STRATOS INTERNATIONAL INC. RESTRICTED STOCK AWARD AGREEMENT (EMPLOYEE AWARD)
EXHIBIT 10.23
This agreement dated as of April 29, 2004 (the “Award Agreement”), is entered into by and
between Stratos International Inc., a Delaware corporation (the “Company”), and
___(the “Grantee”). All capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them by the Stratos Lightwave, Inc. 2003 Stock Plan (the
“Plan”).
General. The purpose of the Plan is to provide selected officers, directors, employees and
others performing services to the Company or any Subsidiary or Affiliate with additional incentive
to promote the success of the Company’s business, encourage such persons to remain in the service
of the Company and enable such persons to acquire proprietary interests in the Company. Shares of
Restricted Stock are granted under this Award Agreement as of April 29, 2004 (the “Award Date”)
subject to all of the terms of this Award Agreement and pursuant to and subject to all of the
provisions of the Plan applicable to Restricted Stock granted pursuant to Article 8 of the Plan,
which provisions are, unless otherwise provided herein, incorporated by reference and made a part
hereof to the same extent as if set forth in their entirety herein, and to such other terms
necessary or appropriate to the grant hereof having been made. A copy of the Plan is on file in
the offices of the Company.
Grant. Effective as of the Award Date, the Company hereby grants to the Grantee a total of
___shares of Restricted Stock (the “Restricted Shares”), subject to the restrictions set
forth in Section 3 hereof and the Plan. If the Grantee does not execute and deliver a signed copy
of this Award Agreement to the Secretary of the Company prior to the close of business on May 14,
2004, the Restricted Shares shall be immediately forfeited and this Award Agreement shall terminate
and have no effect.
Restrictions.
None of the Restricted Shares may be sold, transferred, pledged, hypothecated or otherwise
encumbered or disposed of until they have vested in accordance with Section 6 of this Award
Agreement.
Any Restricted Shares that are not vested shall be forfeited to the Company immediately upon
termination of the Grantee’s employment with the Company and all of its Subsidiaries and
Affiliates.
Stock Certificates. Each stock certificate evidencing any Restricted Shares shall
contain such legends and stock transfer instructions or limitations as may be determined or
authorized by the Committee in its sole discretion; and the Company may, in its sole discretion,
retain custody of any such certificate throughout the period during which any restrictions are in
effect and require, as a condition to issuing any such certificate, that the Grantee tender to the
Company a stock power duly executed in blank relating thereto.
Rights as Stockholder. The Grantee shall have no rights as a stockholder with respect to
any Restricted Shares until a stock certificate for the shares is issued in Grantee’s name. Once
any such stock certificate is issued in Grantee’s name, the Grantee shall be entitled to all rights
associated with ownership of the Restricted Shares, except that the Restricted Shares will remain
subject to the restrictions set forth in Section 3 hereof and if any additional shares of Common
Stock become issuable on the basis of such Restricted Shares (e.g., a stock dividend), any such
additional shares shall be subject to the same restrictions as the shares of Restricted Shares to
which they relate.
Vesting. Except as otherwise provided in Sections 6(a), 6(b), 6(c) and 6(d), the
Restricted Shares granted hereunder shall become vested on the fifth anniversary of the Award Date
if the Grantee continues to be employed by the Company (or a Subsidiary or Affiliate thereof)
through such date.
Up to fifty percent (50%) of the Restricted Shares shall become vested prior to the fifth
anniversary of the Award Date based on the extent to which the Company’s Revenue for a fiscal year
exceeds the Company’s Revenue for its 2004 fiscal year. If the Grantee continues to be employed by
the Company (or a Subsidiary or Affiliate thereof) through the last day of a fiscal year ending
after the Company’s 2004 fiscal year and the Revenue reported by the Company for such fiscal year
exceeds the Company’s Revenue for its 2004 fiscal year, then the Restricted Shares shall thereupon
become immediately vested pursuant to the following schedule:
| Fiscal Year Revenue as a | Percentage of Restricted Shares | |
| Percentage of 2004 Fiscal Year Revenue | Subject to Accelerated Vesting | |
100% or less |
0% | |
110% |
10% | |
120% |
20% | |
130% |
30% | |
140% |
40% | |
150% or more |
50% |
If the actual Revenue for a fiscal year is more than 100% and less than 150% of the
Company’s Revenue for its 2004 fiscal year and is not set forth above, the
percentage of Restricted Shares subject to accelerated vesting shall be determined
by interpolating the percentages set forth above. For purposes of the Plan, the
Company’s “Revenue” shall mean the Company’s gross revenue as determined by the
Committee and set forth in the audited consolidated financial statements of the
Company, prepared in accordance with generally accepted accounting principles
(“GAAP”). The Committee, in its sole discretion, may adjust the Revenue targets
set forth herein to take into account any unusual or nonrecurring events affecting
the Company or any Subsidiary or Affiliate or the financial statements of the
Company or any Subsidiary or Affiliate, including without limitation any
acquisitions or dispositions, and any changes in applicable laws, regulations or
accounting principles.
