Exhibit 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 co
