Document:

Exhibit 10.9

 

NOTICE OF GRANT OF NON-QUALIFIED
STOCK OPTION AWARD

 

MRV COMMUNICATIONS, INC.

2007 OMNIBUS INCENTIVE PLAN

 

FOR
GOOD AND VALUABLE CONSIDERATION, MRV Communications, Inc. (the “Company”)
hereby grants, pursuant to the provisions of the Company’s 2007 Omnibus
Incentive Plan (the “Plan”), to the Participant designated in this Notice of
Grant of Non-Qualified Stock Option Award (the “Notice”) an option to purchase
the number of shares of the common stock of the Company set forth in the Notice
(the “Shares”), subject to certain restrictions as outlined below in this
Notice and the additional provisions set forth in the attached Terms and
Conditions of Stock Option Award (collectively, the “Agreement”).  Also enclosed is a copy of the information
statement describing important provisions of the Plan.  Section references herein refer to the
attached Terms and Conditions of Stock Option Award.

 

Optionee:

 

	
  Date
  of Grant:

  	
  Type
  of Option: Non-Qualified Stock Option

  
	
   

  	
   

  
	
  Exercise
  Price per Share:
  $

  	
  Expiration
  Date:

  
	
   

  	
   

  
	
  Total
  Number of Shares Granted:

  	
  Total
  Exercise Price:
  $

  

 

Vesting Schedule:  All Vest immediately.

 

Exercise
After Termination of Service: Termination of
Service for any reason: any non-vested portion of the Option expires
immediately;

 

Termination
of Service due to death or Disability: vested portion of the Option is exercisable by the
Optionee (or, in the event of the Optionee’s death, the Optionee’s Beneficiary)
for one (1) year after the Optionee’s Termination;

 

Termination
of Service for any reason other than death or Disability: vested portion of the Option is
exercisable for a period of thirty (30) days following the Optionee’s
Termination.

 

This
Option shall not be exercised after the Expiration Date as provided above,
unless extended under Section 2(a). 

 

By signing below, the
Optionee agrees that this Non-Qualified Stock Option
Award is granted under and governed by the terms and conditions of
the Company’s 2007 Omnibus Incentive Plan and the attached Terms and
Conditions.

 

	
  Participant

  	
  MRV Communications, Inc.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
					

 

Non-Qualified Stock
Option  

Audit Committee Grants) 

Version prepared Dec.
2007 

 

1

 

TERMS
AND CONDITIONS OF NON-QUALIFIED STOCK OPTION AWARD

 

I.                                         AGREEMENT

 

1.             Grant of Option.  The Option granted to the Optionee and
described in the Notice of Grant is subject to the terms and conditions of the
Plan, which is incorporated by reference in its entirety into these Terms and
Conditions of Stock Option Award.

 

The Board of Directors of the Company has authorized
and approved the 2007 Omnibus Incentive Plan (the “Plan”), which has been
approved by the Company’s stockholders. 
The Board of Directors has approved an award to the Optionee of an
option to purchase a number of shares of the Company’s common stock,
conditioned upon the Optionee’s acceptance of the provisions set forth in the
Notice and these Terms and Conditions within 30 days after the Notice and these
Terms and Conditions are presented to the Optionee for review.  For purposes of the Notice and these Terms
and Conditions, any reference to the Company shall include a reference to any
Subsidiary.

 

The Company intends that this Option not be
considered to provide for the deferral of compensation under Section 409A of
the Code and that this Agreement shall be so administered and construed.  Further, the Company may modify the Plan and
this Award to the extent necessary to fulfill this intent.

 

2.             Exercise of
Option.

 

(a)           Right to Exercise.  This Option shall be exercisable, in whole or
in part, during its term in accordance with the Vesting Schedule set out in the
Notice of Grant and with the applicable provisions of the Plan and this Option
Agreement.  No Shares shall be issued
pursuant to the exercise of an Option unless the issuance and exercise comply
with applicable laws.  Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.  The Board of Directors may,
in its discretion, extend the applicable exercise period, to the extent
permitted under Section 6.03(c) of the Plan.

 

(b)           Method of Exercise.  The Optionee may exercise the Option by
delivering a written exercise notice in a form approved by the Company (or by
such other method as the Company may establish from time to time and so
instruct the Optionee as to use) (the “Exercise Notice”) which shall state the
election to exercise the Option, the number of Shares with respect to which the
Option is being exercised, and such other representations and agreements as may
be required by the Company.  The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Shares exercised consistent with Section 3. 
This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.

