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EXHIBIT 10.1
HADCO CORPORATION
OUTSIDE DIRECTORS' COMPENSATION PLAN OF 1998
1. PURPOSE AND ESTABLISHMENT
Hadco Corporation (the "Company"), hereby establishes the Hadco
Corporation Outside Directors' Compensation Plan of 1998 (the "Plan") for those
directors of the Company who are neither officers nor employees of the Company.
All of the directors' annual fee will be paid in Restricted Stock of the Company
and all or a portion of the Additional Director Fees (hereinafter defined) may
be paid in Restricted Stock of the Company. The Plan also provides the
opportunity for eligible directors to request that the Company defer payment of
that portion of the annual fee or Additional Director Fees taken as shares of
Restricted Stock of the Company, and further allows the director to defer
Additional Director Fees taken as cash payments, as described more fully below.
The purposes of this Plan are to align the interests of the directors more
closely with the interests of other shareholders of the Company, to encourage
the highest level of director performance by providing the directors with a
direct interest in the Company's attainment of its financial goals, and to help
attract and retain qualified directors.
2. DEFINITIONS
a. "Additional Director Fees" means all those fees, in addition to the
annual fee, that a Director may be entitled to in any year of service for
attendance at Board or committee meetings and/or serving as a chairman of a
committee.
b. "Board" means the Board of Directors of the Company.
c. "Committee" means the Joint Stock Option and Compensation Committee
of the Board.
d. "Common Stock Equivalent" means a hypothetical share of Stock which
shall have a value on any date equal to the Fair Market Value of one share of
Stock on that date. The amount distributed to a Director pursuant to Section 7
hereof shall be that number of shares of Stock equal to the number of Common
Stock Equivalents then in the participating Director's Deferral Account.
e. "Deferral Account" means the bookkeeping account established by the
Company in respect to each Director pursuant to Section 6.3 hereof and to which
shall be credited the Common Stock Equivalents into which deferred portions of
the annual fee and/or Additional Director Fees are converted, and to which
dividends are credited, and to which deferred cash payments, plus accrued
interest, of the Additional Director Fees are credited pursuant to the Plan.
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f. "Director" means a member of the Board who is neither an officer nor
an employee of the Company, who was elected or appointed to the Board in a
manner prescribed in the Bylaws of the Company.
g. "Effective Date" means the date on which this Plan is approved by
the Board.
h. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
i. "Fair Market Value" means as of any applicable date: (i) if the
Company's Stock is actively traded in the established over-the-counter market,
the mean between the bid and asked prices quoted in such over-the-counter market
at the close on the date nearest preceding the applicable date; (ii) if such
Stock is listed on any national exchange, or traded in the NASDAQ National
Market, the mean between the high and low sale prices quoted on such exchange or
market on the trading day nearest preceding the applicable date; or (iii) if the
Stock is not publicly traded, the value as determined from time to time by the
Board.
j. "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
k. "Restricted Stock" means shares of Stock of the Company subject to
terms and conditions as imposed from time to time by the Board, which shall
include the following:
(i) Restricted Stock awards may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance
with the terms of the Plan and each transfer agent for the Stock shall
be instructed to such effect.
(ii) At such time as the Director ceases to serve on the Board, or upon
such earlier date as the Committee or Board shall determine, the
restrictions imposed by the Plan shall lapse.
l. "Stock" means the $0.05 par value common stock of the Company.
m. "Payment Date" means each of the dates each year on which the
Company pays the annual fee and Additional Director Fees to Directors pursuant
to Section 5.
3. PLAN ADMINISTRATION
3.1 The Board shall have full power and authority to interpret and
construe the Plan, any forms and constructions thereof and any action
thereunder.
3.2 The Committee shall have the power and authority to administer the
Plan, including the power and authority to:
a. Impose such limitations, restrictions, and conditions as
shall be deemed appropriate;
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b. Adopt, amend and rescind administrative guidelines and
other rules and regulations relating to the Plan, including the power
to change the dates by which deferral requests must be submitted to the
Clerk and the sole discretion as to whether deferral and distribution
requests made under the Plan are approved; and
c. Make all other determinations and to take all other actions
necessary or advisable for the implementation and administration of the
Plan.
3.3 Notwithstanding the foregoing, the Committee shall have no
authority, discretion or power to alter any terms or conditions specified in the
Plan, except in the sense of administering the Plan subject to the provisions of
the Plan.
4. STOCK SUBJECT TO THE PLAN
4.1 Number of shares. There shall be authorized for issuance under the
Plan, in accordance with the provisions of the Plan, 24,000 shares of Stock.