Up to fifty percent (50%) of the Restricted Shares shall become vested prior to the fifth
anniversary of the Award Date based on the extent to which EBIT goals set forth herein are achieved
after the Company’s 2004 fiscal year. If the Grantee continues to be employed by the Company (or a
Subsidiary or Affiliate thereof) through the last day of the first fiscal year for which the
Company reports positive EBIT for the full fiscal year (the “Base Year”), then twenty percent (20%)
of the Restricted Shares shall thereupon become immediately vested. If the Grantee continues to be
employed by the Company (or a Subsidiary or Affiliate thereof) through the last day of any
subsequent fiscal year for which the Company reports EBIT that exceeds the EBIT for the Base Year,
the Restricted Shares shall thereupon become immediately vested pursuant to the following schedule:
| Excess of Fiscal Year EBIT | Percentage of Restricted Shares | |
| Over Base Year EBIT | Subject to Accelerated Vesting | |
$0 |
0% | |
$1 million |
10% | |
$2 million |
20% | |
$3 million or more |
30% |
If the actual EBIT for a fiscal year exceeds the EBIT for the Base Year by more
than $1 million and less than $3 million and is not set forth above, the percentage
of Restricted Shares subject to accelerated vesting shall be determined by
interpolating the percentages set forth above. For purposes of this Agreement,
“EBIT” shall mean either (i) if the Grantee’s employment duties relate primarily to
the Company as a whole, as designated on Exhibit A hereto, the consolidated
earnings before interest and taxes of the Company as a whole or (ii) if the
Grantee’s employment duties relate primarily to a specific business unit of the
Company, as designated on Exhibit A hereto, the earnings before interest
and taxes of such business unit, in either case as determined by the Committee in
accordance with the audited financial statements of the Company, prepared in
accordance with GAAP. The Committee, in its sole discretion, may adjust the EBIT
targets set forth herein to take into account any unusual or nonrecurring events
affecting the Company or any Subsidiary or Affiliate or the financial statements of
the Company or any Subsidiary or Affiliate, including without limitation any
acquisitions or dispositions, and any changes in applicable laws, regulations or
accounting principles.
All Restricted Shares shall become immediately vested upon a Change of Control, as defined in
the Plan.
All Restricted Shares shall become immediately vested if the Grantee’s employment with the Company
and all of its Subsidiaries and Affiliates is terminated due to: (i) retirement on or after
Grantee’s fifty-fifth birthday with the consent of the Company; (ii) retirement at any age on
account of total and permanent disability as determined by the Company; or (iii) death.
Other Terms and Conditions. The Committee shall have the discretion to determine such
other terms and provisions hereof as stated in the Plan.
Applicable Law. The validity, construction, interpretation and enforceability of this
Award Agreement shall be determined and governed by the laws of the State of Illinois without
regard to any conflicts or choice of law rules or principles that might otherwise refer
construction or interpretation of this Award Agreement to the substantive law of another
jurisdiction, and any litigation arising out of this Award Agreement shall be brought in the
Circuit Court of the State of Illinois or the United States District Court of the Eastern Division
of the Northern District of Illinois and the Grantee consents to the jurisdiction and venue of
those courts.
Severability. The provisions of this Award Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions, and any partially unenforceable provision to the extent enforceable in any
jurisdiction, shall nevertheless be binding and enforceable.
Waiver. The waiver by the Company of a breach of any provision of this Award Agreement by
Grantee shall not operate or be construed as a waiver of any subsequent breach by Grantee.
Binding Effect. The provisions of this Award Agreement shall be binding upon the parties
hereto, their successors and assigns, including, without limitation, the Company, its successors or
assigns, the estate of the Grantee and the executors, administrators or trustees of such estate and
any receiver, trustee in bankruptcy or representative of the creditors of the Grantee.
Withholding. Grantee agrees, as a condition of this grant, to make acceptable arrangements
to pay any withholding or other taxes that may be due as a result of the vesting of the Restricted
Shares acquired under this grant. In the event that the Company determines that any federal,
state, local or foreign tax or withholding payment is required relating to the vesting of shares
arising from this grant, the Company shall have the right to require such payments from Grantee, or
withhold such amounts from other payments due Grantee from the Company or any Subsidiary or
Affiliate.
