UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 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): January 1, 2007
DIODES
INCORPORATED
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction
of
incorporation or organization)
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1-5740
(Commission
File Number)
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95-2039518
(I.R.S.
Employer Identification No.)
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3050
East Hillcrest Drive
Westlake
Village, California
(Address
of principal executive offices)
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91362
(Zip
Code)
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(805)
446-4800
(Registrant's
telephone number, including area code)
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)
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| 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))
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| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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-1-
| Item 5.02. |
Departure
of Directors or Principal Officers; Appointment of Principal Officers;
Compensatory Arrangements of Certain
Officers.
|
Effective
January 1, 2 007, Diodes Incorporated commenced a deferred compensation plan
(the “Plan”) pursuant to which certain officers and employees may defer receipt
of a portion of their salary, bonus or other specified
compensation.
The
foregoing description of the Plan does not purport to be complete and is
qualified in its entirety by reference to the copy of the Plan which is filed
as
Exhibit
99.1
to this
Report, and is incorporated herein by this reference.
| Item 9.01. |
Financial
Statements and Exhibits.
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| (d) |
Exhibits.
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Exhibit
Number
|
Description
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99.1
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Deferred
Compensation Plan
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-2-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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DIODES
INCORPORATED
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Date: January
8, 2007
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By: | /s/ Carl C. Wertz |
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Carl C. Wertz, |
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Chief
Financial Officer
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-3-
EXHIBIT
INDEX
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Exhibit
Number
|
Description
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99.1
|
Deferred
Compensation Plan.
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-4-
DIODES
INCORPORATED
DEFERRED
COMPENSATION PLAN
EFFECTIVE
JANUARY 1, 2007
Diodes
Incorporated Deferred Compensation Plan
|
Article
I
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|
|
Establishment
and Purpose
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1
|
|
Article
II
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|
|
Definitions
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1
|
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Article
III
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|
|
Eligibility
and Participation
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8
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Article
IV
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|
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Deferral
Elections
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9
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Article
V
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|
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Modifications
to Payment Schedules
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11
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|
Article
VI
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|
|
Company
Contributions
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12
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Article
VII
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|
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Valuation
of Account Balances; Investments
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13
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Article
VIII
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Distribution
and Withdrawals
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14
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Article
IX
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|
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Administration
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18
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Article
X
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|
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Amendment
and Termination
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19
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Article
XI
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|
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Informal
Funding
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21
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Article
XII
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|
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Claims
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21
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Article
XIII
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|
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General
Conditions
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28
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1
Diodes
Incorporated Deferred Compensation Plan
Article
I
Establishment
and Purpose
Diodes
Incorporated (the “Company”) hereby adopts the Diodes Incorporated Deferred
Compensation Plan (the “Plan”). This Plan is effective for Deferrals and Company
Contributions on and after the Plan’s Effective Date.
The
purpose of the Plan is to attract and retain key employees by providing each
Participant with an opportunity to defer receipt of a portion of their salary,
bonus, and other specified compensation. The Plan is not intended to meet the
qualification requirements of Code Section 401(a), but is intended to meet
the
requirements of Code Section 409A. The Plan is intended to be an unfunded
arrangement for eligible employees who are part of a select group of management
or highly compensated employees of the Company within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA.
Article
II
Definitions
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2.1
|
Account.
Account means a bookkeeping account maintained by the Plan Administrator
to record the Company’s payment obligation to a Participant as determined
under the terms of the Plan. The Plan Administrator may maintain
an
Account to record the total obligation to a Participant and component
Accounts to reflect amounts payable at different times and in different
forms pursuant to the terms of a Participant’s Deferral Election.
Reference to an Account means any such Account established by the
Plan
Administrator, as the context requires. Accounts are intended to
constitute unfunded obligations of the Company within the meaning
of
Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA.
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|
2.2
|
Account
Balance.
Account Balance means, with respect to any Account, the total amount
of
the Company’s payment obligation from such Account as of the most recent
Valuation Date.
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2.3
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Affiliate.
Affiliate means a corporation, trade or business that, together with
the
Company, is treated as a single employer under Code Section 414(b)
or
(c).
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2.4
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Beneficiary.
Beneficiary means a natural person, estate, or trust designated by
a
Participant to receive payments to which a Beneficiary is entitled
in
accordance with provisions of the Plan. The Participant’s spouse, if
living, otherwise the Participant’s estate, shall be the Beneficiary
if:
|
(i)
the
Participant has not designated a natural person or trust as Beneficiary,
or
(ii)
all
designated Beneficiaries have predeceased the Participant.
A
former
spouse shall have no interest under the Plan, as Beneficiary or otherwise,
unless (i) the Participant designates such person as a Beneficiary after
dissolution of the marriage or (ii) such interest is ordered under a domestic
relations order described in Section 8.10.
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Diodes
Incorporated Deferred Compensation Plan
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2.5
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Business
Day.
A
Business Day is each day on which the New York Stock Exchange is
open for
business.
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2.6
|
Change
in Control.
Change in Control occurs on the date on which there is (i) a change
in the
ownership of the Company, (ii) a change in the effective control
of the
Company or (iii) a change in the ownership of a substantial portion
of the
Company’s assets. For purposes of this Section, a change in ownership of
the Company occurs on the date on which any one person or more than
one
person acting as a group acquires ownership of stock of the Company
that,
together with stock held by such person or group constitutes more
than 50%
of the total fair market value or total voting power of the stock
of the
Company. A change in the effective control of the Company occurs
on the
date on which either (i) a person or more than one person acting
as a
group acquires ownership of stock of the Company possessing 35% or
more of
the total voting power of the stock of the Company or (ii) a majority
of
members of the Company’s Board of Directors is replaced during any
12-month period by directors whose appointment or election is not
endorsed
by a majority of the members of the Company’s Board of Directors prior to
the date of the appointment or election. A change in the ownership
of a
substantial portion of assets occurs on the date on which any one
person
or more than one person acting as a group acquires assets from the
Company
that have a total gross fair market value equal to or more than 40%
of the
total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions.
|
Reference
to the Company under this Section 2.6
also
shall mean Affiliates for whom a Participant is exclusively providing
substantially all of the services he is providing at the time of a Change in
Control affecting such Affiliate.
The
determination as to the occurrence of a Change in Control shall be based on
objective facts and in accordance with the requirements of Code Section
409A.
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2.7
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Claimant.
Claimant means a Participant or Beneficiary filing a claim under
Article
XII of this Plan.
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2.8
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Code.
Code means the Internal Revenue Code of 1986, as amended from time
to
time.
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2.9
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Code
Section 409A.
Code Section 409A means section 409A of the Code, and regulations
and
other guidance issued by the Treasury Department and Internal Revenue
Service thereunder. Reference to proposed Treasury Department regulations
shall be construed as reference to the corresponding provisions of
the
final Treasury Department regulations when said regulations are
published.
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2.10
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Committee.
Committee means the individuals selected by the Compensation Committee
of
the Board of Directors of the Company or the Chief Executive Officer
of
the Company to administer the Plan.
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Diodes
Incorporated Deferred Compensation Plan
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2.11
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Company.
Company means Diodes Incorporated.
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2.12
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Company
Contribution.
Company Contribution means a credit by the Company to a Participant’s
Account(s) in accordance with the provisions of Article VI of the
Plan.
Company Contributions are credited at the sole discretion of the
Company
and the fact that a Company Contribution is credited in one year
shall not
obligate the Company to continue to make such Company Contribution
in
subsequent years.
|
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2.13
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Company
Stock.
Company Stock means phantom shares of common stock issued by
Company.
|
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2.14
|
Compensation.
Compensation means a Participant’s base salary, bonus, commission, and
such other cash or equity-based compensation (if any) approved by
the
Committee as Compensation that may be deferred under this Plan.
Compensation shall not include any compensation that has been previously
deferred under this Plan or any other arrangement subject to Code
Section
409A.
|
|
2.15
|
Death
Benefit.
Death Benefit means payment to a Participant’s Beneficiary(ies) of all
remaining unpaid Account Balances as provided in Section 8.4
of
the Plan.
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|
2.16
|
Deferral.
Deferral means the credits to a Participant’s Accounts attributable to
deferrals of Compensation described in Prop. Treas. Reg. Section
1.409A-1(b)(1) and Earnings on such amounts as provided in Prop.
Treas.
Reg. Section 1.409A-1(b)(2), except where the context of the Plan
clearly
indicates otherwise.
|
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2.17
|
Deferral
Election.
Deferral Election means an agreement between a Participant and the
Company
specifying any or all of the following: (i) the amount of each component
of Compensation subject to the Deferral Election; (ii) the investment
allocation described in Section 7.2;
and (iii) the Payment Schedule. The Plan Administrator may permit
different deferral amounts for each component of Compensation and
may
establish a minimum or maximum deferral amount for each such component.
Unless otherwise specified by the Plan Administrator in the Deferral
Election agreement, Participants may defer up to 80% of their base
salary
and up to 100% of other types of Compensation for a Plan Year.
|
To
the
extent permissible under Code Section 409A, the Plan Administrator may reduce
a
Participant’s Deferral Election as necessary to permit sufficient non-deferred
Compensation from which the Company may satisfy a Participant’s obligations
regarding welfare plans and from which to satisfy tax withholding obligations,
and/or to conform the Deferral Election and the Plan to applicable law.
|
2.18
|
Disability.
