UNITED STATES
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): February 2, 2012
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 |
(State or other jurisdiction of |
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(Commission file number) |
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(I.R.S. employer |
incorporation or organization) |
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identification number) |
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.
On February 3, 2012, MRV Communications, Inc. (the Company) announced that it had appointed Barry R. Gorsun to serve as Chief Executive Officer (CEO) of the Company. Prior to being named CEO, Mr. Gorsun served as President of the Companys Optical Communications Systems (OCS) division. Chris King, the Companys Chief Financial Officer (CFO), who had served as Interim Chief Executive Officer since December 2011, will remain with the Company through the later of March 30, 2012 or the filing of the Companys Annual Report on 10-K for the year ended December 31, 2011. During this period, Mr. King will continue to serve as the Companys CFO.
In conjunction with Mr. Gorsuns appointment as CEO, on February 8, 2012, the Company entered into a letter agreement with Mr. Gorsun (the Gorsun Letter Agreement) that sets forth the terms of his continued employment with the Company, including the Companys assumption of his existing Executive Agreement with MRV Communications Boston Division, Inc., which was described in, and filed as an exhibit to, the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on March 15, 2011. The Gorsun Letter Agreement amended the Executive Agreement to provide for annual base salary at the rate of $380,000 and to replace the bonus provisions of the Executive Agreement with a new bonus arrangement that provides for a bonus to be paid to Mr. Gorsun in the event that any distribution (including, but not limited to, through stock or cash dividends, distribution of assets, share buy-back, or sale of Company) is made to Company stockholders during the term of his employment. The amount of any such bonus payable to Mr. Gorsun will be equal to (a) the sum of (i) 160% of annual base salary times the per-share cumulative future stockholder distributions to the extent less than or equal to $1.15, plus (ii) 480% of annual base salary times the per-share cumulative future stockholder distributions, if any, in excess of $1.15, divided by (b) $1.00 and will be payable in accordance with the terms of the Gorsun Letter Agreement. The Gorsun Letter Agreement also includes an acceleration provision upon termination without cause for bonus amounts related to certain proceeds of sale.
The Company also entered into a letter agreement with Jennifer Hankes Painter, Vice President, General Counsel and Secretary of the Company, (the Painter Letter Agreement) that sets forth certain terms of Ms. Painters continued employment with the Company, including providing for annual base salary at the rate of $272,435, and implementation of a bonus arrangement that is the same as the bonus arrangement described above for Mr. Gorsun.
The foregoing descriptions of the Gorsun and Painter Letter Agreements are not complete and are qualified in their entirety by the full text of the agreements, which are attached as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
A copy of the press release announcing the management changes is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 8.01 Other Events
The Company previously announced that it had engaged Oppenheimer & Co., Inc. as its financial advisor in connection with a review of the strategic alternatives for its OCS division and has now expanded that engagement to include a review of strategic alternatives for all of the Company including OCS, the European system integrators and the assets and liabilities of the parent company. The Company had further previously requested approval of stockholders for a sale of its CES Creative Electronics Systems SA subsidiary, and anticipates closing the sale this month. The Board continues to review opportunities to return cash to stockholders, including the expansion and extension of this strategic review. Any transaction would be dependent on factors that may be beyond the Companys control, including, among others, the current global economic environment and market conditions, the interest of third parties in the Company or their businesses, and the availability of financing to potential buyers on reasonable terms or at all. The Company undertakes no duty to provide updates or make any further comment regarding the evaluation of strategic alternatives unless a specific action is approved by the Board of Directors or the process is concluded. There can be no assurance that the Company will complete any transaction involving any of the divisions indicated on favorable terms or at all.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit 10.1 |
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Letter Agreement, dated February 8, 2012, by and between the Company and Barry R. Gorsun |
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Exhibit 10.2 |
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Letter Agreement, dated February 8, 2012, by and between the Company and Jennifer Hankes Painter |
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Exhibit 99.1 |
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Press Release announcing management changes, dated February 3, 2012 |
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: February 8, 2012
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MRV COMMUNICATIONS, INC. | |
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By: |
/s/ Chris King |
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Chris King |
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Chief Financial Officer |
Exhibit 10.1
February 8, 2012
Barry Gorsun
at the Address on file with MRV
Re: Terms of Employment
Dear Barry:
The purpose of this letter agreement (the Agreement) is to set forth the terms of your employment with MRV Communications, Inc., a Delaware corporation (MRV). Capitalized terms that are used in this Agreement but not defined herein shall have the same meaning as set forth in the employment agreement between you and MRV Communication Boston Division, Inc., a Massachusetts corporation, dated March 10, 2011 (the Employment Agreement).
