HEICO CORPORATION Exhibit 10.1
Leadership Compensation Plan
Plan Document
EFFECTIVE OCTOBER 1, 2006
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
TABLE OF CONTENTS
PAGE
----
Article 1 Definitions..........................................................1
Article 2 Selection, Enrollment, Eligibility...................................6
2.1 Selection by Committee.............................................6
2.2 Enrollment and Eligibility Requirements; Commencement of
Participation......................................................6
Article 3 Deferral Commitments/Company Contribution Amounts/ Company
Matching Amounts/ Vesting/Crediting/Taxes............................7
3.1 Minimum Deferrals..................................................7
3.2 Maximum Deferral...................................................8
3.3 Election to Defer; Effect of Election Form.........................8
3.4 Withholding and Crediting of Annual Deferral Amounts...............9
3.5 Company Contribution Amount.......................................10
3.6 Company Matching Amount...........................................10
3.7 Crediting of Amounts after Benefit Distribution...................10
3.8 Vesting...........................................................10
3.9 Crediting/Debiting of Account Balances............................12
3.10 FICA and Other Taxes..............................................14
Article 4 Scheduled Distribution; Unforeseeable Emergencies...................14
4.1 Scheduled Distribution............................................14
4.2 Postponing Scheduled Distributions................................15
4.3 Other Benefits Take Precedence Over Scheduled Distributions.......15
4.4 Unforeseeable Emergencies.........................................15
Article 5 Change in Control Benefit...........................................16
5.1 Change in Control Benefit.........................................16
5.2 Payment of Change in Control Benefit..............................16
Article 6 Retirement Benefit..................................................17
6.1 Retirement Benefit................................................17
6.2 Payment of Retirement Benefit.....................................17
Article 7 Termination Benefit.................................................18
7.1 Termination Benefit...............................................18
7.2 Payment of Termination Benefit....................................18
Article 8 Disability Benefit..................................................18
8.1 Disability Benefit................................................18
8.2 Payment of Disability Benefit.....................................18
-1-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Article 9 Death Benefit.......................................................18
9.1 Death Benefit.....................................................18
9.2 Payment of Death Benefit..........................................18
Article 10 Beneficiary Designation............................................18
10.1 Beneficiary.......................................................18
10.2 Beneficiary Designation; Change; Spousal Consent..................18
10.3 Acknowledgment....................................................19
10.4 No Beneficiary Designation........................................19
10.5 Doubt as to Beneficiary...........................................19
10.6 Discharge of Obligations..........................................19
Article 11 Leave of Absence...................................................19
11.1 Paid Leave of Absence.............................................19
11.2 Unpaid Leave of Absence...........................................19
11.3 Leaves Resulting in Separation from Service.......................20
Article 12 Termination of Plan, Amendment or Modification.....................20
12.1 Termination of Plan...............................................20
12.2 Amendment.........................................................21
12.3 Plan Agreement....................................................21
12.4 Effect of Payment.................................................21
Article 13 Administration.....................................................21
13.1 Committee Duties..................................................21
13.2 Administration Upon Change In Control.............................21
13.3 Agents............................................................22
13.4 Binding Effect of Decisions.......................................22
13.5 Indemnity of Committee............................................22
13.6 Employer Information..............................................22
13.7 Receipts and Release..............................................22
Article 14 Other Benefits and Agreements......................................22
14.1 Coordination with Other Benefits..................................22
Article 15 Claims Procedures..................................................23
15.1 Presentation of Claim.............................................23
15.2 Notification of Decision..........................................23
15.3 Review of a Denied Claim..........................................23
15.4 Decision on Review................................................24
15.5 Legal Action......................................................24
Article 16 Trust..............................................................24
16.1 Establishment of the Trust........................................24
16.2 Interrelationship of the Plan and the Trust.......................24
16.3 Distributions From the Trust......................................25
-2-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Article 17 Miscellaneous......................................................25
17.1 Status of Plan....................................................25
17.2 Unsecured General Creditor........................................25
17.3 Employer's Liability..............................................25
17.4 Nonassignability..................................................25
17.5 Not a Contract of Employment......................................25
17.6 Furnishing Information............................................26
17.7 Terms.............................................................26
17.8 Captions..........................................................26
17.9 Governing Law.....................................................26
17.10 Notice............................................................26
17.11 Successors........................................................26
17.12 Spouse's Interest.................................................26
17.13 Validity..........................................................27
17.14 Incompetent.......................................................27
17.15 Court Order.......................................................27
17.16 Distribution in the Event of Income Inclusion Under 409A..........27
17.17 Deduction Limitation on Benefit Payments..........................27
17.18 Insurance.........................................................28
-3-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
PURPOSE
The purpose of this Plan is to provide specified benefits to Directors
and a select group of management or highly compensated Employees who contribute
materially to the continued growth, development and future business success of
HEICO Corporation, a Florida corporation, and its subsidiaries, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes
of Title I of ERISA. This Plan is also intended to comply with all applicable
law, including Code Section 409A and related Treasury guidance and Regulations,
and shall be operated and interpreted in accordance with this intention.
ARTICLE 1
DEFINITIONS
For the purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, an entry
on the records of the Employer equal to the sum of the Participant's
Annual Accounts. The Account Balance shall be a bookkeeping entry only
and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.2 "Annual Account" shall mean, with respect to a Participant, an entry on
the records of the Employer equal to the following amount: (i) the sum
of the Participant's Annual Deferral Amount, Company Contribution
Amount and Company Matching Amount for any one Plan Year, plus (ii)
amounts credited or debited to such amounts pursuant to this Plan, less
(iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Annual Account for
such Plan Year. The Annual Account shall be a bookkeeping entry only
and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.3 "Annual Deferral Amount" shall mean that portion of a Participant's
Base Salary, Bonus, Commissions, Director Fees and LTIP Amounts that a
Participant defers in accordance with Article 3 for any one Plan Year,
without regard to whether such amounts are withheld and credited during
such Plan Year. In the event of a Participant's Retirement, Disability,
death or Termination of Employment prior to the end of a Plan Year,
such year's Annual Deferral Amount shall be the actual amount withheld
prior to such event.
1.4 "Annual Installment Method" shall be an annual installment payment over
the number of years selected by the Participant in accordance with this
Plan, calculated as follows: (i) for the first annual installment, the
vested portion of each Annual Account shall be calculated as of the
close of business on or around the Participant's Benefit Distribution
Date, as determined by the Committee in its sole discretion, and (ii)
for remaining annual installments, the vested portion of each
applicable Annual Account shall be calculated on every anniversary of
such calculation date, as applicable. Each annual installment shall be
calculated by multiplying this balance by a fraction, the numerator of
which is one and the denominator of which is the remaining number of
-1-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
annual payments due to the Participant. By way of example, if the
Participant elects a ten (10) year Annual Installment Method as the
form of Retirement Benefit for an Annual Account, the first payment
shall be 1/10 of the vested balance of such Annual Account, calculated
as described in this definition. The following year, the payment shall
be 1/9 of the vested balance of such Annual Account, calculated as
described in this definition.
1.5 "Base Salary" shall mean the annual cash compensation relating to
services performed during any calendar year, excluding distributions
from nonqualified deferred compensation plans, bonuses, commissions,
overtime, fringe benefits, stock options, relocation expenses,
incentive payments, non-monetary awards, director fees and other fees,
and automobile and other allowances paid to a Participant for
employment services rendered (whether or not such allowances are
included in the Employee's gross income). Base Salary shall be
calculated before reduction for compensation voluntarily deferred or
contributed by the Participant pursuant to all qualified or
nonqualified plans of any Employer and shall be calculated to include
amounts not otherwise included in the Participant's gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts
will be included in compensation only to the extent that had there been
no such plan, the amount would have been payable in cash to the
Employee.
