Form of Restricted Stock Unit Agreement under Employee Retention Program
(Employee Retention Program
RSU Grant Form of Agreement)
RESTRICTED STOCK UNIT AGREEMENT
Avanex Corporation (the “Company”) hereby grants you, [ ] (the “Grantee”), the number of Restricted Stock Units indicated below under the Company’s 1998 Stock Plan (the “Plan”). The date of this Agreement is , 200 (the “Grant Date”). Subject to the provisions of Appendix A (attached) and of the Plan, the principal features of this grant are as follows:
Your signature below indicates your agreement and understanding that this grant is subject to all of the terms and conditions contained in this Agreement, including Appendix A, and the Plan. Important additional information on vesting and forfeiture of the Restricted Stock Units covered by this grant is contained in paragraphs 4 through 9 of Appendix A. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT. YOU AGREE TO EXECUTE THIS AGREEMENT AS A CONDITION TO RECEIVING ANY SHARES.
TERMS AND CONDITIONS OF RESTRICTED STOCK
1. Grant . The Company hereby grants to the Grantee under the Plan at the per share price of $.001, equal to the par value of a Share, the number of Restricted Stock Units indicated in the Notice of Grant, subject to all of the terms and conditions in this Agreement and the Plan.
2. Payment of Purchase Price . When the Restricted Stock Units are paid out to the Grantee, par value will be deemed paid by the Grantee for each Restricted Stock Unit through the services rendered by the Grantee, and will be subject to the appropriate tax withholdings.
3. Company’s Obligation to Pay . Each Restricted Stock Unit has a value equal to the Fair Market Value of a Share on the Grant Date. Unless and until the Restricted Stock Units have vested in the manner set forth in paragraphs 4, 5, 6 or 7, the Grantee will have no right to payment of such Restricted Stock Units. Prior to actual payment of any vested Restricted Stock Units, such Restricted Stock Units will represent an unsecured obligation. Payment of any vested Restricted Stock Units shall be made in whole Shares only.
4. Vesting Schedule . Except as otherwise provided in paragraphs 5, 6 or 7 of this Agreement, the Restricted Stock Units awarded by this Agreement are scheduled to vest in accordance with the vesting schedule set forth in the Notice of Grant. Restricted Stock Units scheduled to vest on any such date actually will vest only if the Grantee continues to be a Service Provider through such date.
5. Administrator Discretion . The Administrator, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units at any time, subject to the terms of the Plan. If so accelerated, such Restricted Stock Units will be considered as having vested as of the date specified by the Administrator. If the Administrator, in its discretion, accelerates the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units, the payment of such accelerated Restricted Stock Units nevertheless shall be made at the same time or times as if such Restricted Stock Units had vested in accordance with the vesting schedule set forth in the Notice of Grant (whether or not the Grantee remains a Service Provider through such date(s)). Notwithstanding the foregoing, if the Administrator, in its discretion, accelerates the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units in connection with the Grantee’s termination as a Service Provider (other than due to death) and if the Grantee is a “specified employee” within the meaning of Section 409A at the time of such termination, then any such accelerated Restricted Stock Units otherwise payable within the six (6) month period following the Grantee’s termination instead will be paid on the first business day that is six (6) months and one (1) day following the date of the Grantee’s termination, unless the Grantee dies following his or her termination, in which case, the accelerated Restricted Stock Units will be paid to the Grantee’s estate as soon as practicable following his or her death, subject to paragraph 11. Thereafter, such Restricted Stock Units shall continue to be paid in accordance with the vesting schedule set forth in the Notice of Grant. For purposes of this Agreement, “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and any final Treasury Regulations and other Internal Revenue Service guidance thereunder, as each may be amended from time to time (“Section 409A”). It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the Shares subject to this Award of Restricted Stock Units will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.
6. Acceleration in Connection With Certain Terminations of Employment .
(a) Acceleration in Connection with a Termination of Employment Other Than For Cause and Not in Connection with a Change of Control . Subject to paragraph 6(d) below, if the Company terminates the Grantee’s employment other than for Cause, and such termination is not in Connection with a Change of Control, the Restricted Stock Units awarded by the Agreement shall be fully (i.e., 100%) vested as of the date of such termination.
(b) Acceleration in Connection with a Termination of Employment in Connection with a Change of Control . Subject to paragraph 6(d) below, upon an Involuntary Termination of the Grantee’s employment other than for Cause in Connection with a Change of Control, the Restricted Stock Units awarded by the Agreement shall be fully (i.e. 100%) vested as of the date of such termination.
(c) Definitions . The following terms referred to in this Agreement shall have the following meanings:
(i) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the Grantee in connection with his responsibilities as an employee and intended to result in substantial personal enrichment of the Grantee, (ii) conviction of a felony that is injurious to the Company, (iii) a willful act by the Grantee which constitutes gross misconduct and which is injurious to the Company, or (iv) the Grantee’s willful and continued failure to perform the duties and responsibilities of his or her position after there has been delivered to the Grantee a written demand for performance from the [ INSERT THE FOLLOWING FOR ALL EMPLOYEES OTHER THAN THE CEO: CEO ] [INSERT THE FOLLOWING FOR THE CEO: the Chairman of the Board] which describes the basis for the [ INSERT THE FOLLOWING FOR ALL EMPLOYEES OTHER THAN THE CEO: CEO’s ] [INSERT THE FOLLOWING FOR THE CEO: the Chairman of the Board’s] belief that the Grantee has not substantially performed his or her duties and that the Grantee has not corrected such failure within two (2) weeks of such written demand.
(ii) Change of Control. “Change of Control” shall mean the occurrence of any of the following events:
(1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities other than in a private financing transaction approved by the Board of Directors;
(2) the direct or indirect sale or exchange by the stockholders of the Company of all or substantially all of the stock of the Company;
(3) a merger or consolidation in which the Company is a party and in which the stockholders of the Company before such merger or consolidation do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such transaction; or
(4) the sale or disposition by the Company of all or substantially all the Company’s assets.
(iii) Disability. “Disability” shall mean that the Grantee has been unable to substantially perform his duties as the result of his incapacity due to physical or mental illness, and such inability, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Grantee or the Grantee’s legal representative (such agreement as to acceptability not to be unreasonably withheld).
(iv) In Connection with a Change of Control. A termination of Grantee’s employment with the Company is “in Connection with a Change of Control” if the Grantee’s employment is terminated within twelve (12) months following a Change of Control.
(iv) Involuntary Termination. “Involuntary Termination” shall mean (A) the Grantee’s resignation due to one of the following: (1) without the Grantee’s express written consent, the significant reduction of the Grantee’s duties or responsibilities relative to the Grantee’s duties or responsibilities in effect immediately prior to such reduction; provided, however, that a reduction in duties or responsibilities solely by virtue of the Company being acquired and made part of a larger entity (as, for example, when the Chief Financial Officer of Company remains as such following a Change of Control and is not made the Chief Financial Officer of the acquiring corporation) shall not c