This authorization may be increased from time to time by approval of the Board.
The Company shall at all times during the term of the Plan retain as authorized
and unissued Stock at least the number of shares from time to time required
under the provisions of the Plan. The shares of Stock issuable hereunder shall
be authorized and unissued shares or previously issued and outstanding shares of
Stock reacquired by the Company.
4.2 Other Shares of Stock. Any shares of Stock that are subject to a
Common Stock Equivalent and for any reason are not issued to a Director shall
automatically become available again for use under the Plan.
4.3 Adjustments Upon Changes in Stock. If there shall be any change in
the Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, spin-off, split up, dividend in
kind or other change in the corporate structure, appropriate adjustments shall
be made by the Committee (or if the Company is not the surviving corporation in
any such transaction, the board of directors of the surviving corporation) in
the aggregate number and kind of shares subject to the Plan, and the number and
kind of shares which may be issued under the Plan. Appropriate adjustments may
also be made by the Committee in the terms of Common Stock Equivalents under the
Plan to reflect such changes and to modify any other terms on an equitable basis
as the Committee in its discretion determines.
5. PAYMENT OF FEES
5.1 Payment of Annual Fees. Each Director who serves as a director
shall be entitled to payment of an annual fee in such an amount as determined by
the Board from time to time. The entire annual fee shall be distributed to the
Director as Restricted Stock or, if the Director elects to defer payment as set
forth below, shall be credited to the Director's Deferral Account as Common
Stock Equivalents.
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5.2 Payment of Additional Director Fees. In addition to the annual fee,
Directors may be entitled to additional fees for attendance at Board or
committee meetings and/or serving as chairman of a committee. Such Additional
Director Fees are in amounts to be set from time to time by the Board. A
Director may choose to accept payment of these Additional Director Fees in cash
or Restricted Stock, and the Director may also elect to have such cash or
Restricted Stock payments deferred as set forth in Section 6.1 below. If the
Director fails to make an election regarding the form of payment, the total
amount of the Additional Director Fees shall be paid in cash.
5.3 Payment Dates. All payments, distributions or credits of amounts in
connection with the Director annual fee or Additional Director Fees shall be
made not less than semi-annually. If payments are made semi-annually, the first
payment, distribution or credit is to occur each year on the date of the annual
meeting of the stockholders of the Company and the second payment, distribution
or credit is to occur on the date which is six months after the date of the
annual meeting of the stockholders of the Company.
6. DEFERRAL ELECTIONS
6.1 Deferral Elections for Directors. A Director may elect, in writing,
on or before the last day of the month preceding each annual meeting of
stockholders, on a form to be prescribed by the Clerk, the following:
a. To defer the payment of all or any part of the Restricted
Stock payment constituting the Director annual fee to be earned during
the period immediately following the annual meeting of stockholders and
ending on the date of the next succeeding annual meeting of
stockholders. The Director shall specify on the election form the
percentage amount of the Restricted Stock payment constituting the
annual fee to be deferred. Amounts deferred by a Director pursuant to
this Section 6.1(a) shall be converted into Common Stock Equivalents in
accordance with Section 6.3.
b. To receive payment of all or a specified percentage of the
Additional Director Fees to be earned during the period immediately
following the annual meeting of stockholders and ending on the date of
the next succeeding annual meeting of stockholders, in Restricted Stock
rather than cash. The Director shall specify on the election form the
percentage amount to be paid in cash and the percentage amount to be
paid in Restricted Stock.
c. To defer the payment of all or any portion of the
Additional Director Fees taken as a cash payment. The Director shall
specify on the election form the percentage amount of the cash payment
constituting the Additional Director Fees to be deferred.
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d. To defer the payment of all or any portion of the
Additional Director Fees taken as Restricted Stock payments pursuant to
subsection (b) of this Section. The Director shall specify on the
election form the percentage amount of the Restricted Stock payment
constituting the Additional Director Fees to be deferred. Amounts
deferred by a Director pursuant to this Section 6.1(d) shall be
converted into Common Stock Equivalents in accordance with Section 6.3.
Once made, the election shall remain in effect until revoked by the
participating Director. Such revocation shall become effective for Directors'
fees earned for the period beginning immediately following the annual meeting of
stockholders next occurring after such revocation notice.
6.2 Deferral Elections for Director Candidates. Any individual who is a
candidate for election to the Board may make elections, as listed in Section 6.1
above, regarding the payment of the annual fee and Additional Director Fees to
be earned during the period beginning with the date of his or her election and
ending on the date of the next succeeding annual meeting of stockholders. The
election shall be made in writing, on or before the last day of the month
preceding the annual meeting of stockholders prior to his or her election, on a
form to be prescribed by the Clerk.