1. Amendment and Assumption of Employment Agreement. MRV, MRV Communication Boston Division, Inc., and you hereby agree to the assignment to, and assumption of your Employment Agreement by, MRV. Effective as of February 2, 2012, all references in your Employment Agreement to (i) the Company and Parent shall be deemed to refer to MRV, (ii) the Board of Directors shall be deemed to refer to the board of directors of MRV, (iii) the Compensation Committee or any other committee of the Board of Directors shall be deemed to refer to the Compensation Committee or other applicable committee of the board of directors of MRV, and (iv) the Agreement shall be deemed to refer to the Employment Agreement as amended herein. In addition, the following amendments to your Employment Agreement are hereby agreed to, effective as of February 2, 2012:
a. Section 1.1 is hereby amended and restated in its entirety to read as follows:
Position; Duties and Responsibilities. Effective as of February 2, 2012, and thereafter while the Executive is employed by the Company, he will serve as the Chief Executive Officer of the Company and will report to the Board of Directors. 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.
b. Section 2.1 is hereby amended and restated in its entirety to read as follows:
Base Salary and Bonus. Effective as of February 2, 2012, and thereafter while the Executive is employed by the Company, the Executives annual rate of base salary will be $380,000, and which shall be payable in accordance with the Companys payroll practices, as in effect from time to time. Further, provided the Executive remains employed through the payment date of any bonus described in this Section 2.1, to the extent any distribution (including, but not limited to, through cash dividends, share repurchases or other consideration received by stockholders in connection with the sale of Company) is made to Company stockholders (each, a Stockholder Distribution and collectively, Stockholder Distributions) , the Executive shall be eligible to receive a bonus payment equal to (a) the sum of (i) 160% of the Executives annual base salary times the per-share Stockholder Distributions to the extent less than or equal to $1.15, plus (ii) 480% of the Executives annual base salary times the per-share Stockholder Distributions, if any, in excess of $1.15, divided by (b) $1.00. Any bonus amount payable in accordance with the preceding sentence shall be payable as soon as practicable, but in no event more than ten (10) business days after the date that any Stockholder Distribution is paid to the Companys stockholders. Notwithstanding the foregoing, no bonus shall be paid at the time of (or within the 10 day period following) a Stockholder Distribution that is paid to Company stockholders prior to March 31, 2012. Any Stockholder Distribution paid prior to March 31, 2012 shall be cumulated together with any subsequent Stockholder Distributions made in connection with, or at the time of, the sale of the equity or substantially all of the assets of MRV to determine the total bonus due in accordance with the above formula. In the event the Executives employment is terminated by the Company without Cause, the Executive shall be entitled to receive a bonus in accordance with this Section 2.1 based on the Stockholder Distributions through the date of termination (including receiving any bonus for a Stockholder Distribution paid prior to March 31, 2012), plus the net proceeds per share of any sale of all or a portion of MRV that occurs from the date of this Agreement but prior to the date of termination minus any bonuses previously received in accordance with this Section 2.1 that related to such net proceeds. Annex A, which is attached hereto, provides an illustration of the calculation of the bonuses described above and is provided solely for illustrative purposes. Except as otherwise provided in this Section 2.1, the Executive shall not be entitled to receive any other short- or long-term incentive or bonus award or payment for services performed during 2012 and thereafter.
c. The first two sentences of Section 3.3 are hereby amended and restated in their entirety to read as follows:
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 of MRV Communication Boston Division, Inc. 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 in control of MRV Communication Boston Division, Inc. and b) the expiration of the equity grant. For purposes of this Section 3.3, a change of control of MRV Communication Boston Division, Inc. shall have the same meaning as Change of Control in Section 4.4 hereof, except that references to the Company shall be deemed to refer to MRV Communication Boston Division, Inc.