1.6 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 10, that are entitled
to receive benefits under this Plan upon the death of a Participant.
1.7 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.8 "Benefit Distribution Date" shall mean a date that triggers
distribution of a Participant's vested benefits. A Benefit Distribution
Date for a Participant shall be determined upon the occurrence of any
one of the following:
(a) If the Participant Retires, the Benefit Distribution Date for
his or her vested Account Balance shall be the last day of the
six-month period immediately following the date on which the
Participant Retires; provided, however, in the event the
Participant changes the Retirement Benefit election for one or
more Annual Accounts in accordance with Section 6.2(b), the
Benefit Distribution Date for such Annual Account(s) shall be
postponed in accordance with such section 6.2(b); or
(b) If the Participant experiences a Termination of Employment,
the Benefit Distribution Date for his or her vested Account
Balance shall be the last day of the six-month period
immediately following the date on which the Participant
experiences a Termination of Employment; or
(c) If the Participant dies prior to the complete distribution of
his or her vested Account Balance, the Participant's Benefit
Distribution Date shall be the date on which the
-2-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Committee is provided with proof that is satisfactory to the
Committee of the Participant's death; or
(d) If the Participant becomes Disabled, the Participant's Benefit
Distribution Date shall be the date on which the Participant
becomes Disabled; or
(e) If (i) a Change in Control occurs prior to the Participant's
Termination of Employment, Retirement, death or Disability,
and (ii) the Participant has elected to receive a Change in
Control Benefit, as set forth in Section 5.1 below, the
Participant's Benefit Distribution Date shall be the date on
which the Company experiences a Change in Control, as
determined by the Committee in its sole discretion.
1.9 "Board" shall mean the board of directors of the Company.
1.10 "Bonus" shall mean any compensation, in addition to Base Salary,
Commissions and LTIP Amounts, earned by a Participant for services
rendered during a Plan Year, under any Employer's annual bonus and cash
incentive plans.
1.11 "Change in Control" shall mean any "change in control event" as defined
in accordance with Code Section 409A and related Treasury guidance and
Regulations.
1.12 "Change in Control Benefit" shall have the meaning set forth in Article
5.
1.13 "Claimant" shall have the meaning set forth in Section 15.1.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.15 "Commissions" shall mean the cash commissions earned by a Participant
from any Employer for services rendered during a Plan Year, excluding
Bonus, LTIP Amounts or other additional incentives or awards earned by
the Participant.
1.16 "Committee" shall mean the committee described in Article 13.
1.17 "Company" shall mean HEICO Corporation, a Florida corporation, and any
successor to all or substantially all of the Company's assets or
business.
1.18 "Company Contribution Amount" shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.5.
1.19 "Company Matching Amount" shall mean, for any one Plan Year, the amount
determined in accordance with Section 3.6.
1.20 "Death Benefit" shall mean the benefit set forth in Article 9.
1.21 "Director" shall mean any member of the board of directors of any
Employer.
-3-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
1.22 "Director Fees" shall mean the annual fees earned by a Director from
any Employer, including retainer fees and meetings fees, as
compensation for serving on the board of directors.
1.23 "Disability" or "Disabled" shall mean that a Participant is (i) 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 12 months, or (ii) 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 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident or health plan
covering employees of the Participant's Employer. For purposes of this
Plan, a Participant shall be deemed Disabled if determined to be
totally disabled by the Social Security Administration, or if
determined to be disabled in accordance with the applicable disability
insurance program of such Participant's Employer, provided that the
definition of "disability" applied under such disability insurance
program complies with the requirements in the preceding sentence.
1.24 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.25 "Election Form" shall mean the form, which may be in electronic format,
established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to make an election under
the Plan.
1.26 "Employee" shall mean a person who is an employee of any Employer.
1.27 "Employer(s)" shall mean the Company and/or any of its subsidiaries
(now in existence or hereafter formed or acquired) that have been
selected by the Board to participate in the Plan and have adopted the
Plan as a sponsor.
1.28 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.29 "First Plan Year" shall mean the period beginning October 1, 2006 and
ending October 31, 2006.
1.30 "401(k) Plan" shall mean, with respect to an Employer, a plan qualified
under Code Section 401(a) that contains a cash or deferral arrangement
described in Code Section 401(k), adopted by the Employer, as it may be
amended from time to time, or any successor thereto.
1.31 "LTIP Amounts" shall mean any portion of the compensation attributable
to a Plan Year that is earned by a Participant as an Employee under any
Employer's long-term incentive plan or any other long-term incentive
arrangement designated by the Committee.
1.32 "Participant" shall mean any Employee or Director (i) who is selected
to participate in the Plan, (ii) who submits an executed Plan
Agreement, Election Form and Beneficiary Designation Form, which are
accepted by the Committee, and (iii) whose Plan Agreement has not
terminated.
1.33 "Plan" shall mean the HEICO Corporation Executive Retention Plan, which
shall be evidenced by this instrument and by each Plan Agreement, as
they may be amended from time to time.
-4-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
1.34 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's Employer shall provide for the entire benefit to which
such Participant is entitled under the Plan; should there be more than
one Plan Agreement, the Plan Agreement bearing the latest date of
acceptance by the Employer shall supersede all previous Plan Agreements
in their entirety and shall govern such entitlement. The terms of any
Plan Agreement may be different for any Participant, and any Plan
Agreement may provide additional benefits not set forth in the Plan or
limit the benefits otherwise provided under the Plan; provided,
however, that any such additional benefits or benefit limitations must
be agreed to by both the Employer and the Participant.
1.35 "Plan Year" shall, except for the First Plan Year, mean a period
beginning on November 1 of each year and continuing through October 31
of the following year.
1.36 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, separation from service with all Employers for any reason
other than death or Disability, as determined in accordance with Code
Section 409A and related Treasury guidance and Regulations, on or after
the earlier of the attainment of (a) age sixty-five (65) or (b) age
fifty-five (55) with ten (10) Years of Service; and shall mean with
respect to a Director who is not an Employee, separation from service
as a Director with all Employers. Except as otherwise required to
comply with Code Section 409A, if a Participant is both an Employee and
a Director, Retirement shall occur when he or she Retires as an
Employee (whether or not the Participant also terminates service as a
Director).
1.37 "Retirement Benefit" shall mean the benefit set forth in Article 6.
1.38 "Scheduled Distribution" shall mean the distribution set forth in
Section 4.1.
1.39 "Stock" shall mean HEICO Corporation common stock, $.01 par value, or
any other equity securities designated by the Committee.
1.40 "Terminate the Plan", "Termination of the Plan" shall mean a
determination by an Employer's board of directors that (i) all of its
Participants shall no longer be eligible to participate in the Plan,
(ii) no new deferral elections for such Participants shall be
permitted, and (iii) such Participants shall no longer be eligible to
receive company contributions under this Plan.
1.41 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.42 "Termination of Employment" shall mean the separation from service with
all Employers, voluntarily or involuntarily, for any reason other than
Retirement, Disability or death, as determined in accordance with Code
Section 409A and related Treasury guidance and Regulations. Except as
otherwise required to comply with Code Section 409A, if a Participant
is both an Employee and a Director, a Termination of Employment shall
occur upon the termination of service as an Employee (whether or not
the Participant also terminates service as a Director).
-5-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
1.43 "Trust" shall mean one or more trusts established by the Company in
accordance with Article 16.
1.44 "Unforeseeable Emergency" shall mean a severe financial hardship of the
Participant or his or her Beneficiary resulting from (i) 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)), (ii) a loss of the Participant's
or Beneficiary's property due to casualty, or (iii) such other similar
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant or the Participant's
Beneficiary, all as determined in the sole discretion of the Committee.