Disability means that a Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically-determinable
physical or mental impairment which can be expected to result in
death or
can be expected to last for a continuous period of not less than
twelve
months, or (ii) is, by reason of any medically-determinable physical
or
mental impairment which can be expected to result in death or can
be
expected to last for a continuous period of not less than twelve
months,
receiving income replacement benefits for a period of not less than
three
months under an accident and health plan covering employees of the
Company. The determination of the existence of a Disability shall
be made
by the Plan Administrator in accordance with Code Section
409A.
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Diodes
Incorporated Deferred Compensation Plan
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2.19
|
Disability
Benefit.
Disability Benefit means a payment by the Company to a Participant
of all
remaining unpaid Account Balances in a single lump sum in the event
of
such Participant’s Disability.
|
|
2.20
|
Earnings.
Earnings means an adjustment to the value of an Account in accordance
with
Article VII.
|
|
2.21
|
Effective
Date.
Effective Date means January 1,
2007.
|
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2.22
|
Eligible
Employee.
Eligible Employee means a member of a “select group of management or
highly compensated employees” of the Company within the meaning of
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined
by the
Committee from time to time in its sole
discretion.
|
|
2.23
|
Employee.
Employee means an employee of the
Company.
|
|
2.24
|
ERISA.
ERISA means the Employee Retirement Income Security Act of 1974,
as
amended from time to time.
|
|
2.25
|
Fiscal
Year Compensation.
Fiscal Year Compensation means Compensation earned during one or
more
consecutive fiscal years of the Company, all of which is paid after
the
last day of such fiscal year or
years.
|
|
2.26
|
Participant.
Participant means an Eligible Employee who has received notification
of
his or her eligibility to defer Compensation under the Plan under
Section
3.1
and any other person with an Account Balance greater than zero, regardless
of whether such individual continues to be an Eligible Employee of
the
Company. A Participant’s continued participation in the Plan shall be
governed by Section 3.2
and Section 3.3
of
the Plan.
|
|
2.27
|
Payment
Schedule.
Payment Schedule means the date as of which payment under the Plan
will
commence and the form in which such payment will be
made.
|
|
(a)
|
Retirement
Benefit. Except
in the case of a Specified Employee, payment of a Participant’s Retirement
Benefit will be made (or will commence) on the first business day
of the
month following the month in which a Participant Retires. Payment
will be
made in a single lump sum unless the Participant specifies an alternative
form of payment in his first Deferral Election (filed prior to earning
any
Company Contribution or obtaining a legally binding right to Company
Contributions to his or her Retirement/Termination Account). A Participant
may also specify an alternative form of payment under Section 5.1.
Alternative forms of payment include (i) a lump sum payment between
0% and
100% of the Account Balance and (ii) any remaining Account Balance
payable
in a series of substantially equal annual installments from two to
fifteen
years. For purposes of Article V, (i) each lump sum payment and (ii)
each
series of substantially equal installment payments elected by the
Participant will be treated as a single form of payment. If a lump
sum
equal to less than 100% of the Retirement/Termination Account is
paid, the
payment commencement date for the installment form of payment will
be the
first anniversary of the payment of the lump
sum.
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Diodes
Incorporated Deferred Compensation Plan
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(b)
|
Termination
Benefit.
Except in the case of a Specified Employee, payment of a Participant’s
Termination Benefit will be made on the first business day of the
month
following the month in which a Participant incurs a Separation from
Service that entitles such Participant to a Termination Benefit.
Payment
will be made in a single lump sum.
|
|
(c)
|
Specified
Date Payments. Payment
from a Participant’s Specified Date Account will be made (or will
commence) as of the first day of the month or year specified under
the
elections described in Section 4.4,
as modified under Section 5.1. Unless a Participant specifies an
alternative form of payment under Sections 4.4
and 5.1,
payment will be made in a single lump sum. Alternative forms of payment
include a series of substantially equal annual installments payable
over
two to five years. For purposes of Article V, a series of installment
payments will be treated as a single form of payment. The time and
form of
payment upon an earlier Separation from Service, death, Disability
is
specified in Section 4.4(b).
|
|
(d)
|
Death
Benefit. Payment
to a Participant’s Beneficiary(ies) in the event of death shall be paid in
a single lump sum. Payment will be made as of the first day of the
first
month following the Participant’s
death.
|
|
(e)
|
Disability
Benefit. Payment
due to Disability will be made in a single lump sum as of the first
day of
the first month following the Participant’s
Disability.
|
|
2.28
|
Performance-Based
Compensation.
Performance-Based Compensation means Compensation where the amount
of, or
entitlement to, the Compensation is contingent on the satisfaction
of
pre-established organizational or individual performance criteria
relating
to a performance period of at least twelve consecutive months in
which the
Participant performs services for the Company. Organizational or
individual performance criteria are considered pre-established if
established in writing by not later than ninety (90) days after the
commencement of the period of service to which the criteria relate,
provided that the outcome is substantially uncertain at the time
the
criteria are established. Performance-Based Compensation may include
payments based on performance criteria that are not approved by the
Board
of Directors or by the stockholders of the Company. Performance-Based
Compensation does not include any amount or portion of any amount
that
will be paid either regardless of performance, or based upon a level
of
performance that is substantially certain to be met at the time the
criteria is established. Performance criteria may be subjective but
must
relate to the performance of the Participant, a group of Employees
that
includes the Participant or a business unit (which may include the
Company) for which the Participant provides services. The determination
that any subjective performance criteria have been met shall not
be made
by the Participant or by a family member of the Participant, or by
a
person under the supervision of the Participant or a Participant’s family
members where any amount of the compensation of such person is controlled
in whole or in part by the Participant or such family member. Compensation
based on Company Stock may constitute Performance-Based Compensation
if it
is based solely on an increase in the value of such stock after the
date
of grant or award. The determination of whether Compensation qualifies
as
“Performance-Based Compensation” will be made in accordance with Prop.
Treas. Reg. Section 1.409A-1(e) and subsequent
guidance.
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30
Diodes
Incorporated Deferred Compensation Plan
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2.29
|
Plan.
Plan means the “Diodes Incorporated Deferred Compensation Plan” as
documented herein and as may be amended from time to time
hereafter.
|
|
2.30
|
Plan
Administrator.
Plan Administrator means the Committee, or such individuals appointed
by
the Committee, acting pursuant to the powers and authority granted
under
Section 9.1
of
the Plan.
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|
2.31
|
Plan
Year.
Plan Year means January 1 through December 31.
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2.32
|
Retire/Retirement.
Retire and Retirement means a voluntary Separation from Service on
or
after the earlier of: (i) attaining age 60 with at least 20 Years
of
Service, or (ii) attaining age 65.
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|
2.33
|
Retirement
Benefit.
Retirement Benefit shall mean a payment from a Participant’s
Retirement/Termination Account to such Participant due to such
Participant’s Retirement. Payment of a Retirement Benefit will be made as
provided in Section 8.1(a)
of
the Plan.
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|
2.34
|
Retirement/Termination
Account.
Retirement/Termination Account means an Account established by the
Plan
Administrator to record the amount payable to a Participant due to
his or
her Separation from Service.
|
|
2.35
|
Separation
from Service.
An Employee incurs a Separation from Service upon termination of
employment with the Company. The occurrence of a Separation from
Service
is determined by the Plan Administrator under the facts and circumstances
and in accordance with Code Section 409A.
|
A
Participant’s absence from work due to military leave, sick leave, or other
bona
fide
leave of
absence (such as temporary employment by the government) shall not constitute
a
Separation from Service if the period of such leave does not exceed six months
or such longer period as is provided either by statute or by contract. If the
period of leave exceeds six months and the Participant’s right to reemployment
after such extended leave is not provided either by statute or by contract,
the
Participant shall be deemed to have incurred a Separation from Service on the
first day immediately following such six-month period.
Page
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30
Diodes
Incorporated Deferred Compensation Plan
An
Employee not described under the preceding leave of absence provisions is deemed
to have incurred a Separation from Service if he or she provides services to
the
Company or an Affiliate at an annual rate that is less than 20% of the services
rendered, on average, during the immediately preceding three full calendar
years
of employment (or the actual period of employment, if less than three
years).
|
2.36
|
Specified
Date Account.
A
Specified Date Account means an Account established pursuant to Section
4.4
that will be paid (or that will commence to be paid) at a future
date as
specified in the Participant’s Deferral Election. Unless otherwise
determined by the Plan Administrator, a Participant may maintain
no more
than five Specified Date Accounts. A Specified Date Account may be
identified in enrollment materials as an “In-Service
Account”.
|
|
2.37
|
Specified
Employee.
Specified Employee means a “key employee” (as defined in Code Section
416(i) without regard to Code Section 416(i)(5)) of the Company or
an
Affiliate any stock of which is actively traded on an established
securities market or otherwise, or as defined in Prop. Treas. Regulation
1.409A-1(i).
|
The
Plan
Administrator will identify Specified Employees. The determination of which
Employees are Specified Employees will be determined as of the 12-month period
ending each December 31, and will become effective with respect to Separations
from Service occurring on and after the following April 1. The determination
of
Specified Employees with respect to Separations from Service occurring from
the
date Plan Accounts become subject to the requirements of Code Section 409A
and
ending on March 31, 2006 will be determined under a good-faith application
of
Code Section 409A.
|
2.38
|
Substantial
Risk of Forfeiture.
