants shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Closing Net Financial Position Statement and the Statement of Objections, respectively.
		
	2.4.3.4
	Seller shall pay a portion of the fees and expenses of the Independent Accountants equal to 100% (one hundred percent) multiplied by a fraction, the numerator of which is the amount of Disputed Amounts submitted to the Independent Accountants that are resolved in favour of Purchaser (that being the difference between the Independent Accountants' determination and Seller's determination) and the denominator of which is the total amount of Disputed Amounts submitted to the Independent Accountants (that being the sum total by which Purchaser's determination and Seller's determination differ from the determination of the Independent Accountants). Purchaser shall pay that portion of the fees and expenses of the Independent Accountants that Seller is not required to pay hereunder.

		
	2.4.3.5
	The Independent Accountants shall make a determination as soon as practicable and in any event within 30 days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Net Financial Position Statement and/or the Post-Closing Adjustment shall be conclusive and binding upon the parties hereto.

		
	2.4.4
	Payments of Post-Closing Adjustment

Except as otherwise provided herein, any payment of the Post-Closing Adjustment, shall (A) be due (x) within 5 (five) Business Days of acceptance of the applicable Closing Net Financial Position Statement or (y) if there are Disputed Amounts, then within 10 (ten) Business Days of the resolution described in Section ‎2.6.3.5 above with respect to such Disputed Amounts and within 5 (five) Business Days from the date of the Statement of Objections, with respect to the Undisputed Amounts; and (B) be paid by wire transfer of immediately available funds to such account as is directed by Purchaser or Seller, as the case may be. 
		
	2.4.5
	Adjustments for Tax Purposes

Any payments made pursuant to Section 2.6 shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by law.

14

		
	3.
	Representations and Warranties of the Seller

		
	3.1
	Representations and Warranties of the Seller 

		
	3.1.1
	The Seller hereby makes to the Purchaser the following representations and warranties and certifies that they are true as of the date hereof and as of Closing Date, or at the other earlier date to which they specifically refer (the “Representations and Warranties”). 

		
	3.1.2
	Each of the Representations and Warranties given by the Seller under this Agreement is construed as separate and is not limited or restricted by reference to any other  Representations and Warranties given by the Seller.

		
	3.1.3
	The Parties agree that the rights and remedies of the Purchaser in respect of the Representations and Warranties given by the Seller under this Agreement shall not be affected by (i) the Closing or (ii) any investigation made into the affairs of the Seller and/or the Company, their assets and, or any knowledge held or gained of any such affairs, assets and business by or on behalf of the Purchaser (and/or any of its Affiliates), or (iii) the waiver by the Purchaser of any Condition Precedent or right under this Agreement. For the sake of clarity, the execution of the Closing, including in case the Purchaser waives one or more Conditions Precedent, shall not imply in any case a waiver or limitation of any of the Representations and Warranties given by the Seller under this Agreement nor of the responsibilities of the Seller arising therefrom.

		
	3.2
	Representations and Warranties relating to the Company

		
	3.2.4
	Organization and Good Standing 

The Company (i) is a company duly organized and in good standing, validly incorporated and existing under the Laws of Italy and has been in continuous existence since incorporation; (ii) has full right and corporate power to own and lease its assets, as the case may be, and carry on its businesses as now being conducted and (iii) is not insolvent or subject to any liquidation or bankruptcy proceedings or other proceedings for general composition of claims, whether or not of a judicial nature. 
		
	3.2.5
	Title to the Shares 

		
	3.2.5.1
	Seller is the sole owner of the Shares, which Shares constitute the entire outstanding share capital of the Company.  

		
	3.2.5.2
	The Shares have been validly issued, subscribed and are fully paid-up, have not been repurchased or reimbursed by the Company and are not the subject to any action, proceeding or arbitration pending or threatened in writing received by the Company or the Seller.

		
	3.2.5.3
	The Shares are all of the same class or category and entitle their holders to the same rights and obligations.

		
	3.2.5.4
	The Company has not issued, nor agreed to issue, any securities or other equity or debt securities other than the Shares, nor any 

15

option or other right giving access directly or indirectly to the corporate capital of the Company.
		
	3.2.6
	Transfer the Shares

The transfer of the Shares to the Purchaser in accordance with this Agreement will not:
		
	3.2.6.1
	violate any Law or material Permit;

		
	3.2.6.2
	conflict with, or result in a breach of, or give rise to an event of default under, or require the consent of a Person under, or - except as described in Schedule 3.2.3.2 - enable a Person to terminate an agreement to which the Company is a party;

		
	3.2.6.3
	result in the payment of any change of control indemnity as regards any of the Contracts and/or trigger the early repayment of any loan or credit facility granted to the Company; or

		
	3.2.6.4
	result in the Company losing the benefit of a material Permit, grant, or subsidy which it enjoys at the date of this Agreement in which the Company operates.

		
	3.2.7
	Share Capital

Except for the Shares there is no share capital or other equity interest in  the Company issued or outstanding, or any subscriptions, options, warrants, convertible securities, convertible bonds or other rights to acquire ownership interests in the Company or other agreements obliging  the Company to issue, transfer or sell any of its share capital or other equity interest, or any agreements, arrangements, covenants granting any Person any rights in  the Company similar to share capital or equity interests.
		
	3.2.8
	Articles of Association - Books and Records

All the terms of the articles of association of the Company have been duly complied with by the Company.
All books, ledgers, accounts and other financial records of the Company are up-to-date, complete, and have been kept properly, accurately and in substantial compliance with all applicable Laws.  All the transactions have been duly represented in the books, ledgers, accounts and other financial records, if so requested by the Law. 
		
	3.2.9
	Interests in companies

The Company owns no share participations and ownership interests in any subsidiary and it is not party to any joint venture. 
		
	3.2.10
	Financial Statements 

The Company’s audited statutory financial statement for the fiscal year ended December 31, 2014, attached hereto as Schedule 3.2.7(A) (the 

16

“Annual Financial Statement”), have been prepared, in all respects in accordance with the Accounting Principles.
All goods owned by the Company  that are stored into the relevant third party stock (magazzino presso terzi), as described in Schedule 3.2.7(B) hereto as of the June 30, 2015, are validly owned free and clear from any Liens.
		
	3.2.11
	Compliance with Laws; Permits

The Company: (i) is in material compliance with all Laws applicable to the Company; (ii) and (ii) is not, as of the date hereof, the subject of any written notice from any Governmental Entity or any other Person alleging the violation of any applicable Law; or the subject to any court order, injunction, administrative order or decree arising under any Law.
		
	3.2.12
	Transactions with Affiliates

Attached under Schedule ‎3.2.9 is a true and complete list of open transactions as of June 30, 2015, whose individual value exceed Euro 20,000, entered into the ordinary course of business between the Company and its Affiliates.
		
	3.2.13
	Movables assets

All movable assets owned by the Company are validly owned free and clear from any Liens. There are no financial leases, sale and lease-back agreements concerning the Company’s movable assets.
Each moveable asset of the Company is: (i) legally and beneficially owned by the Company; (ii) where capable of possession, in the possession of  the Company; and (iii) in reasonably good operating condition subject to ordinary tear and wear.
		
	3.2.14
	Real Property and Lease Contracts

The Company does not own nor has ever owned any real property.
Except for the lease Contracts listed in Schedule 3.2.11 (the “Leases”), the Company is not a party to any Contract relating to the lease of real property. 
The Leases are in full compliance with the applicable Law.
No Leases have been terminated for vacating or renegotiation and no rent reviews are currently under negotiation or court review. 
Any real property held under lease by the Company is held under a valid, subsisting and enforceable Lease.
		