1.45 "Years of Service" shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For purposes of
this definition, a year of employment shall be a 365 day period (or 366
day period in the case of a leap year) that, for the first year of
employment, commences on the Employee's date of hiring and that, for
any subsequent year, commences on an anniversary of that hiring date.
The Committee shall make a determination as to whether any partial year
of employment shall be counted as a Year of Service.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 Selection by Committee. Participation in the Plan shall be limited to
Directors and, as determined by the Committee in its sole discretion, a
select group of management or highly compensated Employees. From that
group, the Committee shall select, in its sole discretion, those
individuals who may actually participate in this Plan.
2.2 Enrollment and Eligibility Requirements; Commencement of Participation.
(a) As a condition to participation, each Director or selected
Employee who is eligible to participate in the Plan effective
as of the first day of a Plan Year shall complete, execute and
return to the Committee a Plan Agreement, an Election Form and
a Beneficiary Designation Form, prior to the first day of such
Plan Year, or such other earlier deadline as may be
established by the Committee in its sole discretion. In
addition, the Committee shall establish from time to time such
other enrollment requirements as it determines, in its sole
discretion, are necessary. With respect to the First Plan
Year, each Director or selected Employee must complete these
requirements within thirty (30) days of the date on which such
Director or Employee becomes eligible to participate in the
Plan. Except as provided in Section 2.2(b) below, with respect
to any Plan Year after the First Plan Year, each Director or
selected Employee must complete these requirements prior to
the first day of such Plan Year, or such other earlier
deadline as may be established by the Committee in its sole
discretion.
(b) A Director or selected Employee who first becomes eligible to
participate in this Plan after the first day of a Plan Year
must complete, execute and return to the Committee a Plan
Agreement, an Election Form, and a Beneficiary Designation
Form within thirty (30) days after he or she first becomes
eligible to participate in the Plan, or within such other
earlier deadline as may be established by the Committee, in
its sole discretion, in
-6-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
order to participate for that Plan Year. In such event, such
person's participation in this Plan shall not commence earlier
than the date determined by the Committee pursuant to Section
2.2(c) and such person shall not be permitted to defer under
this Plan any portion of his or her Base Salary, Bonus, LTIP
Amounts, Commissions and/or Director Fees that are paid with
respect to services performed prior to his or her
participation commencement date, except to the extent
permissible under Code Section 409A and related Treasury
guidance or Regulations.
(c) Each Director or selected Employee who is eligible to
participate in the Plan shall commence participation in the
Plan on the date that the Committee determines, in its sole
discretion, that the Director or Employee has met all
enrollment requirements set forth in this Plan and required by
the Committee, including returning all required documents to
the Committee within the specified time period.
Notwithstanding the foregoing, the Committee shall process
such Participant's deferral election as soon as
administratively practicable after such deferral election is
submitted to and accepted by the Committee.
(d) If a Director or an Employee fails to meet all requirements
contained in this Section 2.2 within the period required, that
Director or Employee shall not be eligible to participate in
the Plan during such Plan Year.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY CONTRIBUTION AMOUNTS/
COMPANY MATCHING AMOUNTS/ VESTING/CREDITING/TAXES
3.1 MINIMUM DEFERRALS.
(a) Annual Deferral Amount. For each Plan Year, a Participant may
elect to defer, as his or her Annual Deferral Amount, Base
Salary, Bonus, Commissions, LTIP Amounts and/or Director Fees
in the following minimum amounts for each deferral elected:
DEFERRAL MINIMUM AMOUNT
-------------------------------- -------------------
Base Salary, Bonus, Commissions
and/or LTIP Amounts $5,000 aggregate
Director Fees $0
If the Committee determines, in its sole discretion, prior to
the beginning of a Plan Year that a Participant has made an
election for less than the stated minimum amounts, or if no
election is made, the amount deferred shall be zero. If the
Committee determines, in its sole discretion, at any time
after the beginning of a Plan Year that a Participant has
deferred less than the stated minimum amounts for that Plan
Year, any amount credited to the Participant's applicable
Annual Account as the Annual Deferral Amount for that Plan
Year shall be distributed to the Participant within sixty (60)
days after the last day of the Plan Year in which the
Committee determination was made.
(b) Short Plan Year. Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of
a Plan Year, or in the case of the First Plan Year of the
-7-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Plan itself, the minimum Annual Deferral Amount shall be an
amount equal to the minimum set forth above, multiplied by a
fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which
is 12.
3.2 MAXIMUM DEFERRAL.
(a) Annual Deferral Amount. For each Plan Year, a Participant may
elect to defer, as his or her Annual Deferral Amount, Base
Salary, Bonus, Commissions, LTIP Amounts and/or Director Fees
up to the following maximum percentages for each deferral
elected:
DEFERRAL MAXIMUM PERCENTAGE
-------------------- ------------------
Base Salary 100%
Bonus 100%
Commissions 100%
LTIP Amounts 100%
Director Fees 100%
(b) Short Plan Year. Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of
a Plan Year, or in the case of the First Plan Year of the Plan
itself, the maximum Annual Deferral Amount shall be limited to
the amount of compensation not yet earned by the Participant
as of the date the Participant submits a Plan Agreement and
Election Form to the Committee for acceptance, except to the
extent permissible under Code Section 409A and related
Treasury guidance or Regulations. For compensation that is
earned based upon a specified performance period, the
Participant's deferral election will apply to the portion of
such compensation that is equal to (i) the total amount of
compensation for the performance period, multiplied by (ii) a
fraction, the numerator of which is the number of days
remaining in the service period after the Participant's
deferral election is made, and the denominator of which is the
total number of days in the performance period.
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.
(a) First Plan Year. In connection with a Participant's
commencement of participation in the Plan, the Participant
shall make an irrevocable deferral election for the Plan Year
in which the Participant commences participation in the Plan,
along with such other elections as the Committee deems
necessary or desirable under the Plan. For these elections to
be valid, the Election Form must be completed and signed by
the Participant, timely delivered to the Committee (in
accordance with Section 2.2 above) and accepted by the
Committee.
(b) Subsequent Plan Years. For each succeeding Plan Year, a
Participant may elect to defer Base Salary, Bonus,
Commissions, Director Fees and LTIP Amounts, and make such
other elections as the Committee deems necessary or desirable
under the Plan by timely delivering a new Election Form to the
Committee, in accordance with its rules and procedures, before
the December 31st preceding the Plan Year in which such
compensation is earned, or before such other deadline
established by the Committee in
-8-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
accordance with the requirements of Code Section 409A and
related Treasury guidance or Regulations. For compensation
which is earned over one or more consecutive fiscal years of
an Employer that is not payable during the service period, the
Committee may determine that a Participant may defer such
compensation by making an election before the last day of the
fiscal year preceding the first fiscal year in which the
services are performed.
Any deferral election(s) made in accordance with this Section
3.3(b) shall be irrevocable; provided, however, that if the
Committee requires Participants to make a deferral election
for "performance-based compensation" by the deadline(s)
described above, it may, in its sole discretion, and in
accordance with Code Section 409A and related Treasury
guidance or Regulations, permit a Participant to subsequently
change his or her deferral election for such compensation by
submitting an Election Form to the Committee no later than the
deadline established by the Committee pursuant to Section
3.3(c) below.
