SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 9, 2011
MRV COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE |
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001-11174 |
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06-1340090 |
20415 Nordhoff Street, Chatsworth, CA 91311
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (818) 773-0900
Not Applicable
Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) (1) On March 9, 2011, the Board of Directors of MRV Communications, Inc. (the Company) approved an Executive Agreement, by and between its subsidiary, MRV Communications Boston Division, Inc. (MRV Boston) and Barry Gorsun, providing for the compensation, severance and other terms of employment for Mr. Gorsun, who is the President of the Companys Optical Communications Systems division. Mr. Gorsun began his employment with MRV Boston on October 11, 2011, and received a grant of 250,000 stock options for the Companys Common Stock upon commencement of employment. The Executive Agreement provides for a base salary of $230,000, a target cash incentive bonus of 45% of his base salary for 2011 pursuant to the Companys Incentive Compensation Plan, and standard benefits as provided to similarly situated executives. Mr. Gorsun will receive a lump sum payment equal to six months base salary and payment of premiums of COBRA or its equivalent for 12 months upon termination by MRV Boston without cause or by him for good reason, as defined in the agreement. Further, if there is a change of control of MRV Boston (as defined in the agreement), he will receive a lump sum payment equal to 12 months base salary and accelerated vesting of, and up to a three-year extended expiration period for, unvested equity grants. Upon his termination by MRV Boston without cause or by him for good reason in the 12-month period following a change of control of MRV Boston, he shall receive a lump sum payment equal to 12 months base salary and payment of premiums of COBRA or its equivalent for 12 months. The agreement includes, among other things, non-compete, non-solicitation and non-disparagement provisions. The foregoing description of the agreement is not complete and is qualified in its entirety by the full text of such agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
(2) The Companys Compensation Committee hired Farient Advisors, a compensation consultant, in order to provide a study of comparable fixed and variable compensation levels for the Companys highly compensated employees. The study helped the committee benchmark targets for performance-based compensation, long-term and short-term, as well as base pay. Taking the compensation study and personal performance into account, at its March 9, 2011 meeting, the Board approved base salary increases and annual stock option grants for the Companys Common Stock for the following officers in the following amounts:
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Base Salary Increase |
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Number of Options |
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Chris King |
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$ |
16,100 |
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230,000 |
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Chief Financial Officer |
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Jennifer Hankes Painter |
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$ |
6,900 |
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200,000 |
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VP, General Counsel |
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Blima Tuller |
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$ |
47,600 |
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40,000 |
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VP, Finance |
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The base salary increases raised the annual base pay of Mr. King, Ms. Painter and Ms. Tuller to an aggregate of $246,100, $236,900 and $217,600, respectively. Annual incentive bonus targets remained the same as the prior year. The grant date of the stock options will be June 1, 2011, and they will vest over three years pro rata in annual installments from the first anniversary of the grant date, or upon a change of control. The stock options will have an exercise price equal to the closing price of the Companys Common Stock on the grant date. A form of the stock option grant agreement that will be provided to the officers upon their grants is attached hereto as Exhibit 10.2 to this Current Report on Form 8-K. The foregoing description of the stock options is not complete and is qualified in its entirety by the full text of such document, and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit 10.1 |
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Executive Agreement, dated as of March 10, 2011, by and between MRV Communications Boston Division, Inc. and Barry Gorsun |
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Exhibit 10.2 |
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Form of Notice of Grant of Non-Qualified Stock Option Award for employees under the 2007 Omnibus Incentive Plan |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
Date: March 15, 2011 |
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MRV COMMUNICATIONS, INC. | |
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By: |
/s/ Jennifer Hankes Painter |
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Jennifer Hankes Painter |
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VP, General Counsel and Secretary |
Exhibit 10.1
EXECUTIVE AGREEMENT
This EXECUTIVE AGREEMENT (the Agreement) dated as of March 10, 2011, by and between MRV Communications Boston Division, Inc., a Massachusetts corporation (the Company), and Barry Gorsun (the Executive).