 

3.             Method of
Payment.  If the Optionee elects to
exercise the Option by submitting an Exercise Notice under Section 2(b) of this
Agreement, the aggregate Exercise Price (as well as any applicable withholding
or other taxes) shall be paid by cash or check; provided, however, that the Board of Directors may consent,
in its discretion, to payment in any of the following forms, or a combination
of them, when such payment is made consistent with Section 6.04 of the Plan:

 

(a)           cash or check;

 

2

 

(b)           consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the Plan;

 

(c)           surrender of other Shares owned by the Optionee
which have a Fair Market Value on the date of surrender equal to the aggregate
Exercise Price of the Exercised Shares and any applicable withholding, provided, however, that the Optionee may not transfer any
fractional Share in satisfaction of the Exercise Price; or

 

(d)           any other consideration that the Board of Directors
deems appropriate and in compliance with applicable law.

 

4.             Restrictions on
Exercise.  This Option
may not be exercised until such time the issuance of the Shares upon exercise
or the method of payment of consideration for those Shares would not constitute
a violation of any applicable law or regulation, including until such time as
the Shares reserved for issuance under the Plan have been registered by the
Company under the Securities Act, unless the Optionee provides an opinion of
counsel reasonably satisfactory to the Company that registration under the
Securities Act is not required.

 

5.             Non-Transferability
of Option.  This Option
may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of the
Optionee only by the Optionee, and may be exercised by the Optionee’s
Beneficiary to the extent provided under the Plan following the death of the
Optionee; The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.

 

6.             Term of Option.  This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option Agreement.

 

7.             Withholding.

 

(a)           The Board of Directors shall
determine the amount of any withholding or other tax required by law to be
withheld or paid by the Company with respect to any income recognized by the
Optionee with respect to the Option Award.

 

(b)           The Optionee shall be required to meet any
applicable tax withholding obligation in accordance with the provisions of Section
11.05 of the Plan.

 

(c)           Subject to any rules prescribed by the Board of
Directors, the Optionee shall have the right to elect to meet any withholding
requirement (i) by having withheld from this Award at the appropriate time that
number of whole shares of common stock whose fair market value is equal to the
amount of any taxes required to be withheld with respect to such Award, (ii) by
direct payment to the Company in cash of the amount of any taxes required to be
withheld with respect to such Award or (iii) by a combination of shares and
cash.

 

8.             Defined Terms.  Capitalized terms used but not defined in the
Notice and these Terms and Conditions shall have the meanings set forth in the
Plan, unless such term is defined in the Optionee’s .

 

9.             Optionee
Representations.  The
Optionee hereby represents to the Company that the Optionee has read and fully
understands the provisions of the Notice, these Terms and 

 

3

 

Conditions and the Plan and the Optionee’s decision to participate in
the Plan is completely voluntary. 
Further, the Optionee acknowledges that the Optionee is relying solely
on his or her own advisors with respect to the tax consequences of this stock
option award.

 

10.           Regulatory Limitations on Exercises.  Notwithstanding the other provisions of this
Option Agreement, no option exercise or issuance of Shares pursuant to this
Option Agreement shall be effective if (i) the shares of Common Stock reserved
under the Plan are not subject to an effective registration statement at the
time of such exercise or issuance, or otherwise eligible for an exemption from
registration, or (ii) the Company determines in good faith that such exercise
or issuance would violate any Company policy or applicable securities or other
law or regulation.

 

11.           Miscellaneous.

 

(a)           Notices.  All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under these Terms and Conditions shall be in writing and shall be either
delivered personally or sent by registered or certified mail, or by private
courier, return receipt requested, postage prepaid to the parties at their
respective addresses set forth herein, or to such other address as either shall
have specified by notice in writing to the other.  Notice shall be deemed duly given hereunder
when delivered or mailed as provided herein.

 

(b)           Waiver.  The waiver by any party hereto of a breach of
any provision of the Notice or these Terms and Conditions shall not operate or
be construed as a waiver of any other or subsequent breach.

 

(c)           Entire Agreement.  These Terms and Conditions, the Notice and
the Plan constitute the entire agreement between the parties with respect to
the subject matter hereof.

 

(d)           Binding Effect; Successors.  These Terms and Conditions shall inure to the
benefit of and be binding upon the parties hereto and to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives.  Nothing in these Terms
and Conditions, express or implied, is intended to confer on any person other
than the parties hereto and as provided above, their respective heirs,
successors, assigns and representatives any rights, remedies, obligations or
liabilities.