(c) Performance-Based Compensation. Notwithstanding the foregoing,
the Committee may, in its sole discretion, determine that an
irrevocable deferral election pertaining to "performance-based
compensation" based on services performed over a period of at
least twelve (12) months, may be made by timely delivering an
Election Form to the Committee, in accordance with its rules
and procedures, no later than six (6) months before the end of
the performance service period. "Performance-based
compensation" shall be compensation, the payment or amount of
which is contingent on pre-established organizational or
individual performance criteria, which satisfies the
requirements of Code Section 409A and related Treasury
guidance or Regulations. In order to be eligible to make a
deferral election for performance-based compensation, a
Participant must perform services continuously from a date no
later than the date upon which the performance criteria for
such compensation are established through the date upon which
the Participant makes a deferral election for such
compensation. In no event shall an election to defer
performance-based compensation be permitted after such
compensation has become both substantially certain to be paid
and readily ascertainable.
(d) Compensation Subject to Risk of Forfeiture. With respect to
compensation (i) to which a Participant has a legally binding
right to payment in a subsequent year, and (ii) that is
subject to a forfeiture condition requiring the Participant's
continued services for a period of at least twelve (12) months
from the date the Participant obtains the legally binding
right, the Committee may, in its sole discretion, determine
that an irrevocable deferral election for such compensation
may be made by timely delivering an Election Form to the
Committee in accordance with its rules and procedures, no
later than the 30th day after the Participant obtains the
legally binding right to the compensation, provided that the
election is made at least twelve (12) months in advance of the
earliest date at which the forfeiture condition could lapse.
3.4 Withholding and Crediting of Annual Deferral Amounts. For each Plan
Year, the Base Salary portion of the Annual Deferral Amount shall be
withheld from each regularly scheduled Base Salary payroll in equal
amounts, as adjusted from time to time for increases and decreases in
Base Salary. The Bonus, Commissions, LTIP Amounts and/or Director Fees
portion of the
-9-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Annual Deferral Amount shall be withheld at the time the Bonus,
Commissions, LTIP Amounts or Director Fees are or otherwise would be
paid to the Participant, whether or not this occurs during the Plan
Year itself. Annual Deferral Amounts shall be credited to the
Participant's Annual Account for such Plan Year at the time such
amounts would otherwise have been paid to the Participant.
3.5 COMPANY CONTRIBUTION AMOUNT.
(a) For each Plan Year, an Employer may be required to credit
amounts to a Participant's Annual Account in accordance with
employment or other agreements entered into between the
Participant and the Employer, which amounts shall be part of
the Participant's Company Contribution Amount for that Plan
Year. Such amounts shall be credited to the Participant's
Annual Account for the applicable Plan Year on the date or
dates prescribed by such agreements.
(b) For each Plan Year, an Employer, in its sole discretion, may,
but is not required to, credit any amount it desires to any
Participant's Annual Account under this Plan, which amount
shall be part of the Participant's Company Contribution Amount
for that Plan Year. The amount so credited to a Participant
may be smaller or larger than the amount credited to any other
Participant, and the amount credited to any Participant for a
Plan Year may be zero, even though one or more other
Participants receive a Company Contribution Amount for that
Plan Year. The Company Contribution Amount described in this
Section 3.5(b), if any, shall be credited to the Participant's
Annual Account for the applicable Plan Year on a date or dates
to be determined by the Committee, in its sole discretion.
3.6 Company Matching Amount. A Participant's Company Matching Amount for
any Plan Year shall be equal to 50% of the first 6% of Base Salary
deferred for such Plan Year, unless otherwise determined by the
Committee in its sole discretion. The Participant's Company Matching
Amount, if any, shall be credited to the Participant's Annual Account
for the applicable Plan Year on a date or dates to be determined by the
Committee, in its sole discretion.
3.7 Crediting of Amounts after Benefit Distribution. Notwithstanding any
provision in this Plan to the contrary, should the complete
distribution of a Participant's vested Account Balance occur prior to
the date on which any portion of (i) the Annual Deferral Amount that a
Participant has elected to defer in accordance with Section 3.3, (ii)
the Company Contribution Amount, or (iii) the Company Matching Amount,
would otherwise be credited to the Participant's Account Balance, such
amounts shall not be credited to the Participant's Account Balance, but
shall be paid to the Participant in a manner determined by the
Committee, in its sole discretion.
3.8 VESTING.
(a) A Participant shall at all times be 100% vested in his or her
deferrals of Base Salary, Bonus, Commissions, LTIP Amounts and
Director's Fees.
-10-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
(b) A Participant shall vest in each Company Contribution Amount,
plus amounts credited and debited on such amount, in
accordance with the schedule below based on the number of full
Plan Years following the Plan Year to which the contribution
relates. However, on or prior to the date on which a
Participant is awarded a Company Contribution Amount for a
Plan Year, the Committee, in its sole discretion, may
designate a different vesting schedule in lieu of the schedule
described below that will apply to such Company Contribution
Amount. Unless otherwise declared by the Committee, a new
vesting schedule shall apply to each Company Contribution
Amount.
PLAN YEARS FOLLOWING YEAR TO
WHICH CONTRIBUTION RELATES VESTED PERCENTAGE
-------------------------------- -----------------
Less than 1 year 0%
1 year or more, but less than 2 25%
2 years or more, but less than 3 50%
3 years or more, but less than 4 75%
4 years or more 100%
(c) A Participant shall be vested in the portion of his or her
Account Balance attributable to any Company Matching Amounts,
plus amounts credited or debited on such amounts (pursuant to
Section 3.9), only to the extent that the Participant would be
vested in such amounts under the provisions of the 401(k)
Plan, as determined by the Committee in its sole discretion.
(d) Notwithstanding anything to the contrary contained in this
Section 3.8, in the event of a Change in Control, or upon a
Participant's Retirement, death while employed by an Employer,
or Disability, any amounts that are not vested in accordance
with Sections 3.8(b) or 3.8(c) above, shall immediately become
100% vested (if it is not already vested in accordance with
the above vesting schedules).
(e) Notwithstanding subsection 3.8(d) above, the vesting schedules
described in Sections 3.8(b) and 3.8(c) shall not be
accelerated upon a Change in Control to the extent that the
Committee determines that such acceleration would cause the
deduction limitations of Section 280G of the Code to become
effective, but only if and to the extent that not accelerating
the vesting would result in the net after-tax value (taking
into account any tax imposed by Code Section 4999) of any
compensation that is payable by the Company to the Participant
that is treated as a "parachute payment" under Code Section
280G being greater by not accelerating such vesting than the
net-after tax value of that compensation would be if the
vesting schedule was accelerated. In the event of such a
determination, the Participant may request independent
verification of the Committee's calculations with respect to
the application of Section 280G. In such case, the Committee
must provide to the Participant within ninety (90) days of
such a request an opinion from a nationally recognized
accounting firm selected by the Participant (the "Accounting
Firm"). The opinion shall state the Accounting Firm's opinion
that any limitation in the
-11-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
vested percentage hereunder is necessary to avoid the limits
of Section 280G and contain supporting calculations. The cost
of such opinion shall be paid for by the Company.
(f) Section 3.8(e) shall not prevent the acceleration of the
vesting schedules described in Sections 3.8(b) and 3.8(c) if
such Participant is entitled to a "gross-up" payment, to
eliminate the effect of the Code section 4999 excise tax,
pursuant to his or her employment agreement or other agreement
entered into between such Participant and the Employer.
3.9 Crediting/Debiting of Account Balances. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) Measurement Funds. Subject to the restrictions found in
Section 3.9(d) below, a Participant may elect one or more of
the measurement funds selected by the Committee, in its sole
discretion, which are based on certain mutual funds (the
"Measurement Funds"), for the purpose of crediting or debiting
additional amounts to his or her Account Balance. As
necessary, the Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund. Each such
action will take effect as of the first day of the first
calendar quarter that begins at least thirty (30) days after
the day on which the Committee gives Participants advance
written notice of such change.