2. Waiver of Good Reason. By signing below, you hereby waive any right to claim Good Reason (as defined in Section 4.3 of your Employment Agreement) to terminate your employment under the terms of your Employment Agreement due to the change in your compensation arrangements as set forth in this Agreement.
3. Notice. For purposes of Section 8.10 of your Employment Agreement, as amended by this Agreement, notices shall be delivered to:
If to the Company, to:
MRV Communications, Inc.
20415 Nordhoff Street
Chatsworth, California 91311
Attention: General Counsel
If to you, to:
At the address shown on the Companys records
4. Governing Law. This Agreement will be governed by, construed and enforced under the laws of the State of Massachusetts, except to the extent preempted by Federal law.
5. Withholding. MRV may withhold from any and all amounts payable to you under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to applicable laws or regulations.
6. Disputes; Entire Agreement/Counterparts. Except as otherwise provided herein, your Employment Agreement (including, for the avoidance of doubt, the severance provisions set forth in Sections 3.1 and 3.2 of your Employment Agreement), outstanding equity award agreements and other arrangements will remain in full force and effect in accordance with their terms. Any disputes arising under this Agreement shall be governed under the provisions of Section 4 of your Employment Agreement. This Agreement and your Employment Agreement constitute the entire agreement between the parties and may not be modified or changed except by written instrument executed by all parties. This Agreement may be executed in counterparts, each of which shall constitute an original and which together shall constitute a single instrument.
If this Agreement correctly sets forth your understanding of our agreement with respect to the foregoing matters, please so indicate by signing below on the line provided for your signature.
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Very Truly Yours, | ||
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/s/ Kenneth Traub | ||
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Name: |
Kenneth Traub | |
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Title: |
Chairman of the Board of Directors | |
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Reviewed, approved and agreed: |
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/s/ Barry Gorsun |
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Barry Gorsun |
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February 8, 2012 |
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Exhibit 10.2
February 8, 2012
Jennifer Painter
at the Address on file with MRV
Re: Terms of Employment
Dear Jennifer:
The purpose of this letter agreement (the Agreement) is to set forth certain terms of your continued employment with MRV Communications, Inc., a Delaware corporation (MRV). Capitalized terms that are used in this Agreement but not defined herein shall have the same meaning as set forth in the executive severance agreement between you and MRV, dated May 25, 2010 (the Severance Agreement).
1. Base Salary: Effective as of January 1, 2012, your annual rate of base salary will be $272,435, which shall be payable in accordance with MRVs payroll practices, as in effect from time to time.