6.3 Establishment of Deferral Accounts. There shall be established for
each participating Director an account which shall reflect the cash or
Restricted Stock amounts deferred by the participating Director which would
otherwise have been paid to such Director had no election to defer been made.
Fees deferred by a Director shall be credited to such Deferral Account as of
each Payment Date or such other date that such amounts would otherwise have been
paid or distributed to the Director. Restricted Stock amounts that the Director
elects to defer shall be converted to Common Stock Equivalents based on the Fair
Market Value as of the Payment Date. A statement will be sent to each
participating Director as to the balance of his or her Deferral Account at least
once each calendar year.
6.4 Term of Deferrals. A deferral request made pursuant to Section 6.1
and approved by the Company shall defer the payment with respect to which the
request was made until the participating Director leaves the Board.
6.5 Deferral Elections - First Year of the Plan. Elections to defer
payment of all or a portion of the Restricted Stock constituting the annual fee,
to have payment of all or any portion of the Additional Director Fees made in
the form of Restricted Stock, or to defer the cash or Restricted Stock payments
constituting Additional Director Fees shall be made by the Director, in writing,
on a form to be prescribed by the Clerk, on or before the 30th day following the
Effective Date of this Plan or on or before the last day of the month preceding
the next annual meeting of stockholders, whichever is later.
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7. DISTRIBUTION OF DEFERRED AMOUNTS
7.1 Distribution of Accounts. As soon as practicable following
termination of service as a Director, a Director shall receive a distribution of
his or her Deferral Account. Distribution of all deferred amounts shall be made
in one lump sum. Distribution of deferred cash amounts shall be made in cash and
shall include interested earned pursuant to Section 7.4. Distribution of the
Restricted Stock amounts shall consist of one share of Stock for each Common
Stock Equivalent credited to such Director's Deferral Account as of the Payment
Date immediately preceding the date of distribution, plus any dividends credited
to such account pursuant to Section 7.3.
7.2 Distribution to a Deceased Director's Estate. In the event of a
Director's death before the distribution of his or her Deferral Account, payment
of the Director's Deferral Account shall then be made to the beneficiary
designated by the Director pursuant to Section 8.1 or, in the absence of a
designation of beneficiary pursuant to Section 8.1, to his or her estate, in the
time and manner selected by the Committee. If no beneficiary is designated, then
the Committee may take into account the application of any duly appointed
administrator or executor of a Director's estate and direct that the balance of
the Director's Deferral Account be paid to his or her estate in the manner
requested by such application.
7.3 Hypothetical Dividends on Common Stock Equivalents. Dividends and
other distributions on Common Stock Equivalents shall be deemed to have been
paid as if such Common Stock Equivalents were actual shares of Stock issued and
outstanding on the respective record or distribution dates. Common Stock
Equivalents shall be credited to the Director's Deferral Account on the basis of
the value of the dividend or other distribution and the Fair Market Value of the
Common Stock Equivalents on the date of the announcement of the dividend or
distribution. Credits to a Director's Deferral Account for dividends or
distributions shall be made on the same day as dividends or other distributions
are otherwise paid. Fractional shares shall be credited to a Director's Deferral
Account cumulatively, but the balance of shares of Common Stock Equivalents in a
Director's Deferral Account shall be rounded to the next lower whole share for
any distributions to such Director pursuant to this Section 7. The value of any
fractional share shall be paid in cash.
7.4 Interest on Deferred Cash Payments. Interest shall be accrued and
credited on deferred cash amounts, to be compounded annually, until distribution
is made to the participating Director under the Plan. The interest rate shall be
a flat rate of six percent (6%) per annum, or such other rate as determined from
time to time by the Board.
7.5 Emergency Payments. In the event of an "unforeseeable emergency" as
defined herein, the Committee may determine the amounts payable under Section 7
hereof and pay all or a part of such amounts in shares of Stock to the extent
the Committee determines that such action is necessary in light of immediate and
substantial needs of the Director occasioned by severe financial hardship. For
the purposes of this Section, an "unforeseeable emergency" is a severe financial
hardship to the Director resulting from a sudden and unexpected illness or
accident of the Director or of a dependent (as defined in Section 152(a) of the
Code) of the Director, loss of the Director's property due to casualty, or other
similar extraordinary and unforeseeable
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circumstances arising as a result of events beyond the control of the Director.