(b) Election of Measurement Funds. Subject to the restrictions
found in Section 3.9(d) below, a Participant, in connection
with his or her initial deferral election in accordance with
Section 3.3(a) above, shall elect, on the Election Form, one
or more Measurement Fund(s) (as described in Section 3.9(a)
above) to be used to determine the amounts to be credited or
debited to his or her Account Balance. If a Participant does
not elect any of the Measurement Funds as described in the
previous sentence, the Participant's Account Balance shall
automatically be allocated into the lowest-risk Measurement
Fund, as determined by the Committee, in its sole discretion.
The Participant may (but is not required to) elect, by
submitting an Election Form to the Committee that is accepted
by the Committee, to add or delete one or more Measurement
Fund(s) to be used to determine the amounts to be credited or
debited to his or her Account Balance, or to change the
portion of his or her Account Balance allocated to each
previously or newly elected Measurement Fund. If an election
is made in accordance with the previous sentence, it shall
apply as of the first business day deemed reasonably
practicable by the Committee, in its sole discretion, and
shall continue thereafter for each subsequent day in which the
Participant participates in the Plan, unless changed in
accordance with the previous sentence. Notwithstanding the
foregoing, the Committee, in its sole discretion, may impose
limitations on the frequency with which one or more of the
Measurement Funds elected in accordance with this Section
3.9(b) may be added or deleted by such Participant;
furthermore, the Committee, in its sole discretion, may impose
limitations on the frequency with which the Participant may
change the portion of his or her Account Balance allocated to
each previously or newly elected Measurement Fund.
-12-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
(c) Proportionate Allocation. In making any election described in
Section 3.9(b) above, the Participant shall specify on the
Election Form, in increments of one percent (1%), the
percentage of his or her Account Balance or Measurement Fund,
as applicable, to be allocated/reallocated.
(d) Section 3.9(d) Intentionally Omitted.
(e) Crediting or Debiting Method. The performance of each
Measurement Fund (either positive or negative) will be
determined on a daily basis based on the manner in which such
Participant's Account Balance has been hypothetically
allocated among the Measurement Funds by the Participant.
(f) No Actual Investment. Notwithstanding any other provision of
this Plan that may be interpreted to the contrary, the
Measurement Funds are to be used for measurement purposes
only, and a Participant's election of any such Measurement
Fund, the allocation of his or her Account Balance thereto,
the calculation of additional amounts and the crediting or
debiting of such amounts to a Participant's Account Balance
shall not be considered or construed in any manner as an
actual investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the Trustee
(as that term is defined in the Trust), in its own discretion,
decides to invest funds in any or all of the investments on
which the Measurement Funds are based, no Participant shall
have any rights in or to such investments themselves. Without
limiting the foregoing, a Participant's Account Balance shall
at all times be a bookkeeping entry only and shall not
represent any investment made on his or her behalf by the
Company or the Trust; the Participant shall at all times
remain an unsecured creditor of the Company.
-13-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
3.10 FICA AND OTHER TAXES.
(a) Annual Deferral Amounts. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of
the Participant's Base Salary, Bonus, Commissions and/or LTIP
Amounts that is not being deferred, in a manner determined by
the Employer(s), the Participant's share of FICA and other
employment taxes on such Annual Deferral Amount. If necessary,
the Committee may reduce the Annual Deferral Amount in order
to comply with this Section 3.10.
(b) Company Matching Amounts and Company Contribution Amounts.
When a Participant becomes vested in a portion of his or her
Account Balance attributable to any Company Matching Amounts
and/or Company Contribution Amounts, the Participant's
Employer(s) shall withhold from that portion of the
Participant's Base Salary, Bonus, Commissions and/or LTIP
Amounts that is not deferred, in a manner determined by the
Employer(s), the Participant's share of FICA and other
employment taxes on such amounts. If necessary, the Committee
may reduce the vested portion of the Participant's Company
Matching Amount or Company Contribution Amount, as applicable,
in order to comply with this Section 3.10.
(c) Distributions. The Participant's Employer(s), or the trustee
of the Trust, shall withhold from any payments made to a
Participant under this Plan all Federal, state and local
income, employment and other taxes required to be withheld by
the Employer(s), or the trustee of the Trust, in connection
with such payments, in amounts and in a manner to be
determined in the sole discretion of the Employer(s) and the
trustee of the Trust.
ARTICLE 4
SCHEDULED DISTRIBUTION; UNFORESEEABLE EMERGENCIES
4.1 Scheduled Distribution. In connection with each election to defer an
Annual Deferral Amount, a Participant may irrevocably elect to receive
a Scheduled Distribution, in the form of a lump sum payment, from the
Plan with respect to all or a portion of the Annual Deferral Amount.
The Scheduled Distribution shall be a lump sum payment in an amount
that is equal to the portion of the Annual Deferral Amount the
Participant elected to have distributed as a Scheduled Distribution,
plus amounts credited or debited in the manner provided in Section 3.9
above on that amount, calculated as of the close of business on or
around the date on which the Scheduled Distribution becomes payable, as
determined by the Committee in its sole discretion. Subject to the
other terms and conditions of this Plan, each Scheduled Distribution
elected shall be paid out during a sixty (60) day period commencing
immediately after the first day of any Plan Year designated by the
Participant (the "Scheduled Distribution Date"). The Plan Year
designated by the Participant must be at least three (3) Plan Years
after the end of the Plan Year to which the Participant's deferral
election described in Section 3.3 relates, unless otherwise provided on
an Election Form approved by the Committee in its sole discretion. By
way of example, if a Scheduled Distribution is elected for Annual
Deferral Amounts that are earned in the Plan Year
-14-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
commencing January 1, 2007, the earliest Scheduled Distribution Date
that may be designated by a Participant would be January 1, 2011, and
the Scheduled Distribution would become payable during the sixty (60)
day period commencing immediately after such Scheduled Distribution
Date.
4.2 Postponing Scheduled Distributions. A Participant may elect to postpone
a Scheduled Distribution described in Section 4.1 above, and have such
amount paid out during a sixty (60) day period commencing immediately
after an allowable alternative distribution date designated by the
Participant in accordance with this Section 4.2. In order to make this
election, the Participant must submit a new Scheduled Distribution
Election Form to the Committee in accordance with the following
criteria:
(a) Such Scheduled Distribution Election Form must be submitted to
and accepted by the Committee in its sole discretion at least
twelve (12) months prior to the Participant's previously
designated Scheduled Distribution Date;
(b) The new Scheduled Distribution Date selected by the
Participant must be the first day of a Plan Year, and must be
at least five years after the previously designated Scheduled
Distribution Date; and
(c) The election of the new Scheduled Distribution Date shall have
no effect until at least twelve (12) months after the date on
which the election is made.
4.3 Other Benefits Take Precedence Over Scheduled Distributions. Should a
Benefit Distribution Date occur that triggers a benefit under Articles
5, 6, 7, 8, or 9, any Annual Deferral Amount that is subject to a
Scheduled Distribution election under Section 4.1 shall not be paid in
accordance with Section 4.1, but shall be paid in accordance with the
other applicable Article. Notwithstanding the foregoing, the Committee
shall interpret this Section 4.3 in a manner that is consistent with
Code Section 409A and related Treasury guidance and Regulations.
4.4 UNFORESEEABLE EMERGENCIES.
(a) If the Participant experiences an Unforeseeable Emergency, the
Participant may petition the Committee to receive a partial or
full payout from the Plan, subject to the provisions set forth
below.