	3.2.15
	Employees

Schedule 3.2.12 contains a list, prepared with reference as at May 31, 2015, of the employees of the Company (the “Employees”) including their position, job title and type of Contract (whether full or part time or other).  

17

As at May 31, 2015 there are no employees, other than the Employees. No Employee may successfully claim to be granted by the Company or an Affiliate of the Company a different position, job title or type of employment Contract than those included in the list.
Besides the individuals listed in Schedule 3.2.12, as of Closing Date the Company has no other employees and there are no facts or circumstances under which any individual may successfully claim to be an employee of the Company.
Unless otherwise specifically indicated in Schedule 3.2.12, the Company is not party to any local or specific collective bargaining agreement.
All pension obligations towards all the Employees and former employees have been materially fulfilled and all pension obligations are adequately reserved. The Company has complied and complies in all material respects with relevant employment Law applicable to the Employees and any trade union, staff association or other body representing such Employees.
Termination payments, any deferred remuneration, allowances for leave of any nature not taken, bonuses and gratuities, commissions and any other compensation or allowances to be paid to Employees as well as severance pay and any other compensation or benefits to be paid to agents have been properly allocated in the books, records and ledgers of the Company as of March 31, 2015.
The Company has complied in all material respects with relevant applicable employment Law, including with particular reference to the Legislative Decree no. 81/2008 known as the Consolidated Law on health and safety protection of employees in the workplace.
		
	3.2.16
	Litigation and compliance

Except as described in Schedule 3.2.13, on the date hereof there is no action, proceeding or arbitration pending or, threatened against the Company in writing received by the Company, and there is no action, proceeding or arbitration, pending or, threatened in writing received by the Company, concerning matters of social security and welfare contributions or employment law, which individual value could not reasonably be expected to exceed Euro 10,000.
The Company is not a party to any agreement or arrangement which may materially infringe applicable Italian or European competition Law.
		
	3.2.17
	Guarantees

Except as described in Schedule 3.2.14, there are no: (i) bank guarantees, performance bonds or other securities issued by the Company; (ii) guarantees, securities or mortgages, pledges, liens or other Liens established on the assets of the Company, in order to secure obligations of  the Company.
		
	3.2.18
	Insurance

18

All of the insurance policies entered into by the Company are listed in Schedule 3.2.15. 
The insurance policies are in full force and all current premiums to maintain the same have been or will be paid when due.  No claim is outstanding under any of the Insurance Policies, and the Company duly filed and cultivated all claims under any of the Insurance Policies, upon occurrence of the relevant insured events.
		
	3.2.19
	Taxes

In relation to the obligations of the Company, vis-à-vis the Italian or foreign authorities, for Taxes:
		
	3.2.19.1
	all Tax Returns delivered by the Company have been duly and timely presented to the competent public authorities and have been prepared in compliance with the relevant provisions of law and regulation;

		
	3.2.19.2
	all Taxes and tax penalties to be paid by the Company have been fully, duly and timely paid by the relevant expiration date.

The Company has not been notified that any of its Tax Returns are presently under audit and no claims have been raised by any tax authority in connection with the Company’s Tax Returns.
		
	3.2.20
	Environmental Matters

The operations of the Company are in material compliance with applicable Environmental Laws.  
		
	3.2.21
	Permits 

The Company possesses all material Permits necessary for the lawful conduct and operation of its business as presently conducted and such Permits were obtained in compliance with applicable Law. All the material Permits are valid and in full force and effect and have not been challenged in writing. The Company has complied in all material respects with such Permits.
		
	3.2.22
	Stock Options

The Company does not have in existence any share incentive scheme, share option scheme, profit sharing scheme or stock option plan for any or all of its Employees, Key Employees or directors, other than MRV’s equity incentive plans as specified in Schedule 3.2.19.
		
	3.2.23
	Brokerage Fees and Costs

The Company has not engaged any investment banker, finder, broker or similar agent, advisers with respect to the Transaction, which may give rise to any salary, fee, brokerage fee, finder's fee, commission or similar liability being incurred by the Purchaser or the Company. 

19

		
	3.2.24
	Intellectual Property 

A complete list of any registered Intellectual Property owned by the Company is set out under Schedule 3.2.21.
The Intellectual Property used by the Company in its business is all the Intellectual Property necessary for the operation of the business of the Company as conducted as of today and it will not be adversely affected by the Transaction.
The Intellectual Property used by the Company in connection with its business as of today is free from Liens.
The use by the Company of any Intellectual Property used in the Company's business as of the date hereof does not infringe the Intellectual Property of any other Person, and the Company has not received any written allegations of infringement.
		
	3.2.25
	Information Technology and Data Protection 

To the Seller’s Knowledge, there is no fact or matter which may materially disrupt or interrupt or affect any computer hardware or software used in connection with the business of the Company as of the date hereof.  The Company has not breached any data protection or privacy Laws.
		
	3.2.26
	Contracts

The Seller represents and warrants to the Purchaser as follows:
		
	3.2.26.1
	Schedule 3.2.23.1 lists all Contracts (other than Organizational Documents of the Company, Leases and Contracts related to transactions with Affiliates or Employee benefits and other labor matters) that are material to the business of the Company as of the date hereof (collectively, “Material Contracts”). 

		
	3.2.26.2
	The Material Contracts have been entered into at arm’s length. 

		
	3.2.26.3
	Each of the Material Contracts is valid and in full force and effect and the terms thereof have been complied with by the Company. To the Seller’s Knowledge, there are no grounds for withdrawal, termination, rescission, avoidance or repudiation of any of such Contracts.  No notice of termination or of intention to terminate has been received in respect of any of the Material Contracts.

		
	3.2.26.4
	None of the Material Contracts include a change of control clause except for those listed under Schedule 3.2.23.4.

		
	3.2.26.5
	The Company is not party to any Contract or obligation which (i) is not in the ordinary and usual course of business; (ii) is not commercially reasonable and, in the reasonable opinion of the Seller, cannot be readily fulfilled or performed by the Company without undue or unusual expenditure of money and effort or 

20

(iii) provides non-competition clauses or similar restrictions to the ability of the Company to conduct its business as currently conducted.
		
	3.2.27
	Decree 231/2001

		
	3.2.27.1
	Neither the Seller nor the Company nor their directors, consultants or employees or, to the Seller’s Knowledge, other Persons that are under the supervision or direction of the Company's directors and Key Employees, are or at any time have engaged in any activity, practice or conduct which would constitute an offence under Decree 231/2001.

		
	3.3
	Representations and Warranties relating to the Seller

		
	3.3.6
	Organization and Good Standing

Seller is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. The Seller is not subject to any insolvency proceedings. No order has been made, petition presented, meeting convened or resolution passed for the winding up of the Seller. No administrative receiver, receiver or receiver and manager has been appointed in respect of the whole or any part of the assets of the Seller. No composition in satisfaction of the debts of the Seller has been proposed, sanctioned or approved. 
		
	3.3.7
	Authorization

Seller has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transaction. The execution by Seller of this Agreement, the performance of its obligations hereunder, and the consummation by Seller of the Transaction have been duly authorized by all necessary corporate action, other than the Stockholder Approval, and this Agreement has been duly executed and delivered by Seller and, assuming due authorization and execution of this Agreement by Purchaser, constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.
		
	3.3.8
	No Violations

The execution of this Agreement by Seller does not violate any Law or material Permit and does not conflict with, or result in breach of, or give rise to an event of default under, or require the consent of a Person under, or enable a Person to terminate a Material Contract or any agreement to which Seller is party.
		
	3.3.9
	Ownership of Shares

Seller is the sole owner of the Shares, which Shares constitute the entire outstanding share capital of the Company, and will transfer and deliver to Purchaser, at the Closing, valid title to the Shares free and clear of any Liens.
		