Substantial Risk of Forfeiture shall have the meaning specified in
Prop.
Treas. Reg. Section 1.409A-1(d).
|
|
2.39
|
Termination
Benefit.
Termination Benefit means a payment from a Participant’s
Retirement/Termination Account due to such Participant’s Separation from
Service other than Retirement or death. Payment of a Termination
Benefit
will be paid as provided in Section 8.1(b).
|
|
2.40
|
Unforeseeable
Emergency.
An Unforeseeable Emergency is a severe financial hardship of the
Participant or Beneficiary resulting from an illness or accident
of the
Participant or Beneficiary, the Participant’s or Beneficiary’s spouse, or
the Participant’s or Beneficiary’s dependent (as defined in Code section
152(a)); loss of the Participant’s or Beneficiary’s property due to
casualty (including the need to rebuild a home following damage to
a home
not otherwise covered by insurance, for example, as a result of a
natural
disaster); or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant
or
Beneficiary. For example, the imminent foreclosure of or eviction
from the
Participant’s or Beneficiary’s primary residence may constitute an
Unforeseeable Emergency. In addition, the need to pay for medical
expenses, including non-refundable deductibles, as well as for the
costs
of prescription drug medication, may constitute an Unforeseeable
Emergency. Finally, the need to pay for the funeral expenses of a
spouse
or a dependent (as defined in Code section 152(a)) may also constitute
an
Unforeseeable Emergency. Except as otherwise provided in this section,
the
purchase of a home and the payment of college tuition are not
Unforeseeable Emergencies. Whether a Participant or Beneficiary is
faced
with an Unforeseeable Emergency permitting a distribution under section
8.5
of
the Plan is to be determined by the Plan Administrator based on the
relevant facts and circumstances of each case, but, in any case,
a
distribution on account of Unforeseeable Emergency may not be made
to the
extent that such emergency is or may be reimbursed through insurance
or
otherwise, by liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not cause severe financial hardship,
or
by cessation of Deferrals under this Plan.
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Page
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Diodes
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|
2.41
|
Valuation
Date.
Valuation Date shall mean each Business
Day.
|
|
2.42
|
Year
of Service.
A
Year of Service shall mean each 12-month period of continuous service
with
the Company.
|
Article
III
Eligibility
and Participation
|
3.1
|
Eligibility
and Participation.
An Eligible Employee becomes eligible to file a Deferral Election
upon
receipt of notification of eligibility from the Plan Administrator.
Such
Eligible Employee becomes a Participant upon the earlier to occur
of (i) a
credit of Company Contributions under Article VI or (ii) filing his
or her
initial Deferral Election in accordance with Article
IV.
|
|
3.2
|
Duration.
A
Participant shall be eligible to defer Compensation and receive
allocations of Company Contributions, subject to the terms of the
Plan,
for as long as such Participant is an Eligible Employee. A Participant
who
is no longer an Eligible Employee but continues to be employed by
the
Company may not defer Compensation under the Plan but may otherwise
exercise all of the rights of a Participant under the Plan with respect
to
his or her Account(s). On and after a Separation from Service, a
Participant shall remain a Participant as long as his or her Account
Balance is greater than zero and during such time may continue to
make
allocation elections as provided in Section 7.2.
An individual shall cease being a Participant in the Plan when all
benefits under the Plan to which he or she is entitled have been
paid.
|
|
3.3
|
Revocation
of Future Participation.
Notwithstanding the provisions of Section 3.2,
the Committee may, in its discretion, revoke a Participant’s eligibility
to make future Deferrals under this Plan. Such revocation will not
affect
in any manner a Participant’s Account Balance or other terms of this
Plan.
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Article
IV
Deferral
Elections
|
4.1
|
Deferral
Elections, Generally.
|
|
(a)
|
An
Eligible Employee shall submit a Deferral Election during the enrollment
periods established by the Plan Administrator and in the manner specified
by the Plan Administrator, but in any event, in accordance with Section
4.2.
A
Deferral Election that is not timely filed with respect to a service
period or component of Compensation shall be considered void and
shall
have no effect with respect to such service period or
Compensation.
|
|
(b)
|
Each
Deferral Election will specify the amount of Deferrals and the allocation
of Deferrals to the Participant’s Accounts. A Participant may specify in
his or her initial Deferral Election the Payment Schedule for the
Retirement/Termination Account. A Participant may specify in the
Deferral
Election that establishes a Specified Date Account the Payment Schedule
for such Account in the manner set forth in Section 4.4.
If the time and form is not specified in a Deferral Election, the
time and
form of payment shall be the time and form specified in Section
2.27.
|
|
4.2
|
Timing
Requirements for Deferral
Elections.
|
|
(a)
|
First
Year of Eligibility.
Upon notification of his or her eligible status under Section 3.1,
and subject to this paragraph (a), an Eligible Employee has up to
30 days
to submit a Deferral Election with respect to Compensation earned
during
such year. The Deferral Election described in this paragraph becomes
irrevocable on the first day following such 30th
day. An Eligible Employee may file a Deferral Election under this
Section
4.2(a)
only if he or she does not participate in any other “account balance plan”
as defined in Prop. Treas. Reg. Section 1.409A-1(c)(i)(A) maintained
by
the Company or an Affiliate, other than as permitted in Prop. Treas.
Reg.
Section 1.409A-1(c)(ii).
|
A
Deferral Election filed under this Section 4.2(a)
applies
to Compensation earned on and after the date the Deferral Election becomes
irrevocable. For Compensation that is earned based upon a specified performance
period (e.g. over a calendar year or fiscal year), where a Deferral Election
is
made in the first year of eligibility but after the beginning of the service
period, unless the Compensation may be timely deferred under this Section
4.2(c),
(e),
or
(g),
the
election will be deemed to apply to Compensation paid for services performed
subsequent to the election if the election applies to the portion of the
Compensation equal to the total amount of the Compensation for the service
period multiplied by the ratio of the number of days remaining in the
performance period after the Deferral Election becomes irrevocable over the
total number of days in the performance period.
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(b)
|
Prior
Year Deferrals.
Participants
may defer Compensation by filing a Deferral Election no later than
December 31 of the year prior to the year in which such Compensation
is
earned. A Deferral Election described in this paragraph shall become
irrevocable with respect to such Compensation as of January 1 of
the year
in which such Compensation is
earned.
|
|
(c)
|
Performance-Based
Compensation.
A
Deferral Election may be filed with respect to Performance-Based
Compensation, provided that:
|
| (i) |
the
Participant performs services continuously from a date no later than
the
date upon which the performance criteria for such Performance-Based
Compensation are established through a date no earlier than the date
upon
which the Participant submits a Deferral
Election;
|
| (ii) |
the
Deferral Election is submitted no later than the date that is six
months
before the end of the performance period during which such
Performance-Based Compensation is earned;
and
|
| (iii) |
in
no event may an election to defer Performance-Based Compensation
be made
after such Performance-Based Compensation has become both substantially
certain to be paid and readily
ascertainable.
|
A
Deferral Election becomes irrevocable with respect to Performance-Based
Compensation as of the day immediately following the date described in paragraph
(c)(ii).
|
(d)
|
Commissions.
For purposes of determining Compensation that may be deferred under
Sections 4.2(a)
or
(b),
commissions are considered to be earned in the year a customer remits
payment to the Company or an
Affiliate.
|
|
(e)
|
Deferral
Election with Respect to Fiscal Year Compensation.
A
Participant may defer Fiscal Year Compensation by filing a Deferral
Election prior to the first day of the fiscal year or years in which
such
Fiscal Year Compensation is earned. The Deferral Election described
in
this paragraph becomes irrevocable on the first day of the fiscal
year or
years to which it applies.
|
|
(f)
|
Short-Term
Deferrals.
Compensation that meets the definition of a “short-term deferral”
described in Prop. Treas. Reg. Section 1.409A-1(b)(4) may be deferred
under a Deferral Election filed not later than twelve months prior
to the
date on which the Substantial Risk of Forfeiture lapses. The Payment
Schedule for such Deferral must specify a commencement date no earlier
than five years after the forfeiture restriction
lapses.
|
|
(g)
|
Deferral
Election With Respect to Certain Forfeitable Rights.
With respect to a legally binding right to a payment in a subsequent
year
that is subject to a forfeiture condition requiring the Participant’s
continued services for a period of at least twelve months from the
date
the Participant obtains the legally binding right, an election to
defer
such Compensation may be made on or before the 30th
day after the Participant obtains the legally binding right to the
Compensation, provided that the election is made at least twelve
months in
advance of the earliest date at which the forfeiture condition could
lapse. The Deferral Election described in this paragraph becomes
irrevocable after such 30th
day.
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4.3
|
“Evergreen”
Deferral Elections.
The Plan Administrator, in its discretion, may provide in the Deferral
Election that such Deferral Election will continue in effect for
each
subsequent year or performance period. Such “evergreen” Deferral Elections
will become effective with respect to an item of Compensation on
the date
such election becomes irrevocable under Section 4.2.
An evergreen Deferral Election may be terminated or modified prospectively
with respect to Compensation for which such election remains revocable
under Section 4.2.