(b) The payout, if any, from the Plan shall not exceed the lesser
of (i) the Participant's vested Account Balance, calculated as
of the close of business on or around the date on which the
amount becomes payable, as determined by the Committee in its
sole discretion, or (ii) the amount necessary to satisfy the
Unforeseeable Emergency, plus amounts necessary to pay
Federal, state, or local income taxes or penalties reasonably
anticipated as a result of the distribution. Notwithstanding
the foregoing, a Participant may not receive a payout from the
Plan to the extent that the Unforeseeable Emergency is or may
be relieved (A) through reimbursement or compensation by
insurance or otherwise, (B) by liquidation of the
Participant's assets, to the extent the liquidation of such
assets
-15-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
would not itself cause severe financial hardship or (C) by
cessation of deferrals under this Plan.
(c) If the Committee, in its sole discretion, approves a
Participant's petition for payout from the Plan, the
Participant shall receive a payout from the Plan within sixty
(60) days of the date of such approval, and the Participant's
deferrals under the Plan shall be terminated as of the date of
such approval.
(d) In addition, a Participant's deferral elections under this
Plan shall be terminated to the extent the Committee
determines, in its sole discretion, that termination of such
Participant's deferral elections is required pursuant to
Treas. Reg. Section 1.401(k)-1(d)(3) for the Participant to
obtain a hardship distribution from an Employer's 401(k) Plan.
If the Committee determines, in its sole discretion, that a
termination of the Participant's deferrals is required in
accordance with the preceding sentence, the Participant's
deferrals shall be terminated as soon as administratively
practicable following the date on which such determination is
made, and the Participant shall not be entitled to make a new
deferral election until such time as the Committee determines.
(e) Notwithstanding the foregoing, the Committee shall interpret
all provisions relating to a payout and/or termination of
deferrals under this Section 4.4 in a manner that is
consistent with Code Section 409A and related Treasury
guidance and Regulations.
ARTICLE 5
CHANGE IN CONTROL BENEFIT
5.1 Change in Control Benefit. A Participant, in connection with his or her
commencement of participation in the Plan, shall irrevocably elect on
an Election Form whether to (i) receive a Change in Control Benefit
upon the occurrence of a Change in Control, which shall be equal to the
Participant's vested Account Balance, calculated as of the close of
business on or around the Participant's Benefit Distribution Date, as
determined by the Committee in its sole discretion, or (ii) to have his
or her Account Balance remain in the Plan upon the occurrence of a
Change in Control and to have his or her Account Balance remain subject
to the terms and conditions of the Plan. If a Participant does not make
any election with respect to the payment of the Change in Control
Benefit, then such Participant's Account Balance shall remain in the
Plan upon a Change in Control and shall be subject to the terms and
conditions of the Plan.
5.2 Payment of Change in Control Benefit. The Change in Control Benefit, if
any, shall be paid to the Participant in a lump sum no later than sixty
(60) days after the Participant's Benefit Distribution Date.
Notwithstanding the foregoing, the Committee shall interpret all
provisions in this Plan relating to a Change in Control Benefit in a
manner that is consistent with Code Section 409A and related Treasury
guidance and Regulations.
-16-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
ARTICLE 6
RETIREMENT BENEFIT
6.1 Retirement Benefit. A Participant who Retires shall receive, as a
Retirement Benefit, his or her vested Account Balance, calculated as of
the close of business on or around the Participant's Benefit
Distribution Date, as determined by the Committee in its sole
discretion.
6.2 PAYMENT OF RETIREMENT BENEFIT.
(a) In connection with a Participant's election to defer an Annual
Deferral Amount, the Participant shall elect the form in which
his or her Annual Account for such Plan Year will be paid. The
Participant may elect to receive each Annual Account in the
form of a lump sum or pursuant to an Annual Installment Method
of up to fifteen (15) years. If a Participant does not make
any election with respect to the payment of an Annual Account,
then the Participant shall be deemed to have elected to
receive such Annual Account as a lump sum.
(b) A Participant may change the form of payment for an Annual
Account by submitting an Election Form to the Committee in
accordance with the following criteria:
(i) The election to modify the form of payment for such
Annual Account shall have no effect until at least
twelve (12) months after the date on which the
election is made; and
(ii) The first payment related to such Annual Account
shall be delayed at least five (5) years from the
originally scheduled Benefit Distribution Date for
such Annual Account, as described in Section 1.8(a).
For purposes of applying the requirements above, the right to
receive an Annual Account in installment payments shall be
treated as the entitlement to a single payment. The Committee
shall interpret all provisions relating to an election
described in this Section 6.2 in a manner that is consistent
with Code Section 409A and related Treasury guidance or
Regulations.
The Election Form most recently accepted by the Committee that
has become effective shall govern the payout of the applicable
Annual Account.
(c) The lump sum payment shall be made, or installment payments
shall commence, no later than sixty (60) days after the
Benefit Distribution Date. Remaining installments, if any,
shall continue in accordance with the Participant's election
for each Annual Account and shall be paid no later than sixty
(60) days after each anniversary of the Benefit Distribution
Date.
-17-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
ARTICLE 7
TERMINATION BENEFIT
7.1 Termination Benefit. A Participant who experiences a Termination of
Employment shall receive, as a Termination Benefit, his or her vested
Account Balance, calculated as of the close of business on or around
the Participant's Benefit Distribution Date, as determined by the
Committee in its sole discretion.
7.2 Payment of Termination Benefit. The Termination Benefit shall be paid
to the Participant in a lump sum payment no later than sixty (60) days
after the Participant's Benefit Distribution Date.
ARTICLE 8
DISABILITY BENEFIT
8.1 Disability Benefit. Upon a Participant's Disability, the Participant
shall receive a Disability Benefit, which shall be equal to the
Participant's vested Account Balance, calculated as of the close of
business on or around the Participant's Benefit Distribution Date, as
selected by the Committee in its sole discretion.
8.2 Payment of Disability Benefit. The Disability Benefit shall be paid to
the Participant in a lump sum payment no later than sixty (60) days
after the Participant's Benefit Distribution Date.
ARTICLE 9
DEATH BENEFIT
9.1 Death Benefit. The Participant's Beneficiary(ies) shall receive a Death
Benefit upon the Participant's death which will be equal to the
Participant's vested Account Balance, calculated as of the close of
business on or around the Participant's Benefit Distribution Date, as
selected by the Committee in its sole discretion.
9.2 Payment of Death Benefit. The Death Benefit shall be paid to the
Participant's Beneficiary(ies) in a lump sum payment no later than
sixty (60) days after the Participant's Benefit Distribution Date.
ARTICLE 10
BENEFICIARY DESIGNATION
10.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the
Participant participates.
10.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation
-18-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Form and the Committee's rules and procedures, as in effect from time
to time. If the Participant names someone other than his or her spouse
as a Beneficiary, the Committee may, in its sole discretion, determine
that spousal consent is required to be provided in a form designated by
the Committee, executed by such Participant's spouse and returned to
the Committee. Upon the acceptance by the Committee of a new
Beneficiary Designation Form, all Beneficiary designations previously
filed shall be canceled. The Committee shall be entitled to rely on the
last Beneficiary Designation Form filed by the Participant and accepted
by the Committee prior to his or her death.
10.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in
writing by the Committee or its designated agent.
10.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 10.1, 10.2 and 10.3 above or, if
all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
10.5 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to cause
the Participant's Employer to withhold such payments until this matter
is resolved to the Committee's satisfaction.
10.6 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 11
LEAVE OF ABSENCE
11.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer to take a paid leave of absence from the
employment of the Employer, and such leave of absence does not
constitute a separation from service, as determined by the Committee in
accordance with Code Section 409A and related Treasury guidance and
Regulations, (i) the Participant shall continue to be considered
eligible for the benefits provided in Articles 4, 5, 6, 7, 8, or 9 in
accordance with the provisions of those Articles, and (ii) the Annual
Deferral Amount shall continue to be withheld during such paid leave of
absence in accordance with Section 3.3.