2. Bonus Arrangement. Effective as of February 2, 2012, provided that you remain employed through the payment date of any bonus described in this paragraph 2, to the extent that any distribution (including, but not limited to, through cash dividends, share repurchases or other consideration received by stockholders in connection with the sale of MRV) is made to MRV stockholders (each, a Stockholder Distribution and collectively, Stockholder Distributions), you shall be eligible to receive a bonus payment equal to (a) the sum of (i) 160% of your annual rate of base salary times the per-share Stockholder Distributions to the extent less than or equal to $1.15, plus (ii) 480% of your annual rate of base salary times the per-share Stockholder Distributions, if any, in excess of $1.15, divided by (b) $1.00. Any bonus amount payable in accordance with the preceding sentence shall be payable as soon as practicable, but in no event more than ten (10) business days after the date that any Stockholder Distribution is paid to MRVs stockholders. Notwithstanding the foregoing, no bonus shall be paid at the time of (or within the 10 day period following) a Stockholder Distribution that is paid to MRV stockholders prior to March 31, 2012. Any Stockholder Distribution paid prior to March 31, 2012 shall be cumulated together with any subsequent Stockholder Distributions made in connection with, or at the time of, the sale of the equity or substantially all of the assets of MRV to determine the total bonus due in accordance with the above formula. In the event your employment is terminated by the Company without Cause, you shall be entitled to receive a bonus in accordance with this paragraph 2 based on the Stockholder Distributions through the date of termination (including receiving any bonus for a Stockholder Distribution paid prior to March 31, 2012), plus the net proceeds per share of any sale of all or a portion of MRV that occurs from the date of this Agreement but prior
to the date of termination minus any bonuses previously received in accordance with this paragraph 2 that related to such net proceeds. Annex A, which is attached hereto, provides an illustration of the calculation of the bonuses described above and is provided solely for illustrative purposes. Except as otherwise provided in this paragraph 2, you shall not be entitled to receive any other short- or long-term incentive or bonus award or payment for services performed for MRV during 2012 and thereafter.
3. Severance Agreement Pro-Rata Bonus. To the extent that you become entitled to receive a pro-rata bonus under Section 1.2 of your Severance Agreement for the year of your Separation from Service, the amount of such pro-rata bonus shall be determined as set forth in Section 1.2 but shall be reduced by an amount equal to the product of (i) 3/8 and (ii) the amount of any bonuses that you were paid for the year of your Separation from Service for Stockholder Distributions that occurred during the year in which your Separation from Service occurred.
4. Waiver of Good Reason. By signing below, you hereby waive any right to claim Good Reason to terminate your employment under Section 2.3(d) of your Severance Agreement due to the change in your compensation arrangements as set forth in this Agreement.
5. Contingent Reduction of Parachute Payments. If there is a change in ownership or control of MRV that would cause any payment or distribution by MRV or any other person or entity to you or for your 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 you with respect to such excise tax, the Excise Tax), then you will receive the greatest of the following, whichever gives you 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 you 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 of the Code (Nonqualified Deferred Compensation), then the reduction shall occur in the manner that you elect in writing prior to the date of payment. If any Payment constitutes Nonqualified Deferred Compensation or if you fail to elect an order, then the Payments to be reduced will be determined in a manner which has the least economic cost to you and, to the extent the economic cost is equivalent, will be reduced in the inverse order of when payment would have been made to you, until the reduction is achieved. All determinations required to be made under this paragraph 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 MRV (the Accounting Firm). All fees and expenses of the Accounting Firm shall be borne solely by MRV. Any determination by the Accounting Firm shall be binding upon you and MRV.
6. Successors. This Agreement shall be binding upon and inure to the benefit of you and your estate, and MRV and any successor of MRV or affiliate of a successor to MRV, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by you. All references in this Agreement to MRV shall include its subsidiaries and affiliates and any successors, affiliates of successors or assigns of MRV. Any successor of MRV shall be deemed substituted for all purposes for MRV 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 MRV, including any entity that shall be the surviving corporation in a merger with MRV or the acquiring person or affiliate of the acquiring person in an acquisition of MRV 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, MRV or successor shall remain jointly and severally liable for all obligations hereunder.
7. Notice. For purposes of this Agreement, any notices, requests, demands or other communications shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or five days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. Notice shall be delivered:
If to MRV, to:
MRV Communications, Inc.
20415 Nordhoff Street
Chatsworth, California 91311
Attention: General Counsel
If to you, to:
At the address shown on MRVs records
8. Governing Law. This Agreement will be governed by, construed and enforced under the laws of the State of California, except to the extent preempted by Federal law.
9. Withholding. MRV may withhold from any and all amounts payable to you under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to applicable laws or regulations.