A
Participant whose Deferral Election is suspended due to an Unforeseeable
Emergency will be required to file a new Deferral Election under
this
Article IV in order to continue making Deferrals under the
Plan.
|
|
4.4
|
Specified
Date Elections.
A
Participant’s Deferral Election may establish a Specified Date Account by
specifying the Payment Schedule for Deferrals and Earnings credited
to
such Account.
|
|
(a)
|
Allocation
of Deferrals.
A
Deferral Election may allocate Deferrals to one or more Specified
Date
Accounts. The Plan Administrator may, in its discretion, establish
a
minimum deferral period (for example, the third Plan Year following
the
year Compensation subject to the Deferral Election is earned).
|
|
(b)
|
Effect
of Earlier Separation from Service, Death,
Disability. In
the event of a Separation from Service, death, or Disability, the
unpaid
balance of a Specified Date Account will be paid in accordance with
the
Payment Schedule for the earlier event. Notwithstanding the foregoing,
the
Plan Administrator may allow a Participant to elect not to receive
payment
upon Separation from Service, but to receive the Specified Date Accounts
as of the specified date. Such election must be made (i) on the Deferral
Election form that establishes a Specified Date Account or (ii) in
a
subsequent election under Article V. Such election, once made, is
irrevocable as to such Account.
|
|
4.5
|
Deductions
from Pay.
The Plan Administrator has the authority to determine the payroll
practices under which any component of Compensation subject to a
Deferral
Election will be deducted from a Participant’s
Compensation.
|
Article
V
Modifications
to Payment Schedules
|
5.1
|
Participant’s
Right to Modify.
Subject to Section 5.2,
a
Participant may modify the Payment Schedule with respect to an Account,
provided such modification complies with the requirements of Sections
5.1(a)
and (b).
|
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|
(a)
|
Time
of Election. The
date on which a modification election is submitted to the Plan
Administrator must be at least twelve months prior to the date on
which
payment commences under the Payment Schedule in effect prior to
modification, and the date payments commence under the modified Payment
Schedule must occur no earlier than five years after the date payment
would have commenced under the Payment Schedule in effect prior to
the
effective date of the modification election. Under no circumstances
may a
modification election result in an acceleration of payments in violation
of Code Section 409A.
|
|
(b)
|
Effective
Date. A
modification election described in Section 5.1(a)
is
irrevocable upon receipt by the Plan Administrator and becomes effective
on the date that is twelve months after the date the modification
is filed
with the Plan Administrator
|
|
(c)
|
Effect
on Accounts. An
election to modify a Payment Schedule is specific to the Specified
Date or
Retirement/Termination Account to which it applies, and shall not
be
construed to affect the Payment Schedules of any other
Accounts.
|
|
(d)
|
Effect
of Modification Election Upon Death or
Disability.
A
modification to the form of payment from any Account that would also
change the form of payment upon the Participant’s death or Disability will
be effective at the time specified in Section 5.1(b)
above. Payment will be made in accordance with Section 2.27,
without regard to the five-year requirement specified in Section
5.1(a).
|
|
5.2
|
Modifications
Authorized Under Notice 2005-1, Proposed Regulations, and Notice
2006-79.
Notwithstanding any provision of this Plan to the contrary, during
calendar year 2007, a Participant may modify any Payment Schedule
of any
Account without regard to the requirements of Section 5.1(a)
and (b);
provided, however, that any modification election purporting to modify
an
Account with a Payment Schedule commencing during 2007 or which would
cause the commencement date of the Payment Schedule for an Account
to be
accelerated into 2007 shall be null and void to the extent such election
is inconsistent with the requirements of Code Section 409A and
regulations. The Plan Administrator has the authority to prescribe
the
time and manner under which such modifications may be
made.
|
Article
VI
Company
Contributions
|
6.1
|
Discretionary
Company Contributions.
The Company may, from time to time in its sole and absolute discretion,
credit Company Contributions to any Participant in any amount determined
by the Company. Such contributions will be credited to a Participant’s
Retirement/Termination Account.
|
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6.2
|
Vesting.
Company Contributions described in Section 6.1,
above, and the Earnings thereon, shall vest in accordance with the
vesting
schedule(s) established by the Committee at the time that the Company
Contribution is made. All Company Contributions shall become 100%
vested
upon the occurrence of the earliest of: (i) the death of the Participant;
(ii) the Disability of the Participant, (iii) Retirement of the
Participant, or (iv) a Change in Control. The Company may, at any
time, in
its sole discretion, increase a Participant’s vested interest in a Company
Contribution. The portion of a Participant’s Accounts that remains
unvested upon his or her Separation from Service after the application
of
the terms of this Section 6.2
shall be forfeited.
|
Article
VII
Valuation
of Account Balances; Investments
|
7.1
|
Valuation.
Deferrals shall be credited to appropriate Accounts on the date such
Compensation would have been paid to the Participant absent the Deferral
Election. Company Contributions shall be credited in accordance with
the
provisions of Article VI, as determined by the Plan Administrator.
Valuation of Accounts shall be performed under procedures approved
by the
Plan Administrator.
|
|
7.2
|
Earnings
Credit.
Each Account will be credited with Earnings on each Business Day,
based
upon the Participant’s investment allocation among a menu of investment
options selected in advance by the Plan Administrator, in accordance
with
the provisions of this Section 7.2
(“investment allocation”).
|
|
(a)
|
Investment
Options.
Investment options will consist of actual investments, which may
include
stocks, bonds, mutual fund shares, Company Stock and other investments.
The
Committee, in its sole discretion, shall be permitted to add or remove
investment funds from the Plan menu from time to time provided that
any
such additions or removals of investment funds shall not be effective
with
respect to any period prior to the effective date of such
change.
|
|
(b)
|
Investment
Allocations. A
Participant’s investment allocation constitutes a deemed, not actual,
investment among the investment options comprising the investment
menu. At
no time shall a Participant have any real or beneficial ownership
in any
investment option included in the investment menu, nor shall the
Company
or any trustee acting on its behalf have any obligation to purchase
actual
securities as a result of a Participant’s investment
allocation.
A
Participant’s investment allocation shall be used solely for purposes of
adjusting the value of a Participant’s Account
Balances.
|
A
Participant’s Deferral Election shall specify the investment allocation for
Deferrals. Deferrals may be allocated among the investment options in increments
of 1%. The Participant’s investment allocation will become effective on the same
Business Day or, in the case of investment allocations received after a time
specified by the Plan Administrator, the next Business Day. The investment
allocation specified in such Deferral Election will remain in effect until
the
Participant modifies the investment allocation in accordance with procedures
adopted by the Plan Administrator.
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Participants
also may re-allocate current Account Balances among the investment options
in
increments of 1% by filing a new investment allocation at the time and in the
form specified by the Plan Administrator. The Participant’s investment
allocation will become effective on the same Business Day or, in the case of
investment allocations received after a time specified by the Plan
Administrator, the next Business Day. The investment allocation shall apply
prospectively to the Account or Accounts identified in the
allocation.
|
(c)
|
Unallocated
Deferrals and Accounts.
If
any portion of a Deferral or Account Balance has not been allocated
to an
investment option, such portion shall be invested in an investment
option,
the primary objective of which is the preservation of capital, as
determined by the Committee.
|
|
(d)
|
Company
Stock.
The Committee may include Company Stock as one of the investment
options
described in Section 7.2(a).
The Committee may, in its sole discretion, limit the investment allocation
of Company Contributions to Company Stock. The Committee may also
require
Deferrals consisting of equity-based Compensation be allocated to
Company
Stock.
|
|
(1)
|
Diversification.
A
Participant may
not
re-allocate an investment in Company Stock into another investment
option.
The portion of an Account that is invested in Company Stock will
be paid
under Article VIII in the form of whole shares of Company Stock.
|
|
(2)
|
Effect
on Installment Payments.
If an Account is to be paid in installments, the Plan Administrator
will
determine the portion of each payment that will be paid in the form
of
Company Stock.
|
|
(3)
|
Dividend
Equivalents.
Dividend equivalents with respect to Company Stock will be credited
to the
applicable Accounts in the form of additional shares or units of
Company
Stock.
|
Article
VIII
Distribution
and Withdrawals
|
8.1
|
Separation
Payments.
Payments will be made to a Participant upon a Separation from Service
as
follows:
|
|
(a)
|
Retirement
Benefit.
A
Retirement Benefit will be paid to Participants who incur a Separation
from Service that qualifies as a Retirement. The amount of the Retirement
Benefit payment will be based on the vested Retirement/Termination
Account
Balance and will be paid in accordance with the Payment Schedule
in effect
for such benefit and the provisions of Section 8.7.
|
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(b)
|
Termination
Benefit.
In
the event that a Participant experiences a Separation from Service
that
does not qualify as a Retirement, the Termination Benefit will be
paid to
such Participant. The amount of the Termination Benefit will be based
on
the vested Retirement/Termination Account Balance and will be paid
in
accordance with the Payment Schedule in effect for the Termination
Benefit
and the provisions of Section 8.7.
|
|
(c)
|
Specified
Employees.
With respect to a Participant who is a Specified Employee as of the
date
such Participant incurs a Separation from Service described in this
Section, commencement date of a Payment Schedule will be the first
day of
the seventh month following the month in which such Separation from
Service occurs, unless the Payment Schedule specifies a later date.