	3.3.10
	Brokers and Finders

21

There is no investment banker, broker, finder or other intermediary who has been retained by or is authorized to act on behalf of Seller who is entitled to any fee or commission from the Company or the Purchaser in connection with the Transaction.
		
	4.
	Warranties of Purchaser

		
	4.1
	Purchaser hereby warrants to the Company that as of the date of this Agreement and as of the Closing Date:

		
	4.1.28
	Organization and Good Standing

Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of Italy.
		
	4.1.29
	Authorization

Purchaser has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transaction. The execution by Purchaser of this Agreement, the performance of its obligations hereunder and the consummation by Purchaser of the Transaction have been duly authorized by all necessary action of Purchaser, and this Agreement has been duly executed by Purchaser and, assuming the due authorization and execution of this Agreement by Seller, constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms.
		
	4.1.30
	Governmental Filings - No Violations

		
	4.1.30.1
	No notices, reports, filings or other approvals are required to be made by Purchaser with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Purchaser from, any Governmental Entity in connection with the execution of this Agreement by Purchaser and the consummation by Purchaser of the Transaction.

		
	4.1.30.2
	The execution of this Agreement by Purchaser does not violate any Law or material Permit and does not conflict with, or result in breach of, or give rise to an event of default under, or require the consent of a Person under, or enable a Person to terminate the Agreement. The Purchaser represents and warrants that the Transaction does not trigger any mandatory merger control filing on the basis of any applicable antitrust Laws. 

		
	4.1.31
	Available Funds

The Purchaser has, and will have at Closing, sufficient funds available to consummate the Transaction.
		
	5.
	Covenants of Seller 

Seller covenants and agrees with Purchaser that, at all times from and after the date hereof until the Closing and, with respect to any covenant or agreement by its terms to be performed in whole or in part after the Closing, for the period specified therein or, if 

22

no period is specified therein, indefinitely, Seller will comply with all covenants and provisions of this Section 5, except to the extent Purchaser may otherwise consent in writing. 
		
	5.1
	Seller Stockholders’ Meeting 

Seller shall duly call, give notice of, convene and hold an annual or special meeting of Seller’s stockholders (the “Seller Stockholders’ Meeting”) as promptly as reasonably practicable following the date hereof (it being understood that Seller’s current intention is to use commercially reasonable efforts to hold such meeting on or before November 30, 2015) for the purpose of, inter alia, voting upon the approval of the Transaction. The Seller shall, through the Seller Board (or a duly authorized committee thereof), but subject to the right of the Seller Board to make a Seller Adverse Recommendation Change pursuant to Section 5.2, recommend to its stockholders that the Stockholder Approval be given at the Seller Stockholders’ Meeting (the “Seller Board Recommendation”). Subject to any fiduciary obligations of Seller’s officers and directors, and subject to the provisions of Section 5.2, Seller shall take all lawful action to have the Transaction be approved by the requisite vote of Seller’s stockholders (such approval, the “Stockholder Approval”). 
		
	5.2
	Solicitation; Change in Recommendation 

		
	5.2.1
	Except as otherwise permitted by this Agreement, the Seller agrees that it shall, and shall cause its subsidiaries, directors, officers and employees to, and shall instruct its other Representatives to, immediately cease all existing discussions or negotiations with any Person conducted heretofore with respect to any Takeover Proposal.  Except as otherwise permitted by this Agreement, from the date hereof until the earlier of the Closing Date or the date, if any, on which this Agreement is terminated pursuant to Section 10.1, the Seller shall not, and shall cause its subsidiaries, directors and officers not to, and shall instruct its other Representatives not to, directly or indirectly, (i) solicit, initiate, knowingly encourage or knowingly facilitate any Takeover Proposal or the making or consummation thereof or (ii) enter into, or otherwise participate in any discussions (except to notify such Person of the existence of the provisions of this Section 5.2) or negotiations regarding, or furnish to any Person any non-public material information in connection with, any Takeover Proposal.

		
	5.2.2
	Notwithstanding anything to the contrary contained in this Agreement, if at any time on or after the date hereof and prior to obtaining the Stockholder Approval, the Seller or any of its subsidiaries, or any of its or their respective Representatives, receives a bona-fide Takeover Proposal from any Person or group of Persons, which Takeover Proposal did not result from a breach of this Section 5.2, the Seller, the Seller Board (or a duly authorized committee thereof) and their Representatives may engage in negotiations and discussions with, and furnish any information and other access to, any Person making such Takeover Proposal and any of its Representatives or potential sources of financing if the Seller Board (or duly authorized committee thereof) determines in good faith, after consultation with the Seller’s outside legal and financial advisors, that such Takeover Proposal is or could reasonably be expected to lead to a Superior Proposal and that not taking such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law; provided that prior to furnishing 

23

any material non-public information to any such Person, the Seller receives from the Person making such Takeover Proposal a customary confidentiality agreement.  The Seller will promptly notify Purchaser in writing of the receipt of any such Takeover Proposal and communicate the material terms of any such Takeover Proposal to Purchaser and will, upon request, keep Purchaser reasonably apprised of the status of any such Takeover Proposal (but in any event upon a change in the price or any material terms thereof).  The Seller shall promptly provide to Purchaser any non-public information concerning the Company that is provided to such Person (to the extent such information was not previously provided to Purchaser or its Representatives).
		
	5.2.3
	Except as otherwise provided in this Agreement, the Seller Board shall not (i)(A) withdraw or modify, or publicly propose to withdraw or modify, in a manner adverse to Purchaser, the Seller Board Recommendation or (B) approve or recommend, or publicly propose to approve or recommend, to the stockholders of the Seller a Takeover Proposal (any action described in this clause (i) being referred to as a “Seller Adverse Recommendation Change”) or (ii) authorize the Seller or any of its subsidiaries to enter into any letter of intent, merger, acquisition or similar agreement with respect to any Takeover Proposal (other than a customary confidentiality agreement).

		
	5.2.4
	Notwithstanding anything to the contrary in this Agreement, the Seller Board (or a duly authorized committee thereof) may make a Seller Adverse Recommendation Change in response to either (x) a Superior Proposal or (y) an Intervening Event (and, solely with respect to a Superior Proposal, terminate this Agreement pursuant to Section 10.1.5), if:

		
	5.2.4.5
	the Seller Board (or a duly authorized committee thereof) determines in good faith, after consultation with its outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law (after taking into account all adjustments to the terms of this Agreement that may be offered by Purchaser pursuant to this Section 5.2.4);

		
	5.2.4.6
	solely with respect to a Superior Proposal: (A) the Seller provides Purchaser prior written notice of its intent to make any Seller Adverse Recommendation Change or terminate this Agreement pursuant to Section 10.1.5, together with a copy of the acquisition agreement (and any other relevant transaction documents) with respect to such Superior Proposal, if any, at least three (3) Business Days prior to taking such action, to the effect that the Seller Board has received a Superior Proposal and, absent any revision to the terms and conditions of this Agreement, the Seller Board has resolved to effect a Seller Adverse Recommendation Change or to terminate this Agreement pursuant to Section 10.1.5, which notice shall specify the basis for such Seller Adverse Recommendation Change or termination, including the material terms of the Superior Proposal (a “Notice of Superior Proposal”) (it being understood that such Notice of Superior Proposal shall not in 

