EMPLOYMENT AGREEMENT
Exhibit 99.1
THIS EMPLOYMENT AGREEMENT is made and effective as of the twenty-second day of September,
2009, by and between Diodes Incorporated, a Delaware corporation (the “Company”), and Xx. Xxx-Xxxx
Lu (the “Employee”), with respect to the following facts:
The Company desires to be assured of the continued association and services of the Employee in
order to take advantage of his experience, knowledge and abilities in the Company’s business, and
is willing to employ the Employee, and the Employee desires to be so employed, on the terms and
conditions set forth in this Agreement.
ACCORDINGLY, on the basis of the representations, warranties and covenants contained herein,
the parties hereto agree as follows:
1. EMPLOYMENT
1.1 Employment. The Company hereby employs the Employee as President and Chief
Executive Officer, and the Employee hereby accepts such employment, on the terms and conditions set
forth below, to perform during the term of this Agreement such services as are required hereunder.
1.2 Duties. The Employee shall render such services to the Company, and shall perform
such executive duties and acts, as reasonably may be required by the Company’s Board of Directors
in connection with any aspect of the Company’s business.
1.3 Performance of Duties.
(a) The Employee shall devote such reasonable time, ability and attention during normal
business hours to his duties hereunder as may be necessary to discharge such duties in a
professional and businesslike manner.
(b) The Employee’s services hereunder shall be performed primarily at the location at which
the Employee was employed immediately before the date of this Agreement or at any other location
selected by the Company as its principal executive offices not more than 30 miles from such
location.
1.4 Indemnification. The Company shall, to the maximum extent permitted by applicable
law, indemnify, defend and hold harmless the Employee from, against and in respect of any and all
payments, damages, claims, demands, losses, expenses, costs, obligations and liabilities
(including, but not limited to, attorney’s fees and costs and the costs of investigation and
preparation ) which, directly or indirectly, arise or result from or are related to the fact that
the Employee is or was an employee, officer, director or agent of the Company. By way of
evidencing such obligation and not limitation, the Company and the Employee have previously entered
into an indemnification agreement, a copy of which is attached hereto as Exhibit A.
1.5 Trade Secrets. The Employee shall not, without the prior written consent of the
Company’s Board of Directors, disclose or use in any way, either during his employment by the
Company or thereafter, except as required in the course of such employment, any confidential
business or technical information or trade secret of the Company acquired in the course of such
employment, whether or not patentable, copyrightable or otherwise protected by law, and whether or
not conceived of or prepared by him (collectively, the “Trade Secrets”), including, without
limitation, any confidential information concerning customer lists, products, procedures,
operations, investments, financing, costs, employees, purchasing, accounting, marketing,
merchandising, sales, salaries, pricing, profits and plans for future development, the identity,
requirements, preferences, practices and methods of doing business of specific parties with whom
the Company transacts business, and all other information which is related to any product, service
or business of the Company, other than information which is (or becomes, other than as a result of
the breach hereof by the Employee or any other employee of the Company) generally known in the
industry in which the Company transacts business or is or may be acquired from public sources; all
of which Trade Secrets are the exclusive and valuable property of the Company.
1.6 Noncompetition.
(a) As used in this Agreement, the term “Competitive Activity” shall mean any participation
in, assistance of, employment by, ownership of any interest in, acceptance of business from or
assistance, promotion or organization of any person, partnership, corporation, firm, association or
other business organization, entity or enterprise which, directly or indirectly, is engaged in, or
hereinafter engages in, the development, production, marketing or selling of any product which is
the same as or in competition with any line of business in which the Company is engaged, whether as
an agent, consultant, employee, officer, director, investor, partner, shareholder, proprietor or in
any other individual or representative capacity, but excluding the holding for investment of less
than five percent (5%) of the outstanding securities of any corporation which are regularly traded
on a recognized stock
exchange. Competitive Activity shall not be deemed to include personal investment activities
(including venture capital) of the Employee.
(b) During his employment by the Company and for two (2) years thereafter, the Employee shall
refrain, without the prior written consent of the Company in each instance, from engaging in any
Competitive Activity which would be reasonably likely, as determined by the Company in its
reasonable discretion, to result in the disclosure or use of any Trade Secrets.