11.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer to take an unpaid leave of absence from the
employment of the Employer for any reason, and such leave of absence
does not constitute a separation from service, as determined by the
Committee in accordance with Code Section 409A and related Treasury
guidance and Regulations, such Participant shall continue to be
eligible for the benefits provided in Articles 4, 5, 6, 7, 8, or 9 in
accordance with the provisions of those Articles. However, the
Participant shall be excused from
-19-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
fulfilling his or her Annual Deferral Amount commitment that would
otherwise have been withheld during the remainder of the Plan Year in
which the unpaid leave of absence is taken. During the unpaid leave of
absence, the Participant shall not be allowed to make any additional
deferral elections. However, if the Participant returns to employment,
the Participant may elect to defer an Annual Deferral Amount for the
Plan Year following his or her return to employment and for every Plan
Year thereafter while a Participant in the Plan, provided such deferral
elections are otherwise allowed and an Election Form is delivered to
and accepted by the Committee for each such election in accordance with
Section 3.3 above.
11.3 Leaves Resulting in Separation from Service. In the event that a
Participant's leave of absence from his or her Employer constitutes a
separation from service, as determined by the Committee in accordance
with Code Section 409A and related Treasury guidance and Regulations,
the Participant's vested Account Balance shall be distributed to the
Participant in accordance with Article 6 or 7 of this Plan, as
applicable.
ARTICLE 12
TERMINATION OF PLAN, AMENDMENT OR MODIFICATION
12.1 Termination of Plan. Although each Employer anticipates that it will
continue the Plan for an indefinite period of time, there is no
guarantee that any Employer will continue the Plan or will not
terminate the Plan at any time in the future. Accordingly, each
Employer reserves the right to Terminate the Plan. In the event of a
Termination of the Plan, the Measurement Funds available to
Participants following the Termination of the Plan shall be comparable
in number and type to those Measurement Funds available to Participants
in the Plan Year preceding the Plan Year in which the Termination of
the Plan is effective. Except as otherwise provided below, following a
Termination of the Plan, Participant Account Balances shall remain in
the Plan until the Participant becomes eligible for the benefits
provided in Articles 4, 5, 6, 7, 8 or 9 in accordance with the
provisions of those Articles. The Termination of the Plan shall not
adversely affect any Participant or Beneficiary who has become entitled
to the payment of any benefits under the Plan as of the date of
termination. Notwithstanding the foregoing, to the extent permissible
under Code Section 409A and related Treasury guidance or Regulations,
during the thirty (30) days preceding or within twelve (12) months
following a Change in Control, an Employer shall be permitted to (i)
terminate the Plan by action of its board of directors, and (ii)
distribute the vested Account Balances to Participants in a lump sum no
later than twelve (12) months after the Change in Control, provided
that all other substantially similar arrangements sponsored by such
Employer are also terminated and all balances in such arrangements are
distributed within twelve (12) months of the termination of such
arrangements. Also notwithstanding the foregoing, if and to the extent
permissible under Code Section 409A and related Treasury guidance or
Regulations, in the event of Termination of the Plan, the Board may
require that the Account Balances of all Participants and Beneficiaries
(including, without limitation, any remaining benefits payable to
Participants or Beneficiaries receiving distributions in installments
at the time of the termination) be distributed as soon as practicable
after such termination, notwithstanding any elections by Participants
or Beneficiaries with regard to the timing or form in which their
benefits are to be paid.
-20-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
12.2 AMENDMENT.
(a) Any Employer may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer.
Notwithstanding the foregoing, (i) no amendment or
modification shall be effective to decrease the value of a
Participant's vested Account Balance in existence at the time
the amendment or modification is made, and (ii) no amendment
or modification of this Section 12.2 or Section 13.2 of the
Plan shall be effective.
(b) Notwithstanding any provision of the Plan to the contrary, in
the event that the Company determines that any provision of
the Plan may cause amounts deferred under the Plan to become
immediately taxable to any Participant under Code Section 409A
and related Treasury guidance or Regulations, the Company may
(i) adopt such amendments to the Plan and appropriate policies
and procedures, including amendments and policies with
retroactive effect, that the Company determines necessary or
appropriate to preserve the intended tax treatment of the Plan
benefits provided by the Plan and/or (ii) take such other
actions as the Company determines necessary or appropriate to
comply with the requirements of Code Section 409A and related
Treasury guidance or Regulations.
12.3 Plan Agreement. Despite the provisions of Sections 12.1 and 12.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Employer may only amend or terminate
such provisions with the written consent of the Participant.
12.4 Effect of Payment. The full payment of the Participant's vested Account
Balance under Articles 4, 5, 6, 7, 8, or 9 of the Plan shall completely
discharge all obligations to a Participant and his or her designated
Beneficiaries under this Plan, and the Participant's Plan Agreement
shall terminate.
ARTICLE 13
ADMINISTRATION
13.1 Committee Duties. This Plan shall be administered by the Compensation
Committee of the Board, or such other Committee as the Board may from
time to time appoint. The Committee shall also have the discretion and
authority to (i) make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan, and (ii)
decide or resolve any and all questions, including benefit entitlement
determinations and interpretations of this Plan, as may arise in
connection with the Plan. Any individual serving on the Committee who
is a Participant shall not vote or act on any matter relating solely to
himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a
Participant or the Company.
13.2 Administration Upon Change In Control. Within one hundred and twenty
(120) days following a Change in Control, the individuals who comprised
the Committee immediately prior to the Change in Control (whether or
not such individuals are members of the Committee following the Change
in Control) may, by written consent of the majority of such
individuals, appoint an independent third party administrator (the
"Administrator") to perform any or all of the Committee's duties
described in Section 13.1 above, including without limitation, the
power to determine any questions arising in connection with the
administration or interpretation of the
-21-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
Plan, and the power to make benefit entitlement determinations. Upon
and after the effective date of such appointment, (i) the Company must
pay all reasonable administrative expenses and fees of the
Administrator, and (ii) the Administrator may only be terminated with
the written consent of the majority of Participants with an Account
Balance in the Plan as of the date of such proposed termination.
13.3 Agents. In the administration of this Plan, the Committee or the
Administrator, as applicable, may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit (including
acting through a duly appointed representative) and may from time to
time consult with counsel.
13.4 Binding Effect of Decisions. The decision or action of the Committee or
Administrator, as applicable, with respect to any question arising out
of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated
hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.
13.5 Indemnity of Committee. All Employers shall indemnify and hold harmless
the members of the Committee, any Employee to whom the duties of the
Committee may be delegated, and the Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any
action or failure to act with respect to this Plan, except in the case
of willful misconduct by the Committee, any of its members, any such
Employee or the Administrator.
13.6 Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full
and timely information to the Committee and/or Administrator, as the
case may be, on all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the
Participants, the compensation of its Participants, the date and
circumstances of the Retirement, Disability, death or Termination of
Employment of its Participants, and such other pertinent information as
the Committee or Administrator may reasonably require.
13.7 Receipts and Release. Any payment to any Participant or Beneficiary in
accordance with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of all claims against the Company, the
Committee, the Plan Administrator and the trustee of the Trust under
the Plan, and the Committee may require such Participant or
Beneficiary, as a condition precedent to such payment pursuant to the
Plan, to execute a receipt and release to such effect.
ARTICLE 14
OTHER BENEFITS AND AGREEMENTS
14.1 Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in
addition to any other benefits available to such Participant under any
other plan or program for employees of the Participant's Employer. The
Plan shall supplement and shall not supersede, modify or amend any
other such plan or program except as may otherwise be expressly
provided.