RECITALS
WHEREAS, the purpose of this Agreement is to ensure that the Company will receive the continued dedication, loyalty, and service of, and the availability of objective advice and counsel from, the Executive notwithstanding the possibility, threat or occurrence of a corporate transaction or other event that might eliminate the Executives employment with the Company; and
WHEREAS, the Board of Directors of the Company believes that it is in the best interests of the Company and its stockholders to provide the Executive with an incentive to continue his employment and to motivate the Executive to maximize the value of the Company for the benefit of its stockholders.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements of the parties set forth in this Agreement, and other good and valuable consideration the receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Position; Duties and Responsibilities; Other Activities.
1.1 Position; Duties and Responsibilities. While the Executive is employed by the Company, he will serve as the President of the Company and will report to the Chief Executive Officer of MRV Communications, Inc., the sole stockholder of the Company (the Parent). The Executive will have such duties and responsibilities as are commensurate with his position and such other duties and responsibilities commensurate with his position as are from time to time assigned to him by the Parent.
1.2 Other Activities. While the Executive is employed by the Company, he will devote his full business time, energy and skill to the performance of his duties and responsibilities hereunder, provided the foregoing will not prevent him from (a) serving as a non-executive director on the board of directors of non-profit organizations and, with the prior written approval of the Parent, other companies, (b) participating in charitable, civic, educational, professional, community or industry affairs or (c) managing his and his familys passive personal investments; provided such activities individually or in the aggregate do not interfere or conflict with his duties and responsibilities hereunder or create a potential business or fiduciary conflict.
2. Compensation.
2.1 Base Salary and Bonus. The Executives biweekly rate of pay will be $8,846.15, which expressed on an annualized basis would be equivalent to $230,000, which is subject to change at the Companys sole discretion. Further, the Executive will participate in the MRV Incentive Compensation Plan for 2011 with a target bonus of 45%, which target and plan in future years are subject to change at the Companys sole discretion.
2.2 Benefits and Fringes.
(a) General. While the Executive is employed by the Company, he will be entitled to such benefits and fringes, if any, as are generally provided from time to time by the Company to similarly situated executives at a level commensurate with his position, subject to the satisfaction of any eligibility requirements. Notwithstanding the foregoing, the Company may modify or terminate any employee benefit plan at any time.
(b) Payment of Accrued Amounts. Upon termination of the Executives employment for any reason, except as provided in Section 3, the Company will have no obligations to the Executive under this Agreement other than to pay or provide, to the extent not theretofore paid or provided, (1) any accrued and unpaid base salary through the date of termination of employment in accordance with the Companys payroll practices, (2) any accrued but unused vacation in accordance with Company policy, (3) reimbursement for any unreimbursed business and entertainment expenses incurred through the date of the Executives termination of employment in accordance with Company policy, and (4) any other amounts and benefits the Executive is entitled to receive under law or under any employee benefit plan or program, or equity plan or grant in accordance with the terms and provisions of such plans, programs, equity plan and grants (collectively, Accrued Benefits).
3. Compensation upon Termination.
3.1 Termination at the Companys Convenience. In the event of a Separation from Service of the Executive requested by the Company, within 60 days after the Executives Separation from Service, subject to Section 5 below, the Company shall pay to the Executive a lump sum cash payment equal to the aggregate amount of six months of the Executives base salary as in effect immediately prior to the Separation from Service.
3.2 Termination after a Change of Control. In the event of a Separation from Service (as defined below) of the Executive during a Change of Control Period (as defined below) of the Company, the Company shall pay to the Executive a lump sum cash payment equal to the aggregate amount of 12 months of the Executives base salary as in effect immediately prior to the Separation from Service or, if higher, immediately prior to the Change of Control (in either case, the Base Salary) within 60 days after the Executives Separation from Service, subject to Section 3 below. For clarification, payment to Executive under this Section 3.2 is inclusive of any payment under Section 3.1, and there shall not be additional payment under Section 3.1.