Section 83(b) Election. Under Section 83 of the Internal Revenue Code of 1986, as amended
(the “Code”), the difference between the purchase price paid by the Grantee for the Restricted
Shares, if any, and their fair market value on the date Restricted Shares vest they will be
reportable as ordinary income at that time. Grantee may elect to be taxed on the Award Date with
respect to Restricted Shares rather than when such shares vest by filing an election under Section
83(b) of the Code in a form similar to that set forth in Exhibit B hereto with the Internal
Revenue Service within 30 days after the Award Date. Failure to make this filing within the 30-day
period will result in the recognition of ordinary income by
Grantee (in the event the Fair Market Value of the shares increases after the Award Date) as the
forfeiture restrictions lapse.
GRANTEE ACKNOWLEDGES THAT IT IS HIS OR HER SOLE RESPONSIBILITY,
AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION
83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON GRANTEE’S BEHALF. GRANTEE IS RELYING
SOLELY ON HIS OR HER OWN ADVISORS WITH RESPECT TO THE DECISION AS
TO WHETHER OR NOT TO FILE ANY 83(b) ELECTION.
No Retention Rights. Nothing herein contained shall confer on the Grantee any right with
respect to continuation of employment by the Company or its Subsidiaries or Affiliates, or
interfere with the right of the Company or its Subsidiaries or Affiliates to terminate at any time
the employment of the Grantee.
Construction. This Award Agreement is subject to and shall be construed in accordance with
the Plan, the terms of which are explicitly made applicable hereto. Unless otherwise defined
herein, capitalized terms in this Award Agreement shall have the same definitions as set forth in
the Plan. Except as otherwise specifically set forth in the Award Agreement, the provisions of the
Plan shall govern.
Special Terms Relating to Severance Plan or Agreement. The Company and the Grantee hereby
acknowledge and agree that as a condition to the grant of the Restricted Shares set forth in this
Award Agreement, and notwithstanding the terms of any severance, management retention, change of
control or other plan or agreement pursuant to which the Grantee is a party, a participant or
otherwise has any rights (a “Severance Plan”):
the vesting of the Restricted Shares shall not accelerate pursuant to the terms of any
Severance Plan on account of any change of control that is deemed to have occurred prior to the
Award Date, including the merger of Sleeping Bear Merger Corp., a Delaware corporation and direct
wholly owned subsidiary of the Company, into Sterling Holding Company, a Delaware corporation, or
any termination of the Grantee’s employment following such change of control; and
as of the Award Date, no event has occurred and no circumstances exist that would entitle the
Grantee to terminate employment with the Company (or any Subsidiary or Affiliate) for “Good
Reason,” within the meaning of any Severance Plan, following any change of control that is deemed
to have occurred prior to the Award Date pursuant to the terms of such Severance Plan.
| GRANTEE | Stratos International Inc. | |||
| By: | ||||
| Its: | ||||
Name: [_______________________]
Primary Employment Duties: [______________________]
Exhibit B
to Restricted Stock Award Agreement
Election Under Section 83(b) of the Internal Revenue Code
to Restricted Stock Award Agreement
Election Under Section 83(b) of the Internal Revenue Code
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal
Revenue Code with respect to the property described below and supplies the following information in
accordance with the regulations promulgated thereunder:
1. The name, address and social security number of the undersigned:
| Name: |
| Address: |
| Social Security No.: |
2. Description of property with respect to which the election is being made:
shares of common stock, par value $.01 per share, Stratos International Inc., a
Delaware corporation, (the “Company”).
3. The date on which the property was transferred is , .
4. The taxable year to which this election relates is calendar year .
5. Nature of restrictions to which the property is subject:
The shares of stock are subject to the provisions of a Restricted Stock Agreement between the
undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the
Agreement.
6. The fair market value of the property at the time of transfer (determined without regard to
any lapse restriction) was $ per share, for a total of $ .
7. The amount paid by taxpayer for the property was $ -0- .
8. A copy of this statement has been furnished to the Company.
Dated: |
||||
| Taxpayer’s Signature | Taxpayer’s Printed Name | |||
PROCEDURES FOR MAKING ELECTION UNDER INTERNAL
REVENUE CODE SECTION 83(b)
REVENUE CODE SECTION 83(b)
The following procedures must be followed with respect to the attached form for making an
election under Internal Revenue Code section 83(b) in order for the election to be effective:
1. You must file one copy of the completed election form with the IRS Service Center where you
file your federal income tax returns within 30 days after the Award Date for your Restricted
Shares.
2. At the same time you file the election form with the IRS, you must also give a copy of the
election form to the Secretary of the Company.
3. You must file another copy of the election form with your federal income tax return
(generally, Form 1040) for the taxable year in which the Award Date for your Restricted Shares
occurs.
NOTE: WHETHER OR NOT TO MAKE THE ELECTION IS YOUR DECISION AND MAY CREATE TAX CONSEQUENCES FOR
YOU. YOU ARE ADVISED TO CONSULT YOUR TAX ADVISOR IF YOU ARE UNSURE WHETHER OR NOT TO MAKE THE
ELECTION.