10. Disputes; Entire Agreement/Counterparts. Except as otherwise provided herein, your Severance Agreement, outstanding equity award agreements and other arrangements will remain in full force and effect in accordance with their terms. Any disputes arising under this Agreement shall be governed under the provisions of Section 4 of your Severance Agreement. This Agreement and your Severance Agreement, as amended hereby, constitute the entire agreement between the parties and may not be modified or changed except by written instrument executed by all parties. This Agreement may be executed in counterparts, each of which shall constitute an original and which together shall constitute a single instrument.
If this Agreement correctly sets forth your understanding of our agreement with respect to the foregoing matters, please so indicate by signing below on the line provided for your signature.
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Very Truly Yours, | ||
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/s/ Kenneth Traub | ||
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Name: |
Kenneth Traub | |
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Title: |
Chairman of the Board of Directors | |
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Reviewed, approved and agreed: |
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/s/ Jennifer Painter |
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Jennifer Painter |
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February 8, 2012 |
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Exhibit 99.1
MRV Names Barry Gorsun Chief Executive Officer
David Stehlin appointed President of MRV OCS
CHATSWORTH, Calif., February 3, 2012 MRV Communications, Inc. (OTCQB: MRVC) (MRV or the Company), a leading provider of optical communications network infrastructure equipment and integration and managed services, today announced it has named Barry R. Gorsun as Chief Executive Officer. As previously announced, Chris King, the Companys CFO and Interim CEO, will remain with the Company through the later of March 30, 2012 or the filing of the Companys Annual Report on 10-K for the year ended December 31, 2011. During this period, Mr. King will continue to serve as the Companys CFO. MRV also announced the appointment of David Stehlin to the position of President for the Companys Optical Communications Systems (OCS) division, effective immediately.
Gorsun has over 30 years of technology management and M&A experience including operational and executive management roles within technology companies. For the past year, Gorsun has served as President of MRVs OCS division, demonstrating his respect for the brand through the strengthening of its products and distribution. Stehlin has over 20 years of telecommunications industry experience in executive and product management as well as marketing and sales strategy and M&A. Stehlin assumed the role of OCSs Senior Vice President of Sales and Marketing in 2011 and has reinforced the Companys initiatives through a revitalized sales and marketing program.
Kenneth Traub, Chairman of the Board of MRV, announced The Board of Directors has great confidence in Barry to lead MRV and execute our strategic plan to maximize shareholder value. Barry, Chris, Dave and the rest of the MRV executive leadership team have our full support.
MRV remains firmly committed to returning value to its stockholders and it is with great pride that I assume the role of chief executive officer of MRV, said Gorsun. MRV will continue to execute its tactical plan to maximize value for stockholders and enhance our quality, support and delivery efforts.
Gorsun continued, Daves vast knowledge of the telecommunications space combined with his expertise in sales and marketing will help us further strengthen OCS. This appointment supports our ability to provide innovative products and solutions to the telecommunications industry and broaden worldwide distribution.
About MRV Communications, Inc.
MRV Communications, Inc. is a leading global provider of carrier Ethernet, wavelength division multiplexing optical transport, infrastructure management equipment and solutions, as well as network integration and managed services. MRVs solutions enable the delivery and provisioning of next-generation optical transport and carrier Ethernet services over any fiber infrastructure. MRV provides equipment and services worldwide to telecommunications service providers, enterprises, and governments, enabling network evolution and increasing efficiency, while reducing complexity and costs. Through its subsidiaries, MRV operates research and development centers in North America and Europe, along with support centers and sales offices around the world. For more information about MRV, visit http://www.mrv.com.
Contacts
Investor Relations:
MRV Communications, Inc.
(818) 886-MRVC (6782)
ir@mrv.com
or
CJP Communications for MRV
Thomas J. Rozycki, Jr.
(212) 279-3115 x208
trozycki@cjpcom.com
Media Relations:
MRV Communications, Inc.
pr@mrv.com