3.3 Bonus and Accelerated Vesting. The Company shall pay to the Executive a lump sum cash payment equal to 12 months of his base salary, and the Executive shall vest in full in any unvested grants of stock options, restricted stock, restricted stock units or other equity awards previously received, upon the occurrence of a Change of Control. Notwithstanding provisions in the equity grant agreements regarding expiration upon termination of employment, the grants shall not expire until the sooner of a) three years from the date of the Change of Control and b) the expiration date of the equity grant. All such vested awards shall be administered and, as applicable, paid in accordance with the terms of the governing plan or program; provided, however, that if any such equity award is subject to Section 409A (as defined below), the provisions of this Section 1.4 will not result in the immediate payment of such award if such payment would result in the imposition of tax, interest and/or penalties upon the Executive under Section 409A, in which case such payment shall be made at the earliest time such payment can be made without resulting in the imposition of tax, interest and/or penalties upon the Executive under Section 409A.
3.4 COBRA. In the event of a Separation from Service of the Executive pursuant to Sections 3.1 or 3.2, the Company shall pay in full the COBRA premiums (or their equivalent for a supplemental Medicare policy at the Executives election) for the Executive for a 12-month period beginning on the first of the month following the Separation from Service, or until the Executive becomes eligible for coverage under the group health plan of another employer, whichever happens first.
4. Definitions.
4.1 Separation from Service. Separation from Service means the Executives separation from service (within the meaning of Section 409A (as defined below)) from the Company occurring as a result of the Executives termination of employment either: (a) by the Company without Cause (as defined below); or (b) by the Executive with Good Reason (as defined below). Termination of the Executives employment under any other circumstances shall not constitute a Separation from Service for purposes of the Executives eligibility to receive payments and benefits under this Agreement.
4.2 Cause. Cause is determined by the Parent and is defined as the Executives (a) willful failure to perform the material duties of the Executives position after receiving written notice of such failure and being given reasonable opportunity to cure such failure; (b) willful misconduct injurious to the Company; or (c) conviction of, or plea of nolo contendere to, a felony or any other crime involving moral turpitude. No act or failure to act on the part of the Executive shall be considered willful unless it is done or omitted to be done in bad faith or without reasonable belief that the action or omission was in the best interest of the Company.
4.3 Good Reason. Good Reason shall mean, without the Executives written consent: (a) a material diminution in the Executives duties or responsibilities; (b) the Executives base salary is reduced by greater than 15%; or (d) the Executive experiences in any year a reduction in the target ratio of the Executives annual short-term incentive compensation, bonus or other such payments to base compensation greater than 15%, or a change in the method of calculation of the Executives annual short-term incentive compensation, bonus or other such payments that results in a reduction of the Executives target annual short-term incentive compensation, bonus or other such payments to base compensation greater than 15%, unless such reductions are due to an increase in base compensation. Notwithstanding the above, any reduction in base salary, annual short-term incentive compensation, bonus or other such payments that affects substantially all U.S. employees, shall not constitute Good Reason. In addition, the Executive agrees that a termination of employment shall not be deemed to be for Good Reason unless (i) the Executive
gives the Company written notice describing the event or events which are the basis for such termination within 45 days after the event or events occur, (ii) such grounds for termination (if susceptible to correction) are not corrected by the Company within 45 days of the Companys receipt of such notice, and (iii) the Executive terminates employment no later than 30 days after the expiration of the cure period described in clause (ii) of this paragraph.
4.4 Change of Control. A Change of Control shall take place on the date of the earlier to occur of any of the following events:
(a) The acquisition by any person, other than the Company or the Companys parent or any of the parents subsidiaries, of beneficial ownership of 50% or more of the combined voting power of the Companys then outstanding voting securities;
(b) The purchase of a majority of the shares of Common Stock of the Company under a tender offer or exchange offer, other than an offer by the Company or the Companys parent or any of the parents subsidiaries; or
(c) Completion of a merger, liquidation or dissolution of the Company, or the sale of all or substantially all of the assets of the Company, in each case that does not result in the Parent retaining direct or indirect control of the Company.
4.5 Change of Control Period. A Change of Control Period shall mean the period of time commencing with the date on which the Change of Control occurs, and ending 12 months after the effective date of the Change of Control.