24

itself be deemed a Seller Adverse Recommendation Change and that any material revision or amendment to the terms of such Superior Proposal shall require a new notice and, in such case, all references to three (3) Business Days in this Section 5.2.4 shall be deemed to be one (1) Business Day), (B) during such three (3) Business Day period, if requested by Purchaser, the Seller shall have made its Representatives reasonably available to discuss with Purchaser’s Representatives any proposed modifications to the terms and conditions of this Agreement so that such Takeover Proposal would cease to constitute a Superior Proposal, (C) Purchaser has not, within such three (3) Business Day period, made a written, binding and irrevocable offer capable of being accepted by the Seller to alter the terms or conditions of this Agreement such that such Takeover Proposal would cease to constitute a Superior Proposal and (D) the Seller Board, after taking into account any modifications to the terms of this Agreement and the Transaction agreed to by Purchaser after receipt of such notice, continues to believe that such Takeover Proposal constitutes a Superior Proposal; and
		
	5.2.4.7
	solely with respect to any Intervening Event: (A) at least three (3) Business Days before making a Seller Adverse Recommendation Change with respect to such Intervening Event, the Seller notifies Purchaser in writing of its intention to do so, specifies the reasons therefor and provides a description of such Intervening Event; and (B) if Purchaser makes a written, binding and irrevocable offer capable of being accepted by the Seller during such three (3) Business Day period to alter the terms or conditions of this Agreement, the Seller Board, after taking into consideration the adjusted terms and conditions of this Agreement as proposed by Purchaser, continues to determine in good faith (after consultation with outside counsel) that the failure to make such Seller Adverse Recommendation Change would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law.

		
	5.2.5
	Nothing contained in this Agreement shall prohibit the Seller or the Seller Board (or a duly authorized committee thereof) from (i) taking and disclosing to the stockholders of the Seller a position contemplated by Rule 14e-2(a) under the Exchange Act or making a statement contemplated by Item 1012(a) of Regulation M-A or Rule 14d-9 under the Exchange Act, (ii) making any disclosure to the stockholders of the Seller if the Seller Board (or a duly authorized committee thereof) determines in good faith, after consultation with its outside legal counsel, that the failure to make such disclosure would be reasonably likely to be inconsistent with applicable Law, (iii) informing any Person of the existence of the provisions contained in this Section 5.2 or (iv) making any “stop, look and listen” communication to the stockholders of the Seller pursuant to Rule 14d-9(f) under the Exchange Act (or any similar communication to the stockholders of the Seller).  No disclosures under this Section 5.2.5 shall be, in themselves, a breach of this Section 5.2 or a basis for Purchaser to terminate this Agreement pursuant to Section 10.

25

		
	5.2.6
	Notwithstanding this Section 5.2 or any other provision of this Agreement to the contrary, at any time prior to the receipt of Stockholder Approval, the Seller Board (or a duly authorized committee thereof) may grant a waiver or release under, or determine not to enforce any standstill agreement of the Seller if the Seller Board (or a duly authorized committee thereof) determines in good faith (after consultation with outside legal counsel) that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law; provided, however, that the Seller shall give Purchaser notice of the grant by the Seller Board (or a duly authorized committee thereof) at least 24 hours before granting any such waiver or release.

		
	5.2.7
	As used in this Agreement, “Takeover Proposal” shall mean any bona fide inquiry, proposal or offer from any Person (other than Purchaser and any of its Affiliates) or “group” (as such term is defined in the Exchange Act) to purchase or otherwise acquire, in a single transaction or series of related transactions, (i) assets of the Company (excluding sales of assets in the ordinary course of business) that account for 20% or more of the Company’s consolidated assets (based on the fair market value thereof) or from which 20% or more of the Company’s revenues or earnings on a consolidated basis are derived, (ii) 20% or more of the outstanding Company common stock pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, tender offer, exchange offer or similar transaction, or (iii) 20% or more of the outstanding Seller common stock pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, tender offer, exchange offer or similar transaction.

		
	5.2.8
	As used in this Agreement, “Superior Proposal” shall mean any bona fide written Takeover Proposal on terms which the Seller Board (or a duly authorized committee thereof) determines in good faith, after consultation with the Seller’s outside legal counsel and independent financial advisors, to be more favorable to the Seller or the holders of Seller common stock than the Transaction (after taking into account any revisions to this Agreement set forth in any written, binding and irrevocable offer by Purchaser capable of being accepted by the Seller), taking into account, to the extent applicable, the legal, financial, regulatory and other aspects of such proposal and this Agreement that the Seller Board considers relevant; provided that for purposes of the definition of Superior Proposal, the references to “20%” in the definition of Takeover Proposal shall be deemed to be references to “50%.”

		
	5.2.9
	As used in this Agreement, “Intervening Event” shall mean an event, development or change in circumstance that was not actually known to the Seller Board prior to the execution of this Agreement (or if so known, the consequences of which, when taken together with all other events, developments or circumstances then known, were not actually known or reasonably foreseeable based on information actually known to the members of the Seller Board as of the date of this Agreement), which event, development or change in circumstance, or any consequence thereof, becomes known to the Seller Board prior to the receipt of the Stockholder Approval; provided, that in no event shall the receipt, existence or terms of a Takeover Proposal or any matter relating thereto or consequence thereof constitute an Intervening Event.

26

		
	5.3
	Access to Information by Purchaser and Purchaser’s Financing Sources

Seller shall, and shall cause the Company to, (a) provide Purchaser and any Person who is considering providing financing to Purchaser to finance all or any portion of the Purchase Price and their respective officers, directors, employees, agents, counsel, accountants, financial advisors, consultants and other representatives (together “Representatives”) with access, upon reasonable prior notice and during normal business hours, to such officers, employees, agents and accountants of the Company and their assets and books and records as are reasonably necessary to conduct its investigation, and (b) furnish Purchaser and such other Persons with such information and data concerning the business and operations of the Company as Purchaser or any of such financing providers or Representatives reasonably may request in connection with such investigation. Notwithstanding anything to the contrary in this Agreement, neither Seller nor the Company shall be required to disclose any information to Purchaser if such disclosure would, in Seller's reasonable discretion (x) cause significant competitive harm to Seller, the Company and their respective businesses if the transactions contemplated by this Agreement are not consummated; (y) jeopardize any attorney-client or other privilege; or (z) contravene any applicable and mandatory Law, fiduciary duty or binding agreement entered into prior to the date of this Agreement. 
Prior to the Closing, without the prior written consent of Seller, which may be withheld for any reason, Purchaser shall not contact any suppliers to, or customers of, the Company (except for contact made in the Purchaser’s ordinary course of business) and Purchaser shall have no right to perform invasive or subsurface investigations of the Companies’ leased real property. 
Purchaser shall, and shall cause its Representatives to, abide by the terms of the confidentiality agreement dated as of April 7, 2015, by and between Purchaser and Seller (the “Confidentiality Agreement”), with respect to any access or information provided pursuant to this Section 5.3.
		