Any
subsequent installment payments payable under such Payment Schedule
will
be paid on the anniversary of such
date.
|
|
8.2
|
Specified
Date Accounts.
Subject to Section 4.4(b),
the vested Account Balance of each Specified Date Account will be
paid in
accordance with the Payment Schedule in effect for such Account and
the
provisions of Section 8.7.
|
|
8.3
|
Disability
Benefit.
Upon the Plan Administrator’s determination that a Participant is
Disabled, the Company shall pay all unpaid Account Balances as a
Disability Benefit in
accordance with the Disability Benefit Payment Schedule and the provisions
of Section 8.7.
|
|
8.4
|
Death
Benefit.
In
the event of the Participant’s death prior to receiving all payments from
his or her Accounts, the Participant’s remaining Account Balances will be
paid to the Participant’s Beneficiaries
in
accordance with the Death Benefit Payment Schedule and the provisions
of
Section 8.7.
|
|
8.5
|
Unforeseeable
Emergency.
A
Participant may submit a written request to the Plan Administrator
to
receive a distribution from his or her vested Account Balance(s)
if the
Participant experiences an Unforeseeable Emergency. Distributions
of
amounts in the event of an Unforeseeable Emergency are limited to
the
extent reasonably needed to satisfy the emergency need which cannot
be met
from other sources. The amount of such distribution shall be subtracted
first from the vested portion of the Participant's Retirement/Termination
Account until depleted and then from the vested Specified Date Accounts,
beginning with the Specified Date Account with the latest payment
commencement date. For purposes of the preceding sentence, any minimum
deferral requirement specified in the Plan or Section 5.1
shall not apply.
|
|
8.6
|
Change
in Control.
A
Participant who incurs a Separation from Service within twenty four
(24)
months following the date of a Change in Control shall receive payment
of
his or her vested Accounts in a single lump sum. Payment will be
made as
of the later of the date specified for a Termination Benefit under
Section
2.27
or
the date applicable to Specified Employees under Section 8.1(c).
|
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8.7
|
Valuation
and Payment.
Payment amounts will be based on the valuation of the applicable
Account
Balance as of the Valuation Date specified by the Plan Administrator
in
its discretion.
|
Payment
is treated as made upon the payment commencement date under the applicable
Payment Schedule if the payment is made on or after such date in the same
calendar year or, if later, by the 15th
day of
the third calendar month following the date specified under the arrangement.
If
a calculation of the amount of the payment is not administratively practical
due
to events beyond the control of the Participant, a Beneficiary or the
Participant’s estate, the payment will be treated as made upon the date
specified under the Payment Schedule if the payment is made during the first
calendar year in which the payment becomes administratively
practicable.
|
8.8
|
Installments;
Declining Balance Calculation.
If a Payment Schedule specifies installment payments, annual payments
will
be made beginning as of the payment commencement date for such
installments and shall continue on each anniversary thereof until
the
number of installment payments specified in the Payment Schedule
has been
paid. The amount of each installment payment shall be determined
by
dividing (a) by (b):
|
|
(a)
|
equals
the Account Balance as of the Valuation Date
and
|
|
(b)
|
equals
the remaining number of installment
payments.
|
|
8.9
|
“De
Minimis Account” Balance.
Any provision in this Plan to the contrary notwithstanding, payment
to a
Participant or Beneficiary will be made in a single lump sum, provided
(i)
the payment accompanies the payment of the entirety of the Participant’s
interest in the Plan and all similar arrangements that constitute
a
nonqualified deferred compensation arrangement under Prop. Treas.
Reg.
Section 1.409A-1(c); and (ii) the payment is not greater than $10,000.
Payment under this Section shall be made on or before the later of
December 31 of the calendar year in which occurs the Participant’s
Separation from Service (if applicable), or the 15th
day of the third month following the Participant’s Separation from Service
(if applicable). Any Payment Schedule contrary to the provisions
of this
Section 8.9
shall be null and void.
|
|
8.10
|
Domestic
Relations Order.
Notwithstanding any benefit, Payment Schedule or other provision
of this
Plan regarding the time and form of payment, the Plan Administrator
may
pay all or a portion of a Participant’s Accounts to an “alternate payee”
as specified under the terms of a domestic relations order (defined
in
Code Section 414(p)(1)(B)). If a time or form of payment is not specified
in such order, payment will be made to such alternate payee(s) in
a single
lump sum as soon as is administratively practical following the Plan
Administrator’s determination that the order meets the requirements of
this Section 8.10.
|
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8.11
|
Payments
to Avoid Nonallocation Year Under Section 409(p).
Notwithstanding any benefit, Payment Schedule or other provision
of this
Plan regarding the time and form of payment, payment will be made
to
prevent the occurrence of a nonallocation year (within the meaning
of
Section 409(p)(3) of the Code in the plan year of an employee stock
ownership plan next following the current plan year, provided that
the
amount paid may not exceed 125 percent of the minimum amount of payment
necessary to avoid the occurrence of a nonallocation
year.
|
|
8.12
|
Payment
of Employment Taxes.
The Plan Administrator may permit payment of (i) Federal Insurance
Contributions Act (FICA) tax imposed on Deferrals and Company
Contributions (ii) any related federal, state, local and foreign
tax law
withholding obligations arising in connection with payment of the
FICA
Amount (as defined under Treasury regulations), and (iii) to pay
the
additional income tax at the source on wages attributable to the
pyramiding of wages and taxes as a result of payments under (i) and
(ii).
The total amount of the payment under this Section shall not exceed
the
FICA Amount and the income tax withholding related to the FICA
Amount.
|
|
8.13
|
Conflicts
of Interest.
The Plan Administrator may permit such acceleration of the time or
schedule of a payment under the Plan as may be necessary to comply
with a
certificate of divestiture (as defined in Code Section 1043(b)(2),
or
which may be necessary to satisfy requirements established pursuant
to a
written determination by the Office of Government Ethics that: (1)
divestiture of the financial interest or termination of the financial
arrangement is reasonably necessary to comply with any Federal conflict
of
interest statute, regulation, rule or executive order (including
section
208 of title 18, United States Code), or is requested by a congressional
committee as a condition of confirmation; and (2) specifies the financial
interest to be divested or
terminated.
|
|
8.14
|
Permissible
Payment Delays.
The Company will delay any payment to a Participant upon the Company’s
reasonable anticipation of one or more of the
following:
|
|
(a)
|
The
Company’s income tax deduction with respect to such payment would be
limited or eliminated by application of Code Section 162(m); provided
that
such payment will be made either at the earliest date on which the
Company
reasonably anticipates that the deduction will not be so limited
or
eliminated or the calendar year in which the Participant incurs a
Separation from Service; or
|
|
(b)
|
Making
such payment would violate a term of a loan agreement to which the
Company
or an Affiliate is a party, or other similar contract to which the
Company, or an Affiliate, is a party, and such violation would cause
material harm to the Company or an Affiliate; provided that payment
will
be made at the earliest date on which the Company reasonably anticipates
that making the payment will not cause such violation or such violation
will not cause material harm to the Company and subject to such other
requirements as are specified under Code Section 409A;
or
|
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(c)
|
Making
such payment would violate federal securities laws or other applicable
law; provided that payment will be made at the earliest date which
the
Company anticipates that the making of the payment will not cause
such
violation, and subject to such other requirements as are specified
under
Code Section 409A.
|
Article
IX
Administration
|
9.1
|
Plan
Administration.
This Plan shall be administered by the Plan Administrator which shall
have
discretionary authority to make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this
Plan and
to utilize its discretion to decide or resolve any and all questions,
including but not limited to eligibility for benefits and interpretations
of this Plan and its terms, as may arise in connection with the Plan.
Claims for benefits shall be filed with the Plan Administrator and
resolved in accordance with the claims procedures in Article
XII.
|
|
9.2
|
Administration
Upon Change in Control.
Upon a Change in Control, the Committee, as constituted immediately
prior
to such Change in Control, shall continue to act as the Plan
Administrator. The individual who was the Chief Executive Officer
of the
Company (or if such person is unable or unwilling to act, the next
highest
ranking officer) prior to the Change in Control shall have the authority
(but shall not be obligated) to appoint an independent third party
to act
as the Plan Administrator in lieu of the
Committee.
|
Upon
such
Change in Control, the Company may not remove the Plan Administrator, unless
2/3rds of the members of the Board of Directors of the Company and a majority
of
Participants and Beneficiaries with Account Balances consent to the removal
and
replacement Plan Administrator. Notwithstanding the foregoing, neither the
Committee members nor the officer described above shall have authority to direct
investment of trust assets under any rabbi trust described in Section
11.2.
The
Company shall, with respect to the Plan Administrator identified under this
Section, (i) pay all reasonable expenses and fees of the Plan Administrator,
(ii) indemnify the Plan Administrator (including individual Committee members)
against any costs, expenses and liabilities including, without limitation,
attorneys’ fees and expenses arising in connection with the performance of the
Plan Administrator hereunder, except with respect to matters resulting from
the
Plan Administrator’s gross negligence or willful misconduct and (iii) supply
full and timely information to the Plan Administrator on all matters related
to
the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the
Plan
Administrator may reasonably require.
|
9.3
|
Withholding.