 

(e)           Governing Law.  The Notice and these Terms and Conditions
shall be governed by and construed in accordance with the laws of the State of
Delaware.

 

(f)            Headings.  The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of these
Terms and Conditions.

 

(g)           Conflicts; Amendment.  The provisions of the Plan are incorporated
in these Terms and Conditions in their entirety.  In the event of any conflict between the
provisions of these Terms and Conditions and the Plan, the provisions of the
Plan shall control.  The Agreement may be
amended at any time by written agreement of the parties hereto.

 

4

 

(h)           No Right to Continued Service.  Nothing in the Notice or these Terms and
Conditions shall confer upon the Optionee any right to continue in the employ
or service of the Company.

 

(i)            Further Assurances.  The Optionee agrees, upon demand of the
Company or the Board of Directors, to do all acts and execute, deliver and
perform all additional documents, instruments and agreements which may be
reasonably required by the Company or the Board of Directors, as the case may
be, to implement the provisions and purposes of the Notice and these Terms and
Conditions and the Plan.

 

5Exhibit 10.27

 

MRV
COMMUNICATIONS, INC.

1997

INCENTIVE
STOCK OPTION PLAN

AND

NONSTATUTORY
STOCK OPTION PLAN

(AS
ADOPTED ON NOVEMBER 11, 1997 AND

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

AND
NOVEMBER 1, 2001 (SUBJECT TO STOCKHOLDER APPROVAL)

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

 

1.  NAME, EFFECTIVE DATE AND PURPOSE.

 

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

 

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

 

2.  ADMINISTRATION.

 

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

 

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

 

(c) Definitions:

 

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

 

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

 

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

 

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

 

 

3.
 ELIGIBILITY.

 

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

 

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

 

4.
 STOCK TO BE OPTIONED.

 

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

 

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

 

5.
 OPTION PRICE.

 

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

 

6.
 TERM OF PLAN.

 

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

 

7.
 EXERCISE OF OPTION.

 

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

 

 

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

 

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

 

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

 

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

 

8.
 RULES APPLICABLE TO CERTAIN
DISPOSITIONS.

 

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

 

(i) the
Option Expiration Date; or

 

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

 

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

 

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

 

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

 

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

 

 

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

 

9.
 MERGERS AND ACQUISITIONS.

 

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

 

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

 

10.
 TERMINATION OF EMPLOYMENT.

 

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

 

(i) the
applicable Option Expiration Date; or

 

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

 

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

 

(i) the
applicable Option Expiration Date; or

 

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

 

(iii) the
first anniversary of the date of the

 

 

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

 

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

 

11.
 EXERCISE OF OPTIONS.

 

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

 

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

 

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

 

12.
 AUTHORIZATION TO ISSUE OPTIONS AND
STOCKHOLDER APPROVAL.

 

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

 

13.
 LIMIT ON VALUE OF OPTIONED SHARES.

 

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

 

14.
 PAYMENT OF EXERCISE PRICE WITH COMPANY
STOCK.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15.
 TAXES, FEES AND EXPENSES.

 

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

 

16.
 WITHHOLDING OF TAXES.

 

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

 

 

17.
 AMENDMENT OR TERMINATION OF THE PLAN.

 

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

 

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

 

18.
 OPTIONS NOT TRANSFERABLE.

 

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

 

19.
 NO RESTRICTIONS ON TRANSFER OF STOCK.

 

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

 

20.
 RESERVATION OF SHARES OF COMMON STOCK.

 

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

 

21.
 RESTRICTIONS ON ISSUANCE OF SHARES.

 

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

 

22.
 NOTICES.

 

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

 

 

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

 

23.
 ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION.

 

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

 

24.
 REPRESENTATIONS AND WARRANTIES.

 

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

 

25.
 NO ENLARGEMENT OF EMPLOYEE RIGHTS.

 

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

 

26.
 INFORMATION TO OPTION HOLDERS.

 

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

 

 

27.
 LEGENDS ON STOCK CERTIFICATES.

 

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

 

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

 

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

 

28.
 INVALID PROVISION.

 

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

 

29.
 APPLICABLE LAW.

 

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

 

30.
 SUCCESSORS AND ASSIGNS.

 

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

 

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

 

	
   

  	
  MRV
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  BY

  	
  /s/
  Noam Lotan

  
	
   

  	
   

  	
  Noam
  Lotan

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

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