	5.4
	Conduct of Business

Seller, in the period between the date hereof and the Closing Date, shall cause the Company to conduct business only in the ordinary course consistent with past practice. Except as contemplated by this Agreement or as required to complete the Transaction, Seller shall:
		
	5.4.1
	use all commercially reasonable efforts to preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers and employees;

		
	5.4.2
	continue all planned sales, marketing and promotional activities relating to the business and operations of the Company, which are consistent with past practice; 

		
	5.4.3
	not amend the Organizational Documents of the Company;

		
	5.4.4
	not (i) authorize, issue, sell or otherwise dispose of any shares of or any other securities with respect to the Company, or modify or amend any right of any holder of outstanding shares of the Company; (ii) transfer, sell, dispose of or encumber any portion of its assets, other than purchases and sales of inventory in the ordinary course of business; or (iii) incur any 

27

Indebtedness or issue any debt securities or guarantee or endorse the obligations of any Person in each case, with respect to sub-clause (i) through (iii), other than in the ordinary course of business and consistent with past practice; provided that the Company shall retain the right (x) to utilise the full extent of its factoring capacity, (y) to obtain and draw under the bank loan facilities referred to by Section 5.5, and (z) distribute dividends to the Seller;
		
	5.4.5
	other than as may be required by applicable Law or in the ordinary course of business, not (i) increase the compensation payable or to become payable to Employees and/or Key Employees; (ii) grant any rights to severance or termination pay to, or enter into any employment or severance agreement with any Employee and/or Key Employee other than pursuant to arrangements previously entered into as set forth in Schedule 5.4.5; or (iii) establish, adopt, enter into or amend, any collective bargaining agreement or Employee/Key Employee benefit;

		
	5.4.6
	except in the ordinary course of business or in connection with factoring arrangements, not (i) enter into any Contract which is material to the Company, or (ii) amend or terminate any Material Contract;

		
	5.4.7
	not acquire by merger, consolidation, acquisition of assets or equity interests or any similar transaction any corporation, partnership, limited liability company or other business organization or all or substantially all of the assets of any such entity;

		
	5.4.8
	not settle or comprise any material claim or litigation;

		
	5.4.9
	except in the ordinary course of business, consistent with past practice, not permit any change in (i) any pricing, investment, accounting, financial reporting, inventory, credit, allowance or Tax practice or policy of the Company, or (ii) any method of calculating any bad debt, contingency or other reserve of the Company for accounting, financial reporting or Tax purposes, or (iii) its policies and practices relating to the terms and conditions of its account receivables and payables;

		
	5.4.10
	except as otherwise permitted hereunder or in order to effect the transactions contemplated hereby, not enter into any Contract or amend or modify any existing Contract with Seller or any of its Affiliates or any officer or director of Seller or its Affiliates, and not engage in any transaction outside the ordinary course of business consistent with past practice or not on an arm’s-length basis with any such Person.

		
	5.5
	Repayment of intercompany debt

The Seller undertakes that it will use its reasonable best efforts on or before Closing Date to cause any debt of the Company owing to the Seller or its Affiliates, including interest and fees, to be repaid in full by the Company; provided that in the event that any such debt remains unpaid as of the Closing Date, the Seller (i) undertakes to extend the term of the debt until 1 year after the Closing Date (ii) agrees that the aggregate interest rate applicable to the loan shall not be higher than 2% (two percent) as from the Closing Date until maturity date and (iii) hereby waives any right Seller may have to oppose in its capacity as the Company’s creditor the merger of the Company with any 

28

of the Purchaser or its Affiliates, provided that the successor entity to the Company assumes the Company’s obligations under the Intercompany Note. Subject to (i), (ii) and (iii) being complied with by the Seller, the Purchaser agrees to cause that the intercompany debt owing by the Company to the Seller and its Affiliates is fully repaid within 1 year from the Closing Date. The Parties acknowledge that the Company may borrow a maximum amount of Euro 4,050,000 (four million fifty thousand), plus an amount equal to accrued interest thereon, for the purposes of repaying the Intercompany Note (or the debt used to repay the Intercompany Note) by (i) drawing under any of the Company’s bank loan facilities in place as of the date hereof or (ii) obtaining and drawing under an unsecured bank loan facility or facilities having a maximum term of 4 (four) years and accruing interest at a rate not higher than the prevailing commercial rate for loans of this type. In addition, the Company may draw down on its factored accounts receivable under the Company’s factoring facility to repay the Intercompany Note. For the avoidance of doubt the debt under the mentioned bank loan facilities and factoring facilities (to the extent the Factoring Threshold is exceeded) shall fall under sub-clause (iv) of the definition of “Net Financial Position” and be considered as debt. 
		
	5.6
	Use of Tecnonet name

No rights of whatever nature related to the use of the name “Tecnonet” will be retained by Seller after Closing. After the Closing Date, Seller and its Affiliates shall not use, directly or indirectly, such name individually or in conjunction with other names in any corporate names, trademarks or similar manner.
		
	5.7
	Notification

From the date hereof to the Closing Date, Seller shall notify Purchaser in writing of the existence or happening of any fact, event or occurrence which to the Seller’s Knowledge would cause any of the Representations and Warranties set forth in Section 3 not to be true and correct in all respects.
		
	5.8
	Non-competition 

For a period of 5 (five) years from the Closing Date, the Seller undertakes to refrain from: (i) engaging in any business activities in Italy within the Business Field; (ii) soliciting or attempting to solicit, diverting or hiring away any person employed by the Company or diverting any customer of the Company within the Business Field.  For the removal of doubt, this Section 5.8 shall not apply to any Affiliates of the Seller, other than Persons that are Affiliates of the Seller as of the date of the Closing. 
		
	6.
	Covenants of Purchaser

Purchaser covenants and agrees with Seller that Purchaser will comply with all covenants and provisions of this Section 6, except to the extent Seller may otherwise consent in writing.
		
	6.1
	Use of MRV name

No rights of whatever nature related to the use of the name “MRV” will be retained by Purchaser or the Company after Closing. 
		
	6.2
	Access to Information after Closing

29

		
	6.2.1
	Purchaser shall use its best efforts to provide reasonable access to Seller or its representatives to the books, documents, data and information of the Company during normal business hours, insofar as such information is required or relevant to protect the legitimate interests of Seller, particularly in connection with Italian or United States taxation matters, any requests for or obligations to provide information to the United States Securities and Exchange Commission, or in connection with the requirements of applicable Law, legal disputes with third parties, or for evaluation of and in response to possible claims under this Agreement. If Seller makes use of this right of access, Seller shall (i) reimburse the Company for all reasonable expenses incurred in connection with such access and inspection of documents and (ii) keep such information, as well as any other information acquired during such inspections, confidential in accordance with Section 5.3.

		
	6.2.2
	In connection with any reasonable business purpose, including (i) in response to the request or at the direction of a Governmental Entity, (ii) the preparation of Tax Returns, (iii) the determination of any matter relating to the rights or obligations of Seller under this Agreement; and (iv) taxation matters, any requests for or obligations to provide information to the United States Securities and Exchange Commission, or in connection with compliance with any Laws applicable to Seller, legal disputes with third parties, or for evaluation of and in response to possible claims under this Agreement, subject to any applicable Law and subject to any applicable privileges (including the attorney-client privilege and any confidentiality obligations towards third parties), upon reasonable prior written notice, the Purchaser shall use commercially reasonable efforts to cause the Company to: (A) provide Seller and its representatives information with respect to the Company for periods prior to Closing Date, (B) afford Seller and its representatives reasonable access, during normal business hours, to the offices, properties, books, data, files, information and records of the Company, and (C) make available to Seller and its representatives the Company employees and outside auditors whose assistance, expertise, testimony, notes and recollections or presence is necessary at their workplace or otherwise to assist Seller or its affiliates in connection with any of the purposes referred to above; provided, however, that the foregoing would not in the reasonable judgment of the Purchaser result in any disclosure of any trade secrets or violate any of its obligations with respect to confidentiality, that such access shall not unreasonably interfere with the business or operations of the Company, that Seller and its representatives keep such information confidential. Notwithstanding anything to the contrary in this Agreement, neither Purchaser nor, after Closing, the Company shall be required to disclose any information to Seller if such disclosure would contravene any applicable Law.

		
	6.2.3
	Seller shall have the right to retain copies of all books and records of the Company relating to periods ending on or prior to the Closing Date subject to compliance with applicable law.  Seller shall keep such documents confidential.  The Purchaser agrees that, from and after the Closing Date, with respect to all original books and records of the Company, the Purchaser will (and will cause the Company to) (i) comply in all material respects with applicable law relating to the preservation and retention of records and (ii) apply preservation and retention policies that are no less stringent than those generally applied by the Purchaser.