1.7 Tangible Items. All files, accounts, records, documents, books, forms, notes,
reports, memoranda, studies, compilations of information, correspondence and all copies, abstracts
and summaries of the foregoing, and all other physical items related to the Company, other than a
merely personal item, whether of a public nature or not, and whether prepared by the Employee or
not, are and shall remain the exclusive property of the Company and shall not be removed from the
premises of the Company, except as required in the course of employment by the Company, without the
prior written consent of the Company’s Board of Directors in each instance, and upon the request of
the Company the same shall be promptly returned to the Company by the Employee on the expiration
or termination of his employment by the Company or at any time prior thereto upon the request of
the Company.
1.8 Solicitation of Employees. During his employment by the Company and for two (2)
years thereafter, the Employee shall not, directly or indirectly, either for his own benefit or
purposes or the benefit or purposes of any other person, employ or offer to employ, call on,
solicit, interfere with or attempt to divert or entice away any employee or independent contractor
of the Company (or any person whose employment or status as an independent contractor has
terminated within the six (6) months preceding the date of such solicitation) in any capacity if
that person possesses or has knowledge of any Trade Secrets of the Company.
1.9 Injunctive Relief. The Employee hereby acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach or threatened
breach of Sections 1.5, 1.6, 1.7 or 1.8 and, accordingly, that the Company shall be entitled to
temporary and injunctive relief, including temporary restraining orders, preliminary injunctions
and permanent injunctions, to enforce such provisions. This provision with respect to injunctive
relief shall not, however, diminish the Company’s right to claim and recover damages.
2. COMPENSATION
2.1 Compensation. As the total consideration for the services which the Employee
renders hereunder, the Employee shall be entitled to the following:
(i) an annual base salary of $326,000.00, subject to such periodic increases, if any, as the
Board of Directors may determine, less any applicable deduction therefrom for income tax or other
applicable withholdings, payable in accordance with the Company’s standard practices and
procedures;
(ii) a grant of 100,000 shares of the Common Stock of the Company on each of April 14, 2010,
2011, 2012, 2013, 2014 and 2015 on the terms and conditions set forth in the form of Stock Award
Agreement attached hereto as Exhibit B;
(iii) participation in any executive bonus plan sponsored by the Company;
(iv) prompt reimbursement of any and all reasonable and documented expenses (including, but
not limited to, air fare, car rental, lodging, meals, business telephone and related travel
expenses) incurred by the Employee from time to time in the performance of his duties hereunder,
which reimbursement shall be made in accordance with the Company’s policies and procedures as the
same may be amended from time to time;
(v) such paid vacation as may be provided in accordance with the vacation policy of the
Company applicable to employees in general, as the same may be amended from time to time;
(vi) participation in all plans or programs sponsored by the Company for employees in general,
including, but not limited to, participation in any group health plan, medical reimbursement plan,
life insurance plan, pension and profit sharing plan, or stock option plan;
(vii) a life insurance policy with a death benefit in an amount equal to that existing on the
date of this Agreement, payable as directed by the Employee; and
(viii) a disability insurance policy in the maximum insurable amount as defined by the policy.
2.2 Illness. Subject to the limitations contained in Section 3.2(a)(iii) and 3.3(a)
of this Agreement, if the Employee shall be unable to render the services required hereunder on
account of personal injuries or physical or mental illness, he shall continue to receive all
payments provided in this Agreement; provided, however, that any such payment may, at the sole
option of the Company, be reduced by any amount that the Employee receives for the period covered
by such payments as disability compensation under insurance policies, if any, maintained by the
Company or under government programs.
3. TERM AND TERMINATION
3.1 Term. Unless sooner terminated pursuant to Section 3.2 hereof, the term of the
Employee’s employment by the Company under Section 1.1 shall commence on the date hereof and shall
end on May 31, 2015 (the “Term”), unless sooner terminated as provided below.
3.2 At Will Relationship.
(a) The Employee and the Company each hereby acknowledges and agrees that, except as expressly
set forth in Section 3.3, (i) the Employee’s relationship with the Company under this Agreement is
AT WILL and can be terminated at the option of either the Employee or the Company in his or its
sole and absolute discretion, for any or no reason whatsoever, with or without cause, (ii) no
representations, warranties or assurances have been made concerning the length of such relationship
or the aggregate amount of compensation to be received by the Employee and (iii) after the
termination of his employment by the Company, the Employee shall have no right, title or interest
in or claim to any revenues received by the Company from any person for any goods sold or services
rendered by the Company to such person, whether or not the Employee was the cause, in whole or in
part, for such person to purchase such goods from the Company or to retain the Company to perform
such services.