The Company shall have the right to withhold from any payment due
under
the Plan (or any amount deferred into the Plan) any taxes required
by law
to be withheld in respect of such payment (or
Deferral).
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9.4
|
Indemnification.
The Company shall indemnify and hold harmless each employee, officer,
director, agent or organization, to whom or to which it delegated
duties,
responsibilities, and authority under the Plan or otherwise with
respect
to administration of the Plan, including, without limitation, the
Plan
Administrator, the Committee and their agents, against all claims,
liabilities, fines and penalties, and all expenses reasonably incurred
by
or imposed upon him or it (including but not limited to reasonable
attorney fees) which arise as a result of his or its actions or failure
to
act in connection with the operation and administration of the Plan
to the
extent lawfully allowable and to the extent that such claim, liability,
fine, penalty, or expense is not paid for by liability insurance
purchased
or paid for by the Company. Notwithstanding the foregoing, the Company
shall not indemnify any person or organization if his or its actions
or
failure to act are due to gross negligence or willful misconduct
or for
any such amount incurred through any settlement or compromise of
any
action unless the Company consents in writing to such settlement
or
compromise.
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|
9.5
|
Delegation
of Authority.
In the administration of this Plan, the Plan Administrator may, from
time
to time, employ agents and delegate to them such administrative duties
as
it sees fit, and may from time to time consult with legal counsel
who
shall be legal counsel to the
Company.
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|
9.6
|
Binding
Decisions or Actions.
The decision or action of the Plan Administrator in respect of any
question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
thereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.
|
Article
X
Amendment
and Termination
|
10.1
|
Amendment
and Termination.
The Company may at any time and from time to time amend the Plan
or may
terminate the Plan as provided in this Section 10.1.
|
|
(a)
|
Amendments.
The Company, by action taken by its Board of Directors, may amend
the Plan
at any time, provided that any such amendment shall not reduce the
vested
Account Balances of any Participant accrued as of the date of any
such
amendment or restatement (as if the Participant had incurred a voluntary
Separation from Service on such date) or reduce any rights of a
Participant under the Plan or other Plan features with respect to
Deferrals made prior to the date of any such amendment or restatement
without the consent of the Participant. The Board of Directors may
delegate to the Plan Administrator the authority to amend the Plan
without
the consent of the Board of Directors for the purpose of (i) conforming
the Plan to the requirements of law, (ii) to facilitate administration,
(iii) to clarify provisions based on the Plan Administrator’s
interpretation of the document and (iv) to make such other amendments
as
the Board of Directors may
authorize.
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(b)
|
Termination.
The Company, by action taken by its Board of Directors , may terminate
the
Plan and pay Participants and Beneficiaries their Account Balances
in a
single lump sum at any time under the following
conditions:
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|
(1)
|
Company’s
Discretion.
The Company may terminate the Plan in its discretion, provided that
(i)
all arrangements sponsored by the Company that would be aggregated
with
any terminated arrangement under Prop. Treas. Regulation Section
1.409A-1(c) if the same Participant participated in all of the
arrangements, are terminated; (ii) no payments other than payments
that
would be payable under the terms of the arrangements if the termination
had not occurred are made within 12 months of the termination of
the
arrangements (iii) all payments are made within 24 months of the
termination of the arrangements, and (iv) the Company or its Affiliates
do
not adopt a new arrangement that would be aggregated with any terminated
arrangement under Section 1.409A-1(c) if the same Participant participated
in both arrangements, at any time within five years following the
date of
termination of the arrangement.
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|
(2)
|
Change
in Control.
The Company may terminate the Plan within the thirty (30) days preceding
or the twelve months following a Change in Control (as defined in
Section
1.409A-2(g)(4)(i)). For purposes of this paragraph, a Change in Control
shall be defined as provided in Prop. Treas. Reg. Section
1.409A-2(g)(4)(i). The Plan is considered terminated under this paragraph
only if all substantially similar arrangements are terminated, and
all
participants under such arrangements are required to receive all
amounts
of compensation deferred under the terminated arrangements within
twelve
months of the termination of such
arrangements.
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|
(3)
|
Dissolution;
Bankruptcy Court Order.
The Company may terminate the Plan within 12 months of a corporate
dissolution taxed under Code Section 331, or with the approval of
a
bankruptcy court pursuant to 11 U.S.C. Section 403(b)(1)(A), provided
that
the vested Account Balances are included in Participants’ gross incomes in
the latest of (i) the calendar year in which the Plan terminates;
(ii) the
calendar year in which the amount is no longer subject to a substantial
risk of forfeiture, or (iii) the first calendar year in which the
payment
is administratively practicable.
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|
10.2
|
Accounts
Taxable Under Code Section 409A.
The Plan is intended to constitute a plan of deferred compensation
that
meets the requirements for deferral of income taxation under Code
Section
409A. The Plan Administrator, pursuant to its authority to interpret
the
Plan, may sever from the Plan or any Deferral Election any provision
or
exercise of a right that otherwise would result in a violation of
Code
Section 409A. If, after application of the preceding sentence, the
Plan
Administrator determines that a Participant’s Accounts are taxable or if
such Participant receives a notice of deficiency from the Internal
Revenue
Service due to a violation of Code Section 409A, such Participant
will receive payment from his or her Accounts in a single lump sum.
The
amount of the payment shall not exceed the lesser of (i) the
Participant’s Account Balance or (ii) an amount equal to the amount
of income included in taxable income as a result of such violation,
plus
an additional amount, to the extent permissible under Treasury Department
regulations, for penalties under Code Section 409A, other taxes and
interest or other costs. Payment under this Section 10.2,
including the amount of any taxes, penalties, interest or other costs,
shall be applied against the Participant’s Accounts and shall constitute
fulfillment of the Company’s payment obligation to such Participant under
the Plan to the extent of any such
payments.
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Article
XI
Informal
Funding
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11.1
|
General
Assets.
Obligations established under the terms of the Plan may be satisfied
from
the general funds of the Company, an Affiliate, or a trust described
in
Section 11.2.
No Participant, spouse or Beneficiary shall have any right, title
or
interest whatever in assets of the Company or an Affiliate. Nothing
contained in this Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a
fiduciary
relationship, between the Company or its Affiliates and any Employee,
spouse, or Beneficiary. To the extent that any person acquires a
right to
receive payments from the Company hereunder, such rights are no greater
than the right of an unsecured general creditor of the
Company.
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|
11.2
|
Rabbi
Trust.
The Company or an Affiliate may, at its sole discretion, establish
a
grantor trust, commonly known as a rabbi trust, as a vehicle for
accumulating assets to pay benefits under the Plan. Payments under
the
Plan may be paid from the general assets of the Company or from the
assets
of any such rabbi trust. Payment from any such source shall reduce
the
Company’s obligation to the Participant or Beneficiary under the
Plan.
|
If
a
rabbi trust is in existence upon the occurrence of a “change in control”, as
defined in such trust, the Company shall, upon such change in control, and
on
each anniversary of the change in control, contribute in cash or liquid
securities such amounts as are necessary so that the value of assets after
making the contributions exceed the total value of all Account Balances by
125%.
Article
XII
Claims
|
12.1
|
Filing
a Claim.
Any controversy or claim arising out of or relating to the Plan shall
be
filed in writing with the Plan Administrator which shall make all
determinations concerning such claim. Any claim filed with the Plan
Administrator and any decision by the Plan Administrator denying
such
claim shall be in writing and shall be delivered to the Participant
or
Beneficiary filing the claim (the “Claimant”).
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12.2
|
In
General.
Notice of a denial of benefits (other than Disability benefits) will
be
provided within ninety (90) days of the Plan Administrator’s receipt of
the Claimant's claim for benefits. If the Plan Administrator determines
that it needs additional time to review the claim, the Plan Administrator
will provide the Claimant with a notice of the extension before the
end of
the initial ninety (90) day period. The extension will not be more
than
ninety (90) days from the end of the initial ninety (90) day period
and
the notice of extension will explain the special circumstances that
require the extension and the date by which the Plan Administrator
expects
to make a decision.
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|
12.3
|
Disability
Benefits.
Notice of denial of Disability benefits will be provided within forty-five
(45) days of the Plan Administrator’s receipt of the Claimant’s claim for
Disability benefits. If the Plan Administrator determines that it
needs
additional time to review the Disability claim, the Plan Administrator
will provide the Claimant with a notice of the extension before the
end of
the initial forty-five (45) day period. If the Plan Administrator
determines that a decision cannot be made within the first extension
period due to matters beyond the control of the Plan Administrator,
the
time period for making a determination may be further extended for
an
additional thirty (30) days. If such an additional extension is necessary,
the Plan Administrator shall notify the Claimant prior to the expiration
of the initial thirty (30) day extension. Any notice of extension
shall
indicate the circumstances necessitating the extension of time, the
date
by which the Plan Administrator expects to furnish a notice of decision,
the specific standards on which such entitlement to a benefit is
based,
the unresolved issues that prevent a decision on the claim and any
additional information needed to resolve those issues. A Claimant
will be
provided a minimum of forty-five (45) days to submit any necessary
additional information to the Plan Administrator. In the event that
a
thirty (30) day extension is necessary due to a Claimant’s failure to
submit information necessary to decide a claim, the period for furnishing
a notice of decision shall be tolled from the date on which the notice
of
the extension is sent to the Claimant until the earlier of the date
the
Claimant responds to the request for additional information or the
response deadline.