30

		
	6.2.4
	In addition, the Purchaser shall use its best effort to deliver to Seller, no later than the earlier of 21 days after Closing Date or 10 days after the end of the fiscal quarter in which the Closing Date takes place, a reporting package using the regular monthly reporting package used by the Company to report its financial results to Seller, except that the balance sheet data will be as of the Closing Date and the statement of operations data will be for the period then ended.

		
	6.3
	Employees; Benefit Plans

		
	6.3.11
	During the period commencing at the Closing and ending on the date which is 6 (six) months from the Closing (or if earlier, the date of the employee's termination of employment with the Company), Purchaser shall and shall cause the Company to provide each Employee who remains employed immediately after the Closing (“Company Continuing Employee”) with: (i) base salary or hourly wages which are no less than the base salary or hourly wages provided by the Company immediately prior to the Closing; (ii) target bonus opportunities (excluding equity-based compensation), if any, which are no less than the target bonus opportunities (excluding equity-based compensation) provided by the Company immediately prior to the Closing; (iii) retirement and welfare benefits that are no less favorable in the aggregate than those provided by the Company immediately prior to the Closing; and (iv) severance benefits that are no less favorable than the practice, plan or policy in effect for such Company Continuing Employee immediately prior to the Closing. The foregoing does not limit the ability of the Company to dismiss for just cause or justified reason, subjective or objective, accept the resignation of, implement a collective dismissal procedure or offer incentives to leave to, the Company Continuing Employees.

		
	6.3.12
	This Section 6.3 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 6.3, express or implied, shall confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 6.3. Nothing contained herein, express or implied, shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement. The parties hereto acknowledge and agree that the terms set forth in this Section 6.3 shall not create any right in any Employee or any other Person to any continued employment with the Company, Purchaser or any of their respective Affiliates or compensation or benefits of any nature or kind whatsoever.

		
	7.
	Additional Covenants of Seller and Purchaser

The Parties further covenant and agree that they will comply with all covenants and provisions of this Section 7, except to the extent the other Party may otherwise consent in writing.
		
	7.1
	Publicity

Seller and Purchaser shall consult with each other prior to issuing of the first press releases or otherwise making the first public announcement with respect to the 

31

Transaction and prior to making any the first filing with any third party and/or any Governmental Entity 
		
	7.2
	Other Actions

		
	7.2.13
	Purchaser and Seller shall cooperate with each other and use commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Law to consummate the Transaction, including preparing and submitting as promptly as practicable all documentation to effect all necessary notices, reports, submissions and other filings.

		
	7.2.14
	In furtherance and not in limitation of the foregoing, each of Purchaser and Seller shall (i) execute and deliver, or cause to be executed and delivered, such documents and other instruments and take, or cause to be taken, such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the Transaction, and (ii) refrain from taking any actions that could reasonably be expected to impair, delay or impede the Closing.

		
	8.
	Conditions to Closing

		
	8.1
	Conditions to Obligations of Purchaser

The obligations of Purchaser to consummate the Transaction are also subject to the satisfaction or waiver by Purchaser, as the case may be, on or prior to the Closing Date, of the following conditions:
		
	8.1.14.1
	Seller shall have performed in all material respects all obligations required to be performed by Seller under this Agreement at or prior to the Closing.

		
	8.1.14.2
	Seller shall have obtained the Stockholder Approval.

		
	8.1.14.3
	The Seller’s Representations and Warranties shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality) or in all material respects (in the case of any representation or warranty not qualified by materiality) as of Closing Date.

		
	8.1.14.4
	From the date of this Agreement, there shall not have occurred any Material Adverse Effect.

		
	8.2
	Conditions to Obligations of Seller

The obligations of Seller to consummate the Transaction are also subject to the satisfaction or waiver by Seller, as the case may be, on or prior to the Closing Date, of the following conditions:
		
	8.2.1.8
	Purchaser shall have performed in all material respect all obligations required to be performed by  Purchaser under this Agreement at or prior to the Closing.

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	8.2.1.9
	Seller shall have obtained  the Stockholder Approval.

		
	8.2.1.10
	The Purchaser’s Representations and Warranties shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality) or in all material respects (in the case of any representation or warranty not qualified by materiality) as of Closing Date.

(the items above under Sections 8.1 and 8.2 above, hereinafter, collectively, the “Conditions Precedent”, and each a “Condition Precedent”).
		
	8.3
	Disclosure and cooperation

The Parties undertake to disclose in writing to each other anything which will or reasonably may be expected to prevent any of the Conditions Precedent from being satisfied promptly after it comes to their notice.
The Seller shall promptly provide any assistance and cooperation which the Purchaser may reasonably request for the purpose of verifying that any Condition Precedent has been actually met. 
		
	8.4
	Waiver

The Conditions Precedent under Section 8.1 have been provided to the benefit of the Purchaser only, which is entitled to waive any of such Conditions Precedent.
The Conditions Precedent under Section 8.2 have been provided to the benefit of the Seller only, which is entitled to waive any of such Conditions Precedent.
For the sake of clarity, it is agreed and understood that the waiver of any Condition Precedent by the Party entitled to do so pursuant to this Agreement and the consequent consummation of the Closing shall not be regarded as a waiver of any rights, remedies or actions which the Party waiving such Condition Precedent may be entitled to pursuant to this Agreement and/or the Law. 
		
	9.
	Indemnification

		
	9.1
	General Indemnification

		
	9.1.2
	Seller shall indemnify Purchaser and/or the Company, as the case may be, in respect of, and hold them harmless from and against, any Loss suffered by the Purchaser and the Company for breach by the Seller of the Representations and Warranties or for breach of any other obligations provided for in this Agreement. 

		
	9.1.3
	Notwithstanding the foregoing, the Purchaser shall use its best efforts to prevent and mitigate any Loss it may incur as a consequence of the breaches referred to above. The Seller shall not be liable should a Loss be, in whole or in part, the result of an act or omission of the Purchaser or the Company committed after the Closing Date.

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	9.1.4
	No Person, other than the Purchaser and/or the Company, as the case may be, will be entitled to make a claim under this Agreement, nor will damages be calculated by reference to a Loss suffered by any Person other than the Purchaser and/or the Company, as the case may be.

		
	9.1.5
	Any payment made by the Seller hereunder shall be deemed as a reduction of the Purchase Price. No interest shall accrue on payments to be made by the Seller hereunder until the due date. 

		
	9.1.6
	Notwithstanding anything to the contrary contained in this Agreement, no amounts of indemnity pursuant to Section 9.1.1 shall be payable as a result of any claim in respect of a Loss: 

		
	9.1.6.1
	unless, with respect to any claim (including claims relating to substantially the same factual circumstances), such claim involves Losses in excess of Euro 10,000 (ten thousand);

		
	9.1.6.2
	unless and until Purchaser has suffered, incurred, sustained or become subject to Losses in excess of 1% (one percent) of the Purchase Price in the aggregate, provided that once such threshold has been reached, the Seller will be liable for the whole amount and not only for the excess; and

		
	9.1.6.3
	if Purchaser has received payments in respect of Losses of an amount equal to 20% (twenty percent) of the Purchase Price in the aggregate,

it being understood that the above limitations will not apply to the Representations and Warranties under Sections 3.2.1, 3.2.2, 3.2.4, 3.3.1, ‎3.3.2 and ‎3.3.4
		
	9.1.7
	The Parties agree that:

		
	9.1.7.1
	in case the Loss is tax deductible, then the liability of the Seller shall be limited to the amount of the Loss, less the tax deduction which will be realized by the Purchaser or the Company;