-22-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
ARTICLE 15
CLAIMS PROCEDURES
15.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within sixty
(60) days after such notice was received by the Claimant. All other
claims must be made within 180 days of the date on which the event that
caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
15.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, but no later than ninety (90) days
after receiving the claim. If the Committee determines that special
circumstances require an extension of time for processing the claim,
written notice of the extension shall be furnished to the Claimant
prior to the termination of the initial ninety (90) day period. In no
event shall such extension exceed a period of ninety (90) days from the
end of the initial period. The extension notice shall indicate the
special circumstances requiring an extension of time and the date by
which the Committee expects to render the benefit determination. The
Committee shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be
understood by the Claimant:
(i) the specific reason(s) for the denial of the claim,
or any part of it;
(ii) specific reference(s) to pertinent provisions of the
Plan upon which such denial was based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect the
claim, and an explanation of why such material or
information is necessary;
(iv) an explanation of the claim review procedure set
forth in Section 15.3 below; and
(v) a statement of the Claimant's right to bring a civil
action under ERISA Section 502(a) following an
adverse benefit determination on review.
15.3 Review of a Denied Claim. On or before sixty (60) days after receiving
a notice from the Committee that a claim has been denied, in whole or
in part, a Claimant (or the Claimant's duly authorized representative)
may file with the Committee a written request for a review of the
denial of the claim. The Claimant (or the Claimant's duly authorized
representative):
-23-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
(a) may, upon request and free of charge, have reasonable access
to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA
regulations) to the claim for benefits;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
15.4 Decision on Review. The Committee shall render its decision on review
promptly, and no later than sixty (60) days after the Committee
receives the Claimant's written request for a review of the denial of
the claim. If the Committee determines that special circumstances
require an extension of time for processing the claim, written notice
of the extension shall be furnished to the Claimant prior to the
termination of the initial sixty (60) day period. In no event shall
such extension exceed a period of sixty (60) days from the end of the
initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination. In rendering its
decision, the Committee shall take into account all 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. The
decision must be written in a manner calculated to be understood by the
Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based;
(c) a statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies
of, all documents, records and other information relevant (as
defined in applicable ERISA regulations) to the Claimant's
claim for benefits; and
(d) a statement of the Claimant's right to bring a civil action
under ERISA Section 502(a).
15.5 Legal Action. A Claimant's compliance with the foregoing provisions of
this Article 15 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 16
TRUST
16.1 Establishment of the Trust. In order to provide assets from which to
fulfill its obligations to the Participants and their Beneficiaries
under the Plan, the Company may establish a trust by a trust agreement
with a third party, the trustee, to which each Employer may, in its
discretion, contribute cash or other property, including securities
issued by the Company, to provide for the benefit payments under the
Plan, (the "Trust").
16.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Employers, Participants and the
-24-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
creditors of the Employers to the assets transferred to the Trust. Each
Employer shall at all times remain liable to carry out its obligations
under the Plan.
16.3 Distributions From the Trust. Each Employer's obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust, and any such distribution shall reduce the
Employer's obligations under this Plan.
ARTICLE 17
MISCELLANEOUS
17.1 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees" within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
(i) to the extent possible in a manner consistent with the intent
described in the preceding sentence, and (ii) in accordance with Code
Section 409A and related Treasury guidance and Regulations.
17.2 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For
purposes of the payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general, unpledged
unrestricted assets of the Employer. An Employer's obligation under the
Plan shall be merely that of an unfunded and unsecured promise to pay
money in the future.
17.3 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
17.4 Nonassignability. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be, unassignable and non-transferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in
the event of a Participant's or any other person's bankruptcy or
insolvency or be transferable to a spouse as a result of a property
settlement or otherwise.
17.5 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any
time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a Participant
the right to be retained in the service of any Employer, either as
-25-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
an Employee or a Director, or to interfere with the right of any
Employer to discipline or discharge the Participant at any time.
17.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem necessary.
17.7 Terms. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where
they would so apply; and whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were
used in the plural or the singular, as the case may be, in all cases
where they would so apply.
17.8 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
17.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State
of Florida without regard to its conflicts of laws principles.
17.10 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
HEICO Corporation
Attn: Chief Financial Officer
3000 Taft Street
Hollywood, Florida 33021
Such 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.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Participant.
17.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns
and the Participant and the Participant's designated Beneficiaries.
17.12 Spouse's Interest. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.
-26-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
17.13 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal or invalid provision had never been
inserted herein.
17.14 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of
that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the care
and custody of such minor, incompetent or incapable person. The
Committee may require proof of minority, incompetence, incapacity or
guardianship, as it may deem appropriate prior to distribution of the
benefit. Any payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Plan for
such payment amount.
17.15 Court Order. The Committee is authorized to comply with any court order
in any action in which the Plan or the Committee has been named as a
party, including any action involving a determination of the rights or
interests in a Participant's benefits under the Plan. Notwithstanding
the foregoing, the Committee shall interpret this provision in a manner
that is consistent with Code Section 409A and other applicable tax law.
In addition, if necessary to comply with a qualified domestic relations
order, as defined in Code Section 414(p)(1)(B), pursuant to which a
court has determined that a spouse or former spouse of a Participant
has an interest in the Participant's benefits under the Plan, the
Committee, in its sole discretion, shall have the right to immediately
distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to such spouse or former spouse.
17.16 Distribution in the Event of Income Inclusion Under 409A. If any
portion of a Participant's Account Balance under this Plan is required
to be included in income by the Participant prior to receipt due to a
failure of this Plan to meet the requirement of Code Section 409A and
related Treasury guidance or Regulations, the Participant may petition
the Committee or Administrator, as applicable, for a distribution of
that portion of his or her Account Balance that is required to be
included in his or her income. Upon the grant of such a petition, which
grant shall not be unreasonably withheld, the Participant's Employer
shall distribute to the Participant immediately available funds in an
amount equal to the portion of his or her Account Balance required to
be included in income as a result of the failure of the Plan to meet
the requirements of Code Section 409A and related Treasury guidance or
Regulations, which amount shall not exceed the Participant's unpaid
vested Account Balance under the Plan. If the petition is granted, such
distribution shall be made within ninety (90) days of the date when the
Participant's petition is granted. Such a distribution shall affect and
reduce the Participant's benefits to be paid under this Plan.
17.17 Deduction Limitation on Benefit Payments. If an Employer reasonably
anticipates that the Employer's deduction with respect to any
distribution from this Plan would be limited or eliminated by
application of Code Section 162(m), then to the extent deemed necessary
by the Employer to ensure that the entire amount of any distribution
from this Plan is deductible, the Employer may delay payment of any
amount that would otherwise be distributed from this Plan. Any amounts
for which distribution is delayed pursuant to this Section shall
continue to be
-27-
HEICO CORPORATION
Leadership Compensation Plan
Plan Document
credited/debited with additional amounts in accordance with Section 3.9
above. The delayed amounts (and any amounts credited thereon) shall be
distributed to the Participant (or his or her Beneficiary in the event
of the Participant's death) at the earliest date the Employer
reasonably anticipates that the deduction of the payment of the amount
will not be limited or eliminated by application of Code Section
162(m).
17.18 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and
in such forms as the Trust may choose. The Employers or the trustee of
the Trust, as the case may be, shall be the sole owner and beneficiary
of any such insurance. The Participant shall have no interest
whatsoever in any such policy or policies, and at the request of the
Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the
insurance company or companies to whom the Employers have applied for
insurance.
IN WITNESS WHEREOF, the Company has signed this Plan document as of
___________________, 2006.
"Company"
HEICO Corporation, a Florida corporation
By:
---------------------------------
Title:
---------------------------------
-28-