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|
12.4
|
Contents
of Notice.
If
a claim for benefits is completely or partially denied, notice of
such
denial shall be in writing and shall set forth the reasons for denial
in
plain language. The notice shall (i) cite the pertinent provisions
of the
Plan document and (ii) explain, where appropriate, how the Claimant
can
perfect the claim, including a description of any additional material
or
information necessary to complete the claim and why such material
or
information is necessary. The claim denial also shall include an
explanation of the claims review procedures and the time limits applicable
to such procedures, including a statement of the Claimant’s right to bring
a civil action under Section 502(a) of ERISA following an adverse
decision
on review. In the case of a complete or partial denial of a Disability
benefit claim, the notice shall provide a statement that the Plan
Administrator will provide to the Claimant, upon request and free
of
charge, a copy of any internal rule, guideline, protocol, or other
similar
criterion that was relied upon in making the
decision.
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|
12.5
|
Appeal
of Denied Claims.
A
Claimant whose claim has been completely or partially denied shall
be
entitled to appeal the claim denial by filing a written appeal with
a
committee designated to hear such appeals (the “Appeals Committee”). A
Claimant who timely requests a review of the denied claim (or his
or her
authorized representative) may review, upon request and free of charge,
copies of all documents, records and other information relevant to
the
denial and may submit written comments, documents, records and other
information relevant to the claim to the Appeals Committee. All written
comments, documents, records, and other information shall be considered
“relevant” if the information (i) was relied upon in making a benefits
determination,(ii) was submitted, considered or generated in the
course of
making a benefits decision regardless of whether it was relied upon
to
make the decision, or (iii) demonstrates compliance with administrative
processes and safeguards established for making benefit decisions.
The
Appeals Committee may, in its sole discretion and if it deems appropriate
or necessary, decide to hold a hearing with respect to the claim
appeal.
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(a)
|
In
General.
Appeal of a denied benefits claim (other than a Disability benefits
claim)
must be filed in writing with the Appeals Committee no later than
sixty
(60) days after receipt of the written notification of such claim
denial.
The Appeals Committee shall make its decision regarding the merits
of the
denied claim within sixty (60) days following receipt of the appeal
(or
within one hundred and twenty (120) days after such receipt, in a
case
where there are special circumstances requiring extension of time
for
reviewing the appealed claim). If an extension of time for reviewing
the
appeal is required because of special circumstances, written notice
of the
extension shall be furnished to the Claimant prior to the commencement
of
the extension. The notice will indicate the special circumstances
requiring the extension of time and the date by which the Appeals
Committee expects to render the determination on review. The review
will
take into account comments, documents, records and other information
submitted by the Claimant relating to the claim without regard to
whether
such information was submitted or considered in the initial benefit
determination.
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|
(b)
|
Disability
Benefits.
Appeal of a denied Disability benefits claim must be filed in writing
with
the Committee no later than one hundred eighty (180) days after receipt
of
the written notification of such claim denial. The review shall be
conducted by the Appeals Committee (exclusive of the person who made
the
initial adverse decision or such person’s subordinate). In reviewing the
appeal, the Appeals Committee shall (i) not afford deference to the
initial denial of the claim, (ii) consult a medical professional
who has
appropriate training and experience in the field of medicine relating
to
the Claimant’s disability and who was neither consulted as part of the
initial denial nor is the subordinate of such individual and (iii)
identify the medical or vocational experts whose advice was obtained
with
respect to the initial benefit denial, without regard to whether
the
advice was relied upon in making the decision. The Appeals Committee
shall
make its decision regarding the merits of the denied claim within
forty-five (45) days following receipt of the appeal (or within ninety
(90) days after such receipt, in a case where there are special
circumstances requiring extension of time for reviewing the appealed
claim). If an extension of time for reviewing the appeal is required
because of special circumstances, written notice of the extension
shall be
furnished to the Claimant prior to the commencement of the extension.
The
notice will indicate the special circumstances requiring the extension
of
time and the date by which the Appeals Committee expects to render
the
determination on review. Following its review of any additional
information submitted by the Claimant, the Appeals Committee shall
render
a decision on its review of the denied
claim.
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(c)
|
Contents
of Notice.
If
a benefits claim is completely or partially denied on review, notice
of
such denial shall be in writing and shall set forth the reasons for
denial
in plain language.
|
|
(1)
|
The
decision on review shall set forth (i) the specific reason or reasons
for
the denial, (ii) specific references to the pertinent Plan provisions
on
which the denial is based, (iii) a statement that the Claimant is
entitled
to receive, upon request and free of charge, reasonable access to
and
copies of all documents, records, or other information relevant (as
defined above) to the Claimant’s claim, and (iv) a statement describing
any voluntary appeal procedures offered by the plan and a statement
of the
Claimant’s right to bring an action under Section 502(a) of ERISA.
|
|
(2)
|
For
the denial of a Disability benefit, the notice will also include
a
statement that the Appeals Committee will provide, upon request and
free
of charge, (i) any internal rule, guideline, protocol or other similar
criterion relied upon in making the decision, (ii) any medical opinion
relied upon to make the decision and (iii) the required statement
under
Section 2560.503-1(j)(5)(iii) of the Department of Labor
regulations.
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|
(d)
|
Claims
Appeals Upon Change in Control.
Upon a Change in Control, the Appeals Committee, as constituted
immediately prior to such Change in Control, shall continue to act
as the
Appeals Committee. Upon such Change in Control, the Company may not
remove
any member of the Appeals Committee, but may replace resigning members
if
2/3rds of the members of the Board of Directors of the Company and
a
majority of Participants and Beneficiaries with Account Balances
consent
to the replacement.
|
The
Appeals Committee shall have the exclusive authority at the appeals stage to
interpret the terms of the Plan and resolve appeals under the Claims
Procedure.
The
Company shall, with respect to the Plan Administrator identified under this
Section, (i) pay all reasonable expenses and fees of the Appeals Committee,
(ii)
indemnify the Appeals Committee (including individual committee members) against
any costs, expenses and liabilities including, without limitation, attorneys’
fees and expenses arising in connection with the performance of the Appeals
Committee hereunder, except with respect to matters resulting from the Appeals
Committee’s gross negligence or willful misconduct and (iii) supply full and
timely information to the Appeals Committee on all matters related to the Plan,
any rabbi trust, Participants, Beneficiaries and Accounts as the Appeals
Committee may reasonably require.
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12.6
|
Legal
Action.
A
Claimant may not bring any legal action, including commencement of
any
arbitration, relating to a claim for benefits under the Plan unless
and
until the Claimant has followed the claims procedures under the Plan
and
exhausted his or her administrative remedies under such claims
procedures.
|
If
a
Participant or Beneficiary prevails in a legal proceeding brought under the
Plan
to enforce the rights of such Participant or any other similarly situated
Participant or Beneficiary, in whole or in part, the Company shall reimburse
such Participant or Beneficiary for all legal costs, expenses, attorneys’ fees
and such other liabilities incurred as a result of such proceedings. If the
legal proceeding is brought in connection with a Change in Control, or a “change
in control” as defined in a rabbi trust described in Section 11.2,
the
Participant or Beneficiary may file a claim directly with the trustee for
reimbursement of such costs, expenses and fees. For purposes of the preceding
sentence, the amount of the claim shall be treated as if it were an addition
to
the Participant’s or Beneficiary’s Account Balance and will be included in
determining the Company’s trust funding obligation under Section 11.2.
|
12.7
|
Discretion
of Committee.
All interpretations, determinations and decisions of the Appeals
Committee
with respect to any claim shall be made in its sole discretion, and
shall
be final and conclusive.
|
|
12.8
|
Arbitration.
|
|
(a)
|
Prior
to Change in Control. If,
prior to a Change in Control, any claim or controversy between the
Company
and a Participant or Beneficiary is not resolved through the claims
procedure set forth in Article XII, such claim shall be submitted
to and
resolved exclusively by expedited binding arbitration by a single
arbitrator. Arbitration shall be conducted in accordance with the
following procedures:
|
|
i.
|
The
complaining party shall promptly send written notice to the other
party
identifying the matter in dispute and the proposed remedy. Following
the
giving of such notice, the parties shall meet and attempt in good
faith to
resolve the matter. In the event the parties are unable to resolve
the
matter within twenty one (21) days, the parties shall meet and attempt
in
good faith to select a single arbitrator acceptable to both parties.
If a
single arbitrator is not selected by mutual consent within ten (10)
Business Days following the giving of the written notice of dispute,
an
arbitrator shall be selected from a list of nine persons each of
whom
shall be an attorney who is either engaged in the active practice
of law
or recognized arbitrator and who, in either event, is experienced
in
serving as an arbitrator in disputes between employers and employees,
which list shall be provided by the main office of either JAMS, the
American Arbitration Associate (“AAA”) or the Federal Mediation and
Conciliation Service. If, within three Business Days of the parties’
receipt of such list, the parties are unable to agree on an arbitrator
from the list, then the parties shall each strike names alternatively
from
the list, with the first to strike being determined by the flip of
a coin.
After each party has had four strikes, the remaining name on the
list
shall be the arbitrator. If such person is unable to serve for any
reason,
the parties shall repeat this process until an arbitrator is
selected.