(b) The term “cause” shall mean:
(i) the willful and continued refusal of the Employee to substantially perform his duties in
accordance with this Agreement (other than any such failure resulting from incapacity due to
physical or mental illness), insubordination, or material violation of the Company’s policies, in
each case after a written demand for substantial performance is delivered to the Employee by the
Board of Directors of the Company which specifically identifies the manner in which the Board of
Directors believes that the Employee has not substantially performed such duties, the acts
constituting such insubordination, or such violations of the Company’s policies, as the case may
be, and the Employee shall have had a reasonable opportunity to remedy the same; or
(ii) the conviction of, or a plea of nolo contendere by, the Employee to a felony; or
(iii) a charge or indictment of a felony, the defense of which renders the Employee
substantially unable to perform his duties under this Agreement.
For purposes of this provision, no act or failure to act, on the part of the Employee, shall be
considered “willful” unless it is done, or omitted to be done, by the Employee in bad faith or
without reasonable belief that such action or omission was in the best interests of the Company.
Any act or failure to act, based upon authority given pursuant to a resolution of the Board of
Directors or based upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Employee in good faith and in the best interests of the
Company. The cessation of employment of the Employee shall not be deemed to be for cause unless
and until there shall have been delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of all members of the Board of Directors at a
meeting of the Board of Directors called and held for such purpose (after reasonable notice is
provided to the Employee and the Employee is given an opportunity, together with counsel, to be
heard before the Board of Directors), finding that, in the good faith opinion of the Board of
Directors, the Employee is guilty of the conduct described in subparagraph (i), (ii), or (iii)
above, and specifying the particulars thereof in detail.
(c) Each of the following will constitute “good reason” for purposes of this Agreement, unless
otherwise agreed to in writing by Employee:
(i) a material diminution in Employee’s base salary;
(ii) a material diminution in Employee’s authority, duties or responsibilities as contemplated
by Sections 1.2 and 1.3 of this Agreement;
(iii) a material change in the geographic location at which Employee must perform services; or
(iv) any other action or inaction that constitutes a material breach by the Company of this
Agreement.
For purposes of this provision, with respect to clauses (i) through (iv) above, “good reason” shall
not exist unless Employee has notified the Company within thirty (30) days of the initial existence
of the actions or failures to act giving rise to good reason, and such actions or failures have not
been cured or remedied by the Company within thirty (30) days of the receipt of such notice.
Notwithstanding any provision in this Agreement to the contrary, any termination by Employee for
good reason under clauses (i) through (iv) above must occur within thirty (30) days following the
date on which Employee provides the Company with the “Termination Notice” described under Section
3.2(d) below.
(d) Any termination by the Company for cause, or by the Employee for good reason, shall be
communicated by a written notice (the “Termination Notice”) to the other party given in accordance
with Section 4.6 of this Agreement, which notice shall (i) indicate the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated and (iii) if the date of termination is other than the
date of receipt of such notice, specifies the termination date (which date shall be not more than
thirty (30) days after the giving of such notice). The failure by the Employee or the Company to
set forth in the Termination Notice any factor or circumstance which contributes to a showing of
good reason or cause shall not waive any right of the Employee or the Company, respectively,
hereunder or preclude the Employee or the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee’s or the Company’s rights hereunder.
3.3 Duties Upon Termination.
(a) In the event that the Employee’s employment by the Company under this Agreement is
terminated by (a) the Company other than for “cause” (as defined above), or (b) the Employee for
“good reason” (as defined above), neither the Company nor the Employee shall have any remaining
duties or obligations hereunder, except that (i) the Company shall continue to pay or provide to
the Employee, or his estate, the amount specified in Section 2.1(i) during the period commencing on
the effective date of such termination and ending on the first anniversary of such effective date,
(ii) the Company shall pay to the Employee, or his estate, the amount specified in Section 2.1
(iii) for the fiscal year in which such termination occurs, prorated to the date of the
termination, (iii) the Company shall provide to the Employee continued participation in any group
health plan or medical reimbursement plan on the terms existing on the date of termination for the
period commencing on the effective date of such termination and ending 18 months thereafter, (iv)
all stock-based compensation previously granted to the Employee (including, but not limited to, all
stock options, stock appreciation rights, bonus units and stock grants) shall continue to be
governed by the applicable award agreement, and (v) the Employee shall continue to be bound by
Sections 1.5, 1.6, 1.7 and 1.8.