5. Delay of Payment Pursuant to Section 409A. The parties agree that this Agreement is intended to comply with the requirements of Section 409A of the Code and the regulations promulgated thereunder (Section 409A) or an exemption from Section 409A. For purposes of this Agreement, each amount to be paid or benefit to be provided hereunder shall be construed as a separate identified payment for purposes of Section 409A. With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in this Agreement, no compensation or benefits payable in connection with a Separation from Service shall be paid to the Executive during the six-month period following such Separation from Service to the extent that the Company reasonably determines that the Executive is a specified employee at the time of such Separation from Service and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Internal Revenue Code Section 409A(a)(2)(b)(i). If the payment of any such
amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of the Executives death), the Company shall pay to the Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to the Executive during such six-month period, without interest thereon.
6. Dispute Resolution. Either the Executive or the Company may elect to have any good faith dispute or controversy arising under or in connection with this Agreement settled by arbitration by providing written notice of such election to the other party specifying the nature of the dispute to be arbitrated. If arbitration is selected, such proceeding shall be submitted to confidential, final and binding arbitration before JAMS (formerly known as Judicial Arbitration and Meditation Services) sitting in a location agreed to by the Company and the Executive within 50 miles from the location of the Executives principal place of employment and conducted under the auspices and then-existing Employment Arbitration Rules of JAMS. The decision of the arbitrator shall be final and binding on both parties, provided however, that the arbitrator shall not have the authority to alter or amend, or add to or delete from the provisions of this Agreement in any way, except as provided herein. To the extent that the Executive prevails on the material issues in any litigation or arbitration seeking to enforce the provisions of this Agreement, the Executive is entitled to reimbursement by the Company of all expenses of such litigation or arbitration, including any reasonable legal fees and expenses and any costs and disbursements as such costs may be awarded by the court or arbitrator.
The Executive shall be entitled to reimbursement of the fees and expenses described under this Section 4 during the period commencing on the effective date of this Agreement and ending on the Executives death. Any reimbursement of fees and expenses under this Agreement shall be made on or before the last day of the year following the year in which the expense is incurred. The amount of fees and expenses eligible for reimbursement during a year shall not affect the expenses eligible for reimbursement in any other year except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code. The right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
7. Executive Release and Representations
7.1 Release Required. The amount payable pursuant to Section 3 shall only be payable if the Executive delivers to the Company and does not revoke a general release and waiver of all claims related to the Company, its Parent and its subsidiaries, and each of their past and present officers, directors, employees and stockholders, including without limitation claims relating to the Executives employment by the Company and the Separation from Service, discrimination claims, employment-related tort claims, contract claims and claims under this Agreement, in such form and substance satisfactory to the Company; provided, however, that, such release will not include a waiver of any rights the Executive may have (a) to Accrued Benefits, (b) under any outstanding equity grant, (c) to enforce the Executives rights under this Agreement, (d) as a stockholder of the Company, if applicable, and (e) to indemnification and directors and officers liability insurance coverage.
7.2 Non-Solicitation. The Executive agrees that, during his employment with the Company and for the period of one year beginning from the date of the Executives Separation from Service, Executive shall not, directly or indirectly or by action in concert with others, hire current or former employees, agents, independent contractors, or other service providers of the Company (which shall for this purpose only include individuals employed by the Company at any point during the 12 months preceding such hiring), disrupt, damage, impair or interfere with the Companys relationships with its work staff, or induce or influence (or seek to induce or influence) any person who is engaged (as an employee, agent, independent contractor, or otherwise) by the Company to alter or terminate his employment or engagement, except in the good faith performance of the Executives duties on behalf of the Company; provided that the Executive may serve as a reference for such individuals and actions taken by any person or entity with which the Executive is associated if the Executive is not, directly or indirectly, personally involved in such solicitation and has not identified such individual for soliciting will not be considered a violation for purposes of this Section 7.2. This shall not be construed to prohibit general solicitations of employment through the placing of advertisements.