Payments shall not be made pursuant to this Section to the extent that such
hardship is or may be relieved: (i) through reimbursement or compensation by
insurance or otherwise, (ii) by liquidation of the Director's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship, or (iii) by cessation of the Director's deferrals under the Plan. Such
action shall be taken only if a Director (or a Director's legal representatives)
signs an application describing fully the circumstances which are deemed to
justify the payment, together with an estimate of the amounts necessary to
prevent such hardship, which application shall be approved by the Committee
after making such inquiries as the Committee deems necessary and appropriate.
8. DESIGNATION OF BENEFICIARY
8.1 Designation. In the event of death of a participating Director at a
time when deferred amounts remain credited to the Director's Deferral Account,
such amounts will be paid to the beneficiary designated to receive such deferred
amounts on a form to be supplied by and filed with the Clerk of the Company, if
such named beneficiary survives the participating Director. If no beneficiary
designation has been filed with the Clerk, or if the designated beneficiary does
not survive the participating Director, such deferred amounts shall be
distributed pursuant to the terms of Section 7.2.
8.2 Incapacity of the Participating Director or Beneficiary. If the
Company shall find that any person to whom any amount is payable under this Plan
has been judicially declared incompetent to carry on his or her own affairs or
is a minor, distribution or payment of amounts due hereunder may be made to a
duly appointed guardian or other legal representative in accordance with the
applicable provisions of this Plan. Any such distribution or payment shall
completely discharge any obligations or liabilities of the Company under this
Plan with respect to such distributions or payments.
9. RIGHT TO AMEND, ALTER OR REVOKE
The Company reserves the right to amend, alter, modify or revoke in
whole or in part this Plan at any time; provided, however, that with respect to
amounts as to which the period of deferral has commenced at the time of the
Company's exercise of its rights under this Section 9, no exercise of such
rights shall result in a forfeiture of such deferred amounts, a change in the
time of payment of amounts, a change in terms and conditions under which
forfeiture of such deferred amounts may occur, or a change in the provisions of
this agreement governing the crediting of dividends on such deferred amounts,
without the consent of the participating Director(s) affected by such exercise
of rights, except as otherwise provided in this Plan.
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10. GENERAL CREDITOR STATUS
Each Director, and each other recipient of a Director's Deferral
Account pursuant to Section 7, shall be and remain an unsecured general creditor
of the Company with respect to any payments due and owing to such Director
hereunder. All payments to persons entitled to benefits hereunder shall be made
out of the general assets, and shall be the sole obligations, of the Company.
The Plan is a promise to pay benefits in the future and it is the intention of
the parties that it be "unfunded" for tax purposes (and for purposes of Title I
of the Employment Retirement Income Security Act ("ERISA")).
11. GOVERNING LAW
This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
12. NO TRUST, LEGAL OR BENEFICIAL OWNERSHIP INTENDED
No trust agreement is to be deemed created for the benefit of any
participating Director, or the Director's beneficiary, executors,
administrators, heirs, assigns or legal representatives as a result of this
Plan. Similarly, no legal or beneficial interest in any of the Company's assets
is intended to be conferred by the terms of the Plan.
13. PROHIBITION OF ALIENATION
The right of the participating Director or the Director's designated
beneficiary or any other person to the payment of amounts due under the Plan may
not be assigned, transferred, pledged or encumbered except as otherwise provided
in this Plan.
14. BINDING EFFECT
The Plan, except as otherwise provided herein, shall be binding upon
and inure to the benefit of the Company, the Board, its successors and assigns
and participating Directors, their designated beneficiary, heirs, executors,
administrators and legal representatives.
15. DISTRIBUTION UPON FINDING OF INCLUSION OF DEFERRED AMOUNTS IN GROSS
INCOME
If this Plan shall ever be determined to require the inclusion of all
or part of any participating Director's deferred amounts in the Director's gross
income for federal, state, or local income tax purposes prior to the time such
amount would be required to be distributed or paid under the terms of this Plan,
whether by taxing authorities of the United States or other sovereign nations or
political subdivisions thereof, then only those amounts which would be treated
as includable in gross income at such time will be paid over to the
participating Director. All other deferred amounts will continue to be subject
to the terms of this Plan.
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16. AGREEMENT
By requesting the Company to defer payment hereunder, a Director
consents to the provisions of this Plan as they exist at the time of such
request and as they may be amended thereafter by the Board, subject to the
consent of the Director when required pursuant to Section 9.
17. EFFECTIVE DATE
The Effective Date of this Plan is March 4, 1998.
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