(b) In the event that the Employee’s employment by the Company under this Agreement is
terminated by (a) the Company for “cause” or (b) the Employee other than for “good reason,” neither
the Company nor the Employee shall have any remaining duties or obligations hereunder except that
(i) the Company shall promptly pay or provide to the Employee, or his estate, the amount specified
in Section 2.1(i), prorated through the date of termination, (ii) the Company shall pay to the
Employee, or his estate, the amount specified in Section 2.1(iii) for the fiscal year in which such
termination occurs, prorated to the date of the termination, and (iii) the Employee shall continue
to be bound by Sections 1.5, 1.6, 1.7 and 1.8.
3.4 Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Employee’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as the Employee may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts which are vested
benefits or which the Employee otherwise is entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its affiliated companies at or
subsequent to the date of termination shall be payable in accordance with such plan, policy,
practice, program, contract or agreement except as explicitly modified by this Agreement.
3.5 Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Employee or others; provided, however, that in the event the Employee shall obtain
employment within one year from the date of termination, any amount payable by the Company to the
Employee under Section 3.3(a)(i) shall be reduced by any amount received by the Employee during
such one year in connection with such other employment. In no event shall the Employee be
obligated to seek other employment or take any other action by way of mitigation of the amounts
payable to the Employee under any provision of this Agreement.
4. MISCELLANEOUS
4.1 Severable Provisions. The provisions of this Agreement are severable, and if any
one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in
part, the remaining provisions, and any partially unenforceable provisions to the extent
enforceable, shall nevertheless be binding and enforceable.
4.2 Successors and Assigns.
(a) All of the terms, provisions and obligations of this Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective heirs, representatives,
successors and assigns. Notwithstanding the foregoing, this Agreement is personal to the Employee,
and neither this Agreement nor any rights hereunder shall be assigned, pledged, hypothecated or
otherwise transferred by the Employee (other than by will or the laws of descent and distribution)
without the prior written consent of the Company in each instance.
(b) The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken place. As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its
business or assets as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
4.3 Governing Law. The validity, construction and interpretation of this Agreement
shall be governed in all respects by the laws of the State of Texas applicable to contracts made
and to be performed wholly within that State.
4.4 Headings. Section and subsection headings are not to be considered part of this
Agreement and are included solely for convenience and reference and in no way define, limit or
describe the scope of this Agreement or the intent of any provisions hereof.
4.5 Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof, and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, relating to the subject
matter of this Agreement. No supplement, modification, waiver or termination of this Agreement
shall be valid unless executed by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
4.6 Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be deemed to have been given (i) if personally delivered, when so
delivered, (ii) if mailed, one (1) week after having been placed in the United States mail,
registered or certified, postage prepaid, addressed to the party to whom it is directed at the
address set forth below or (iii) if given by e-mail or telecopier, when such notice or other
communication is transmitted to the e-mail or telecopier number specified below and the appropriate
answerback or telephonic confirmation is received. Either party may change the address to which
such notices are to be addressed by giving the other party notice in the manner herein set forth.
4.7 Mediation. The parties agree to mediate any dispute or claim between them arising
out of this Agreement before resorting to court action. The mediation fees, if any, shall be
divided equally between the parties, and each side shall bear their own attorney’s fees.
4.8 Attorneys’ Fees. In the event any party takes legal action to enforce any of the
terms of this Agreement, the unsuccessful party to such action shall pay the successful party’s
expenses, including attorneys’ fees and expenses, incurred in such action.
4.9 Third Parties. Nothing in this Agreement, expressed or implied, is intended to
confer upon any person other than the Company or the Employee any rights or remedies under or by
reason of this Agreement.
4.10 Costs. The Company shall reimburse the Employee promptly upon demand for all
attorney’s fees and costs incurred by him in connection with the preparation and negotiation of
this Agreement.