7.3 Non-Compete. Eligibility for payments and benefits under Section 3 is contingent upon the Executives agreement and compliance with the Companys requirement that the Executive not accept employment or an engagement as a consultant with a competitor for a period of one year beginning on the date of the Executives Separation from Service whereupon such position is comparable to the position the Executive held with the Company and where the Executive cannot reasonably satisfy the Company that the new employer is prepared to and/or does take adequate steps to preclude and to prevent inevitable disclosure of trade secrets, as prohibited under the Companys policies with respect to the use and disclosure of confidential and proprietary information, as set forth in the most-recent confidentiality and inventions agreement that the Executive has executed with the Company and by this reference made a part hereof. It is a specific condition of this Agreement that, for a period of one year following the date of the Executives Separation from Service, the Executive is obligated to immediately notify the Company as to the specifics of the new position that the Executive is planning to commence as an employee or consultant for any company which is a competitor of the Company.
7.4 Non-Disparagement. The Executive agrees that, while he is employed by the Company and thereafter, he will not, or encourage or induce others to, Disparage the Company or any of its past and present officers, directors, employees, stockholders, products or services. Disparage includes, without limitation, making comments or statements to the press, the Companys employees or any individual or entity with whom the Company has a business relationship (including, without limitation, any vendor, supplier, customer or distributor of the Company) that could adversely affect in any manner: (a) the conduct of the business of the Company (including, without limitation, any products or business plans or prospects); or (b) the business reputation of the Company, or any of its products or services, or the business or personal reputation of the Companys past or present officers, directors, employees or stockholders. Nothing herein shall prohibit the Executive (i) from responding truthfully to any governmental investigation, legal process or inquiry related thereto, (ii) from making traditional competitive statements in the course of promoting a competitive business, so long as any statements described in this clause (ii) do not intentionally Disparage the Company or any
of its past and present officers, directors, employees, stockholders, products or services and are not based on Confidential Information obtained during the course of the Executives employment with the Company, (iii) from making statements in the course of the good faith performance of the Executives assigned duties and responsibilities and for the benefit of the Company or in order to in good faith enforce the Executives rights under this Agreement, (iv) from rebutting untrue or misleading statements in good faith. This Section 7.4 is made and entered into solely for the benefit of the Company and its successors and permitted assigns, and no other person or entity shall have any cause of action hereunder.
7.5 Transition and Other Assistance. During the 30 days after notice of termination of the Executives employment has been given (or, if shorter, during the period between the date written notice of termination and the effective date of the Executives termination of employment), the Executive will take all actions the Company may reasonably request to maintain the Companys business, goodwill and business relationships and to assist with transition matters. In addition, upon the receipt of notice from the Company (including outside counsel), the Executive agrees that while he is employed by the Company and thereafter, he will respond and provide information with regard to matters in which he has knowledge as a result of his employment with the Company, and will provide assistance to the Company and its representatives in the defense or prosecution of any claims that may be made by or against the Company, to the extent that such claims may relate to the period of his employment with the Company. The Executive agrees to promptly inform the Company if he becomes aware of any lawsuits involving such claims that may be filed or threatened against the Company. The Executive also agree to promptly inform the Company (to the extent he is legally permitted to do so) if he is asked to assist in any investigation of the Company (or its actions), regardless of whether a lawsuit or other proceeding has then been filed against the Company with respect to such investigation, and will not do so unless legally required. Upon presentment to the Company of appropriate documentation, the Company will compensate the Executive at a customary per diem consulting fee in effect at the time, plus reasonable expenses, in connection with any actions requested by the Company under this Section 7.5 following the termination of his employment. Following the termination of the Executives employment, the Company agrees that it will coordinate any such request for assistance with the Executives other business or professional commitments and responsibilities to minimize the degree to which such request interferes with such commitments and responsibilities.
7.6 Resignations. Upon termination of the Executives employment for any reason, the Executive agrees to immediately resign from (a) all boards of directors, committees and officer or other positions of the Company and (b) all fiduciary positions (including as trustee) the Executive holds with respect to any pension plans or trusts established by the Company.