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ii.
|
Unless
the parties agree otherwise, within sixty (60) days of the selection
of
the arbitrator, a hearing shall be conducted before such arbitrator
at a
time and a place agreed upon by the parties. In the event the parties
are
unable to agree upon the time or place of the arbitration, the time
and
place shall be designated by the arbitrator after consultation with
the
parties. Within thirty (30) days of the conclusion of the arbitration
hearing, the arbitrator shall issue an award, accompanied by a written
decision explaining the basis for the arbitrator’s
award.
|
|
iii.
|
In
any arbitration hereunder, the Company shall pay all administrative
fees
of the arbitration and all fees of the arbitrator, except that the
Participant or Beneficiary may, if he/she/it wishes, pay up to one-half
of
those amounts. Each party shall pay its own attorneys’ fees, costs, and
expenses, unless the arbitrator orders otherwise. The prevailing
party in
such arbitration, as determined by the arbitrator, and in any enforcement
or other court proceedings, shall be entitled, to the extent permitted
by
law, to reimbursement from the other party for all of the prevailing
party’s costs (including but not limited to the arbitrator’s
compensation), expenses, and attorneys’ fees. The arbitrator shall have no
authority to add to or to modify this Plan, shall apply all applicable
law, and shall have no lesser and no greater remedial authority than
would
a court of law resolving the same claim or controversy. The arbitrator
shall have no authority to add to or to modify this Plan, shall apply
all
applicable law, and shall have no lesser and no greater remedial
authority
than would a court of law resolving the same claim or controversy.
The
arbitrator shall, upon an appropriate motion, dismiss any claim without
an
evidentiary hearing if the party bringing the motion establishes
that it
would be entitled to summary judgment if the matter had been pursued
in
court litigation.
|
The
parties shall be entitled to discovery as follows: Each party may take no more
than three depositions. Company may depose the Participant or Beneficiary plus
two other witnesses, and Participant or Beneficiary may depose the Company,
pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, plus two
other witnesses. Each party may make such reasonable document discovery requests
as are allowed in the discretion of the arbitrator.
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iv.
|
The
decision of the arbitrator shall be final, binding, and non-appealable,
and may be enforced as a final judgment in any court of competent
jurisdiction.
|
|
v.
|
This
arbitration provision of the Plan shall extend to claims against
any
parent, subsidiary, or affiliate of each party, and, when acting
within
such capacity, any officer, director, shareholder, Participant,
Beneficiary, or agent of any party, or of any of the above, and shall
apply as well to claims arising out of state and federal statutes
and
local ordinances as well as to claims arising under the common law
or
under this Plan.
|
|
vi.
|
Notwithstanding
the foregoing, and unless otherwise agreed between the parties, either
party may apply to a court for provisional relief, including a temporary
restraining order or preliminary injunction, on the ground that the
arbitration award to which the applicant may be entitled may be rendered
ineffectual without provisional
relief.
|
|
vii.
|
Any
arbitration hereunder shall be conducted in accordance with the Federal
Arbitration Act: provided, however, that, in the event of any
inconsistency between the rules and procedures of the Act and the
terms of
this Plan, the terms of this Plan shall
prevail.
|
|
viii.
|
If
any of the provisions of this Section 12.8
are determined to be unlawful or otherwise unenforceable, in the
whole
part, such determination shall not affect the validity of the remainder
of
this Section 12.8,
and this Section 12.8
shall be reformed to the extent necessary to carry out its provisions
to
the greatest extent possible and to insure that the resolution of
all
conflicts between the parties, including those arising out of statutory
claims, shall be resolved by neutral, binding arbitration. If a court
should find that the provisions of this Section 12.8
are not absolutely binding, then the parties intend any arbitration
decision and award to be fully admissible in evidence in any subsequent
action, given great weight by any finder of fact and treated as
determinative to the maximum extent permitted by
law.
|
|
ix.
|
The
parties do not agree to arbitrate any putative class action or any
other
representative action. The parties agree to arbitrate only the claims(s)
of a single Participant or
Beneficiary.
|
|
(b)
|
Upon
Change in Control. If,
upon the occurrence of a Change in Control, any dispute, controversy
or
claim arises between a Participant or Beneficiary and the Company
out of
or relating to or concerning the provisions of the Plan, such dispute,
controversy or claim shall be finally settled by a court of competent
jurisdiction which, notwithstanding any other provision of the Plan,
shall
apply a de novo standard of review to any determination made by the
Company, the Board or the Appeals
Committee.
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Article
XIII
General
Conditions
|
13.1
|
Anti-assignment
Rule.
No interest of any Participant, spouse or Beneficiary under this
Plan and
no benefit payable hereunder shall be assigned as security for a
loan, and
any such purported assignment shall be null, void and of no effect,
nor
shall any such interest or any such benefit be subject in any manner,
either voluntarily or involuntarily, to anticipation, sale, transfer,
assignment or encumbrance by or through any Participant, spouse or
Beneficiary.
|
|
13.2
|
No
Legal or Equitable Rights or Interest.
No Participant or other person shall have any legal or equitable
rights or
interest in this Plan that are not expressly granted in this Plan.
Participation in this Plan does not give any person any right to
be
retained in the service of the Company or any of its subsidiaries
or
affiliated companies. The right and power of the Company to dismiss
or
discharge an Employee is expressly reserved. Notwithstanding the
provisions of Section 10.2,
the Company makes no representations or warranties as to the tax
consequences to a Participant or a Participant’s beneficiaries resulting
from a deferral of income pursuant to the
Plan.
|
|
13.3
|
No
Employment Contract.
Nothing contained herein shall be construed to constitute a contract
of
employment between an Employee and the Company or any of its subsidiaries
or affiliated companies.
|
|
13.4
|
Notice.
Any notice or filing required or permitted to be delivered to the
Plan
Administrator under this Plan shall be delivered in writing, in person,
or
through such electronic means as is established by the Plan Administrator.
Notice shall be deemed given as of the date of delivery or, if delivery
is
made by mail, as of the date shown on the postmark on the receipt
for
registration or certification. Written transmission shall be sent
by
certified mail to:
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Diodes
Incorporated
Attn:
Director of Human Resources
3050
East Hillcrest
Westlake
Village, Ca 91362
Any
notice or filing required or permitted to be given to a Participant under this
Plan shall be sufficient if in writing or hand-delivered, or sent by mail to
the
last known address of the Participant.
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13.5
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Headings.
The headings of Sections are included solely for convenience of reference,
and if there is any conflict between such headings and the text of
this
Plan, the text shall control.
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13.6
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Invalid
or Unenforceable Provisions.
If any provision of this Plan shall be held invalid or unenforceable,
such
invalidity or unenforceability shall not affect any other provisions
hereof and the Plan Administrator may elect in its sole discretion
to
construe such invalid or unenforceable provisions in a manner that
conforms to applicable law or as if such provisions, to the extent
invalid
or unenforceable, had not been
included.
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13.7
|
Governing
Law.
To the extent not preempted by ERISA, the laws of the State of California
shall govern the construction and administration of the
Plan.
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IN
WITNESS WHEREOF,
the undersigned executed this Plan as of the 1st day of January, 2007 to be
effective as of the Effective Date.
Diodes
Incorporated
| By: | Richard D. White | (Print Name) |
| Its: | Sr. VP of Finance | (Title) |
| /s/ Richard White | (Signature) | |
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Incorporated Deferred Compensation Plan
AMENDMENT
TO
THE DIODES INCORPORATED
DEFERRED
COMPENSATION PLAN
This
Amendment to the Diodes Incorporated Deferred Compensation Plan (the “Plan”) is
adopted coincident with the adoption of the Plan. The purpose of the Amendment
is to permit Directors of the Company to defer compensation paid for services
as
Directors.
The
provisions of the Plan shall remain in effect, except as modified below with
respect to Deferrals by Directors. This Amendment shall not be construed as
modifying the Plan with respect to any other Participant, Beneficiary or
Eligible Employee as defined in the Plan document.
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(1)
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“Compensation”
shall mean Directors’ fees, which may include annual fees, meeting fees
and such other Compensation as is paid to the Directors for services
performed in such capacity.
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(2)
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“Director”
means a member of the Board of Directors of the
Company.
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(3)
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“Eligible
Employee” shall mean a Director of the Company’s Board of
Directors.
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(4)
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“Separation
Payments” under the “Payment Schedule” definition shall mean (a) a single
lump sum or (b) substantially equal installment payments paid over
a
period of two (2) to fifteen (15)
years.
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(5)
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“Separation
from Service” shall mean the first day in which the Director is no longer
performing services for the Company in the capacity of a Director
or other
independent contractor, either due to resignation or
removal.
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(6)
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Section
3.1 is modified to read as follows: “A Director becomes an Eligible
Employee upon commencement of services as a
Director.”
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(7)
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Section
3.2 is modified to read as follows: “A Director shall remain a Participant
eligible to defer Compensation until such time as he or she incurs
a
Separation from Service.”
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(8)
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Directors
are eligible for benefits described in Sections 8.1 (Separation from
Service), 8.2 (Specified Date Accounts), 8.4 (death) 8.6 (Change
in
Control) and 8.10 (Domestic Relations
Orders).
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Except
as
modified above, the rights of Directors shall be the same as all other
Participants, except where the context would indicate otherwise.
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