		
	9.1.7.2
	the Seller will not be liable in respect of any Loss, to the extent that it arises or is increased or extended as a result of an increase in the rates of taxes or any change in Tax practice occurring after Closing;

		
	9.1.7.3
	the Seller shall not be liable in respect of any Loss, to the extent that it arises as a result of a change in the Law or in any regulation requirement or code of conduct of any Governmental Authority and any change in any accounting policy;

		
	9.1.7.4
	the Seller will not be responsible for Losses if, and to the extent that, the relevant amount is recoverable by the Purchaser or the Company from their respective insurers;

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	9.1.7.5
	should the Company benefit from the receipt of contingent income of any other contingent assets, of any kind whatsoever in connection with or resulting from a Loss, then the liability of the Seller will be further reduced by the corresponding amounts;

		
	9.1.7.6
	the Seller will not be liable to the extent that a claim relates to a liability that is contingent only, unless and until such contingent liability becomes an actual liability or until it is finally adjudicated (including by way of a decision that although not final, is provisionally enforceable); in this respect, notwithstanding anything to the contrary herein, any Third Party Claim including a payment request will considered as an actual Loss if an order or a decision is issued by a Governmental Authority which is enforceable (including provisionally), in which case the Loss shall be indemnified by the Seller before the date on which the payment to the third party by the Company or the Purchaser becomes due;

		
	9.1.7.7
	the Seller shall not have any liability under any provision of the Agreement for any damages which are not direct and immediate, within the meaning of article 1223 of the Civil Code (including punitive damages); 

		
	9.1.7.8
	the Purchaser is not entitled to recover more than once in respect of any matter giving rise to a claim; and

		
	9.1.7.9
	no tax gross up shall be made on payments to be made hereunder by the Seller to the Purchaser, even if they are taxable in the hands of the Purchaser.

		
	9.1.8
	The Purchaser shall use all its best efforts, at its sole expense and as requested by the Seller, to pursue any and all rights to reimbursement, recovery or indemnification with respect to all Losses for which it is entitled pursuant to any Contract (other than insurance policies) executed by it or by the Company with any Person, or pursuant to the extra contractual liability of any Person. 

		
	9.1.9
	If the Seller pays to the Purchaser an amount in discharge of a Loss and the Purchaser subsequently recovers from a third party a sum which is attributable to the subject matter of the Claim, the Purchaser shall promptly pay to the Seller an amount equal to all amounts recovered, up to the aggregate amount thus paid by the Seller. 

		
	9.1.10
	Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that all qualifications in the Representations and Warranties as to “materiality” shall be disregarded following the Closing, including for the purposes of determining (i) whether or not there is a breach of, or any inaccuracy or misrepresentation with respect to, any representation or warranty for which indemnification would be available under Section 9 and (ii) the amount of any Losses to be indemnified.    

		
	9.2
	Handling of Claims

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	9.2.1
	If any event occurs which could give rise to the Seller’s liability under this Agreement, the Purchaser shall deliver to the Seller a written claim in relation to such event as promptly as practicable and in any event within and no later than 15 (fifteen) Business Days following the date on which the Purchaser or the Company became aware of such event and shall provide all reasonable particulars thereof, indicating the provision of this Agreement which have been allegedly breached. Should the Purchaser fail to timely deliver such claim to the Seller, the Purchaser, in any case, shall not lose its right to compensation. The Seller agrees to respond to the Purchaser within 15 (fifteen) Business Days as of the date of receipt of the claim, to challenge the Indemnification claim, it being understood that failure to timely respond may not be considered as acceptance of the Claim, and the Purchaser will be considered free to commence or continue the relevant litigation.

In case of written claim relating to an action or a claim by any third party against the Company (the “Third Party Claim”), the Seller shall have the right to participate and, to the maximum extent permitted by Law, join, at its own cost, by counsel or counsels chosen by the Seller, in the defence against any Third Party Claim and the Purchaser shall provide the Seller with any necessary or useful assistance and information in connection therewith. The Purchaser shall in any case properly and diligently defend, and shall cause the Company to properly and diligently defend, any claim, suit, action or proceeding however related to such Third Party Claim.
Unless the Seller acknowledges its indemnification liability vis-à-vis the Purchaser and the Company in relation to the part of a Third Party Claim that relates to a potential breach by the Seller of a warranty under this Agreement, the Purchaser shall have the exclusive right to take the final decision with reference to the defence of such Third Party Claim. In case of Third Party Claims, the indemnification payment shall be made by the Seller upon Purchaser's payment request in case of payments required under decisions of any Governmental Entities (including Courts and arbitration panels or similar bodies having jurisdiction on the Company), even if not yet final, to the extent that such decisions are enforceable (esecutive), and it being further understood that if the Purchaser is required to make a payment to a third party thereunder the Seller shall make the payment before the relevant payment to be made by the Purchaser becomes due (in accordance with the instructions provided by the Purchaser).
		
	9.2.2
	On condition that the Seller has acknowledged its indemnification liability vis-à-vis the Purchaser and the Company in relation to a Third Party Claim, if a firm offer is made to the Company or to the Purchaser to settle any Third Party Claim which the Purchaser (or the Company), but not the Seller, is willing to accept, the Purchaser and/or the Company (as the case may be) shall be free to enter into such settlement, at their own expense, it being understood that the Seller shall be relieved of any liability in connection thereof.

		
	9.2.3
	If a firm offer is made to the Company or to the Purchaser to settle any Third Party Claim which the Seller, but not the Purchaser, is willing to accept, the Purchaser and/or the Company (as the case may be) shall be free not to enter into such settlement and to commence or continue the relevant litigation, at their own expense, it being understood that the liability of the Seller in 

36

connection thereof, in case of success of the Purchaser and/or the Company in the relevant litigation, shall be equal to what provided by the relevant Court decisions.
		
	9.3
	Survival

		
	9.3.1
	The warranties (including the Representations and Warranties), covenants and agreements of Seller and Purchaser contained in this Agreement will survive the Closing:  

		
	9.3.1.1
	Until the expiry of the applicable statute of limitation period with respect to the Representations and Warranties contained in Sections 3.2.1, 3.2.2, 3.2.4, ‎3.2.16, 3.2.24 (only with respect to bribery or other criminal offences against or involving any Governmental Entities and the related consequences under the Decree 231/2001), 3.3.1, ‎3.3.2 and 3.3.4. 

		
	9.3.1.2
	until the 24 (twenty four) month anniversary of the Closing Date in the case of all other Representations and Warranties and any covenant or agreement to be performed in whole or in part on or prior to the Closing;

		
	9.3.1.3
	with respect to each other covenant or agreement contained in this Agreement, until 1 (one) year following the last date on which such covenant or agreement is to be performed as specified herein or, of no such date is specified, until the 36 (thirty six)-month anniversary of the Closing Date; 

provided that any representation, warranty, covenant or agreement that would otherwise terminate in accordance with clauses 9.3.1.1 to 9.3.1.3 above will continue to survive if a notice of claim shall have been timely given hereunder on or prior to such termination date, until the related claim for indemnification has been satisfied or otherwise resolved.
		
	9.4
	Special Indemnity

		
	9.4.1
	The Seller agrees that, should any of the credit receivables of the Company towards Vitrociset S.p.A. - for an amount as of the Signing Date equal to the outstanding consideration provided under the relevant Contract not be fully paid and discharged within 3 months from the Closing Date it will purchase from the Company, within 3 Business Days from the Purchaser's written request, all such receivables then still outstanding, for a price equal to their nominal value, to be paid immediately from the Seller to the Company upon such purchase.