The obligations contained in this Section 7 shall survive the termination of the Executives employment with the Company for any reason and shall be fully enforceable thereafter. The Company may bring an action or proceeding to temporarily, preliminarily or permanently enforce this Section 7. The Executive agrees that (i) violating any part of this Section 7 would cause damage to the Company that cannot be measured or repaired and that the Companys remedies at law for a breach or threatened breach of any of the provisions of this Section 7 would be inadequate, (ii) the Company therefore is entitled to an injunction, restraining order
or other equitable relief restraining any actual or threatened violation of this Section 7 in addition to any remedies at law, (iii) no bond will need to be posted for the Company to receive such an injunction, order or other relief, and (iv) no proof will be required that monetary damages for violations of this Section 7 would be difficult to calculate and that remedies at law would be inadequate. In addition, in the event of a violation by the Executive of this Section 7, any severance payments or benefits being paid to the Executive pursuant to this Agreement or otherwise shall immediately cease and any severance previously paid to the Executive shall be immediately repaid to the Company.
8. Miscellaneous.
8.1 Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the Executive and the Company with respect to the subject matter hereof, and constitutes the entire agreement of the parties with respect thereto.
8.2 Modification. This Agreement shall not be varied, altered, modified, cancelled, changed or in any way amended except by mutual agreement of the parties in a written instrument executed by the parties or their legal representatives.
8.3 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected and shall remain in full force and effect.
8.4 Tax Withholding. The Company may withhold all Federal, state, city or other taxes required pursuant to any law or governmental regulation or ruling.
8.5 Contingent Reduction of Parachute Payments. If there is a change in ownership or control of the Company that would cause any payment or distribution by the Company or any other person or entity to the Executive or for his benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a Payment) to be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the Code) (such excise tax, together with any interest or penalties incurred by the Executive with respect to such excise tax, the Excise Tax), then the Executive will receive the greatest of the following, whichever gives the Executive the highest net after-tax amount (after taking into account federal, state, local and social security taxes): (a) the Payments or (b) one dollar less than the amount of the Payments that would subject the Executive to the Excise Tax (the Safe Harbor Amount). If a reduction in the Payments is necessary so that the Payments equal the Safe Harbor Amount and none of the Payments constitutes a deferral of compensation within the meaning of and subject to Section 409A (Nonqualified Deferred Compensation), then the reduction shall occur in the manner the Executive elects in writing prior to the date of payment. If any Payment constitutes Nonqualified Deferred Compensation or if the Executive fails to elect an order, then the Payments to be reduced will be determined in a manner which has the least economic cost to the Executive and, to the extent the economic cost is equivalent, will be reduced in the inverse order of when payment would have been made to the Executive, until the reduction is achieved. All determinations required to be made under this Section 8.5, including whether
and when the Safe Harbor Amount is required and the amount of the reduction of the Payments and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Company (the Accounting Firm). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.
8.6 Board Committee. Any action taken or determination made by the Board of Directors under this Agreement may be taken or made by the Compensation Committee or any other Committee of the Board of Directors.
8.7 No Offset or Mitigation. All amounts payable by the Company hereunder shall be paid without notice or demand. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under this Agreement, and the obtaining of any other employment shall not result in a reduction of the Companys obligations to make the payments, benefits and arrangements required to be made under this Agreement.
8.8 Successors. This Agreement shall be binding upon and inure to the benefit of the Executive and his estate, and the Company and any successor of the Company or affiliate of a successor to the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive. All references in this Agreement to the Company shall include its subsidiaries and affiliates and any successors, affiliates of successors or assigns of the Company. Any successor of the Company shall be deemed substituted for all purposes of the Company under the terms of this Agreement. As used in this Agreement, the term successor shall mean any person, firm, corporation or business entity or affiliate thereof which at any time, whether by merger, purchase or otherwise, directly or indirectly acquires all or substantially all of the assets or the business of the Company, including any entity that shall be the surviving corporation in a merger with the Company or the acquiring person or affiliate of the acquiring person in an acquisition of the Company and/or of all or substantially all of its business or assets, regardless of whether such transaction constitutes a change of control. In all cases, the Company or successor shall remain jointly and severally liable for all obligations hereunder.
8.9 Governing Law. To the extent not preempted by Federal law, the provisions of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Massachusetts.
8.10 Notice. Any notices, requests, demands or other communications required by or provided for in this Agreement shall be sufficient if in writing and sent by either party by personal delivery, recognized overnight commercial courier, or registered or certified United States mail to the Executive at the last address shown on the records of the Company or, in the case of the Company, at its principal office, or to such other address as either party may have furnished to the other in writing in accordance herewith, and shall be deemed to have been duly given when delivered or five days after deposit in the United States mail (except that notices of change of address shall be effective only upon receipt (or refusal of receipt)).
8.11 Scope of Agreement. Nothing in this Agreement shall be deemed to alter the at-will nature of the Executives employment or entitle the Executive to continued employment with the Company.
8.12 Counterparts. This Agreement may be executed (including by facsimile or scanned electronic mail transmission) in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the date first above written.
MRV COMMUNCATIONS BOSTON DIVISION, INC. |
EXECUTIVE | |||||
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By: |
/s/ Jennifer Hankes Painter |
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By: |
/s/ Barry Gorsun | |
Name: |
Jennifer Hankes Painter |
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Barry Gorsun | |||
Title: |
Secretary |
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Exhibit 10.2
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 Companys 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: |
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Type of Option: Non-Qualified Stock Option |
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Exercise Price per Share: $ |
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Expiration Date: |
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Total Number of Shares Granted: |
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Total Exercise Price: $ |
Vesting Schedule: [1/3 vesting on each of the first, second and third anniversaries of the date of the grant]
Vesting is accelerated in full or in part upon a Change in Control pursuant to Section 2(c).
Exercise After Termination of Employment: Termination of Employment for any reason: any non-vested portion of the Option expires immediately;
Termination of Employment due to death or Disability: vested portion of the Option is exercisable by the Optionee (or, in the event of the Optionees death, the Optionees Beneficiary) for one year after the Optionees Termination;
Termination of Employment for any reason other than death or Disability: vested portion of the Option is exercisable for a period of 30 days following the Optionees 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 Companys 2007 Omnibus Incentive Plan and the attached Terms and Conditions.
Participant |
MRV Communications, Inc. | |||
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By: |
Dilip Singh | |
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Title: |
Chief Executive Officer | ||
Date: |
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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 Companys stockholders. The Committee and/or Board has approved an award to the Optionee of an option to purchase a number of shares of the Companys Common Stock, conditioned upon the Optionees 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 Committee may, in its discretion, (i) accelerate vesting of the Option or (ii) 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.
(c) Acceleration of Vesting on Change in Control. Subject to the exception contained in Section 6.05 of the Plan, in the event of a Change in Control, all Options outstanding on the date of the Change in Control that have not previously vested or terminated under the terms of this Agreement shall be immediately and fully vested and exercisable. In addition, subject to the exception contained in Section 6.05 of the Plan, if the Optionee is employed by a Subsidiary of the Company, then 50 percent of all options outstanding on the date of a Subsidiary Change in Control (as defined below), that have not previously vested or terminated under the terms of this Agreement, shall be immediately and fully vested and
exercisable in the event of a Subsidiary Change in Control for the Subsidiary by whom the Optionee is employed. A Subsidiary Change in Control shall have the same meaning as set forth in Section 2.06 of the Plan for Change in Control, with the exception that the word Company shall be replaced by Subsidiary and Board shall refer to the Subsidiarys Board of Directors. For purposes of clarification, any restructuring transaction that may be conducted where the Company retains direct or indirect control of a Subsidiary is not considered a Subsidiary Change in Control.
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 any of the following methods, or a combination of them, when such payment is made consistent with Section 6.04 of the Plan:
(a) cash or check;
(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 Committee 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 Optionees 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 Committee 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 Committee, 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 Optionees Employment Agreement. Any terms used in the Notice and these Terms and Conditions, but defined in the Optionees Employment Agreement are incorporated herein by reference and shall be effective for purposes of the Notice and these Terms and Conditions without regard to the continued effectiveness of the Employment Agreement.
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 Conditions and the Plan, and the Optionees 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.
(h) No Right to Continued Employment. 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 or affect the right of the Company to terminate the Optionees employment or service at any time.
(i) Further Assurances. The Optionee agrees, upon demand of the Company or the Committee, 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 Committee, as the case may be, to implement the provisions and purposes of the Notice and these Terms and Conditions and the Plan.