		
	9.4.2
	If during the 12 months after the Closing the Company collects payment on accounts receivable in excess of their carrying value on the books and records of the Company as of the Closing Date, the Purchaser shall promptly pay to the Seller an amount equal to such excess.

		
	9.5
	Sole Remedy

The indemnification provisions of this Section 9 shall be the sole and exclusive remedy for any breach by the Seller of any warranties, obligations and covenants contained in 

37

this Agreement after the Closing. No breach of any warranty, covenant or agreement contained in this Agreement shall give rise to any right on the part of Purchaser, to rescind or terminate this Agreement after the Closing. 
		
	10.
	Termination

		
	10.1
	Termination Events

This Agreement may be terminated, and the transactions contemplated hereby may be abandoned:
		
	10.1.4
	at any time before the Closing, by mutual written agreement of Seller and Purchaser;

		
	10.1.5
	at any time before the Closing, by Seller or Purchaser, in the event (i) of a material breach by the non-terminating Party of its covenants contained in this Agreement, if such non-terminating Party fails to cure such breach within five (5) Business Days following notification thereof by the terminating Party or (ii) upon notification of the non-terminating Party by the terminating Party that the satisfaction of any condition to the terminating Party’s obligations under this Agreement becomes impossible or impracticable with the use of commercially reasonable efforts temporary impossible for a cause not imputable to the terminating Party and in any case if the failure of such condition to be satisfied is not caused by a breach hereof by the terminating Party; 

		
	10.1.6
	at any time by Seller or Purchaser after the Seller Stockholder’s Meeting has been held (and not further adjourned) and the Stockholder Approval has not been obtained; provided that the right to terminate this Agreement pursuant to this Section 10.1.3 shall not be available to the Seller unless the Seller pays or has paid the Termination Fee to Purchaser;

		
	10.1.7
	at any time after November 30, 2015 (the “Long Stop Date”) by Seller or Purchaser upon notification of the non-terminating Party by the terminating Party if the Closing shall not have occurred on or before such date and such failure to consummate the Transaction is not caused by a breach of this Agreement by the terminating Party; it is agreed that the Long Stop Date will be automatically postponed to December 31, 2015 if the Seller has filed the Final Proxy Statement by November 30, 2015;

		
	10.1.8
	at any time by the Seller in order to enter into a definitive agreement providing for a Superior Proposal, in accordance with Section 5.2; provided that the right to terminate this Agreement pursuant to this Section 10.1.5 shall not be available to the Seller unless the Seller pays or has paid the Termination Fee to Purchaser, it being understood that the Seller may enter into any transaction that is a Superior Proposal simultaneously with the termination of this Agreement pursuant to this Section 10.1.5.

		
	10.2
	Termination Fee

In case of termination by either Party under Section 10.1.3 or 10.1.5, the Seller shall pay the Termination Fee within 3 (three) Business Days from the written request by the Purchaser, independently from the reason why the Stockholder Approval has not been timely obtained.

38

		
	10.3
	Effect of Termination

If this Agreement is validly terminated pursuant to Section 10.1, this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of Seller or Purchaser (or any of their respective officers, directors, employees, agents or other representatives or Affiliates), except that the provisions with respect to expenses in Section 11.2, governing law in Section 11.3, and arbitration in Section 11.4. 
		
	11.
	Miscellaneous and General

		
	11.1
	Amendment; Waivers; Etc.

No amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed by both Parties and no waiver hereunder shall be valid or binding unless set forth in writing by the waiving Party. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. The waiver by Purchaser or Seller of a breach of or a default under any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall not be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and none is exclusive of any other, or of any rights or remedies that any Party may otherwise have.
		
	11.2
	Expenses

Except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transaction shall be paid by the Party incurring such cost or expense.
		
	11.3
	Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Republic of Italy, without regard to conflict of Law principles thereof; except for Sections 5.1, 5.2, 10.1.3 and 10.1.5, which shall be governed by and construed in accordance with the laws of the State of Delaware, U.S.A.
		
	11.4
	Arbitration 

The Parties will try to settle any dispute which may arise between the Parties in relation to this Agreement (including those concerning its validity, enforceability, performance and termination), by amicable effort of the Parties, which may avail the assistance of their advisors, also involving the persons who originally executed it or their successors. Such effort shall be deemed to have failed if a settlement of the dispute is not reached in writing within 40 (forty) days from the notice of the dispute received by any Party.
If the effort at settlement has failed, Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be three.

39

The seat, or legal place, of arbitration shall be London, England.
The language to be used in the arbitral proceedings shall be English.
The award shall be final and binding upon the parties. 
The final award shall award to the prevailing party its reasonable attorneys’ fees and costs incurred in connection with the arbitration to the extent the arbitration panel deems the party to have prevailed (but if the prevailing party is not awarded all of the payment or damages or other remedies sought, the arbitration panel may decide to award to the prevailing party only a portion of its fees and costs).  Judgment upon any decision of the arbitrator may be entered into in any court having jurisdiction thereof, or application may be made to such court for a judicial acceptance of the decision in an order of enforcement.
		
	11.5
	Notices

All notices, consents and other communications required or permitted under this Agreement shall be made in writing and be delivered by hand, by registered mail to the addresses set forth below or to such other addresses as may be given by written notice in accordance with this Section 11.5. Messages shall be deemed to have been received:
		
	11.5.1
	upon actual delivery if delivered by hand;

		
	11.5.2
	by registered mail.

Messages shall be addressed:
If to Seller:
MRV Communications, Inc.
20415 Nordhoff Street
Chatsworth, CA 91311
Facsimile: +1 818 473 4257
Attention: Mark Bonney

With a copy to:
Norton Rose Fulbright US LLP
666 Fifth Avenue
New York, New York  10103-3198
Facsimile: +1 212 318 3400
Attention: Steven I. Suzzan
If to Purchaser:    
to Maticmind S.p.A.
Via B. Croce
Vimodrone (MI)
20090

40

Italy
Attention: Mr Luciano Zamuner  
Email: luciano.zamuner@maticmind.it 

With a copy to:  
 
DLA Piper Studio Legale Tributario Associato  
Via dei Due Macelli 66  
00187 Rome  
Italy  
Attention: Mr Giulio Maroncelli 
Email: giulio.maroncelli@dlapiper.com
or to such other persons or addresses as may be designated in writing by the Party to receive such notice as provided above.
		
	11.6
	Entire Agreement

This Agreement and the Confidentiality Agreement contain the entire agreement between the Parties in connection with the Transaction and supersede any previous written or oral agreement between the Parties in relation to the subject matters dealt with in this Agreement.
		
	11.7
	No Third Party Beneficiaries

This Agreement is not intended to confer upon any Person other than the Parties any rights or remedies hereunder.
		
	11.8
	Severability

The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
		
	11.9
	Interpretation

		
	11.9.1
	This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

		
	11.9.2
	All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. 

		
	11.10
	Successors and Assigns

The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. No Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that Purchaser may assign its rights hereunder to one of its Affiliates; and provided further, that such assignment shall not relieve Purchaser of its obligations hereunder.

41

*  *  *
If you agree to the above, we kindly ask you to confirm that the terms and conditions of Agreement reflect our understandings, by returning a duly initialised and executed copy of this document to us, as a sign of your full and unconditional acceptance.

MRV COMMUNICATIONS, INC.
By: ___/s/ Mark J. Bonney_________________ 
Name: Mark J. Bonney
Title: Chief Executive Officer                    

42

*  *  *

In full and unconditional acceptance of all the above

Kind regards,

                                
MATICMIND S.P.A.
By:    ___/s/ Luciano Zamuner_______________ 
Name: Dr. Luciano Zamuner
Title: Chief Executive Officer 

 

43

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