4.11 Termination of Prior Agreements. The rights and obligations of the Company and
the Employee, if any, under any and all prior agreements, understandings and arrangements in
respect of the Employee’s employment by the Company (“Prior Agreements”) hereby are terminated
effective as of the date hereof. From and after the date hereof, neither the Company nor the
Employee shall have any further rights or obligations whatsoever under the Prior Agreements.
4.12 Consent to Jurisdiction. Each party hereto, to the fullest extent it may
effectively do so under applicable law, irrevocably (i) submits to the exclusive jurisdiction of
any court of the State of Texasor the United States of America sitting in the City of Dallas over
any suit, action or proceeding arising out of or relating to this Agreement, (ii) waives and agrees
not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have to the
establishment of the venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum, (iii) agrees that a judgment in any such suit, action or proceeding brought in
any such court shall be conclusive and binding upon such party and may be enforced in the courts of
the United States of America or the State of Texas (or any other courts to the jurisdiction of
which such party is or may be subject) by a suit upon such judgment and (iv) consents to process
being served in any such suit, action or proceeding by mailing a copy thereof by registered or
certified air mail, postage prepaid, return receipt requested, to the address of such party
specified in or designated pursuant to Section 4.6. Each party agrees that such service (i) shall
be deemed in every respect effective service of process upon such party in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid
personal service upon and personal delivery to such party.
4.13 Construction. This Agreement was reviewed by legal counsel for each party hereto
and is the product of informed negotiations between the parties hereto. If any part of this
Agreement is deemed to be unclear or ambiguous, it shall be construed as if it were drafted jointly
by the parties. Each party hereto acknowledges that no party was in a superior bargaining position
regarding the substantive terms of this Agreement.
4.14 Section 409A.
(a) This Agreement is intended to comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder
(“Section 409A”), and shall in all respects be administered in accordance with Section 409A.
(b) The parties agree that if any payment or the provision of any amount, benefit or
entitlement hereunder at the time specified in this Agreement would subject Employee to any
additional tax or interest or penalties under Section 409A, the payment or provision of such
amount, benefit or entitlement shall be postponed to the earliest commencement date on which the
payment or the provision of such amount, benefit or entitlement could be made without incurring
such additional tax, interest or penalties (including delaying payment of any severance to the
earliest possible payment date which is consistent with Section 409A). In addition, to the extent
that any regulations or guidance issued under Section 409A (after application of the previous
provision of this paragraph) would result in Employee being subject to the payment of interest,
penalties or any additional tax under Section 409A, the Company and Employee agree, to the extent
reasonably possible, to amend this Agreement in order to avoid the imposition of any such interest,
penalties or additional tax under Section 409A, which amendment shall be reasonably determined in
good faith by the Company and Employee.
(c) Notwithstanding any provision in this Agreement to the contrary, all payments not
otherwise exempt from Section 409A which are to be made after a termination of employment under
this Agreement may only be made after Employee experiences a “separation from service” as such term
is defined under Section 409A. All reimbursements and in-kind benefits provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A, including,
where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during
Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year
may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the
last day of the calendar year following the year in which the expense is incurred, and (iv) the
right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another
benefit.
(d) If upon Employee’s “separation from service” from the Company, Employee is then a
“specified employee” (as defined by and determined in accordance with Section 409A), then solely to
the extent necessary to comply with Section 409A and avoid the imposition of taxes under Section
409A, the Company shall defer payment of “nonqualified deferred compensation,” subject to Section
409A, which is payable as a result of and would otherwise be paid within six (6) months following
such separation from service, until the earlier of (a) the first business day of the seventh month
after Employee’s separation from service, or (b) ten (10) days after the Company receives written
notice of Employee’s death. All such delayed payments shall be paid in a lump sum without accrual
of interest. To the extent permissible by law, each payment and each installment described in this
Agreement shall be considered a separate payment from each other payment or installment for
purposes of Section 409A.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date and year first set forth above.
| Company: | DIODES INCORPORATED | |||||||||
| By | /s/ Xxxxxxx X. Xxxxx | |||||||||
| Authorized Representative | ||||||||||
| 00000 Xxxxx Xxxxxx Xxxxxxx | ||||||||||
| Xxxxx 000 | ||||||||||
| Xxxxxx, XX 00000 | ||||||||||
| Attention: Xxxxxxx X. Xxxxx | ||||||||||
Employee:
|
By | /s/ Xxx-Xxxx Xx | ||||||||
| Xxx-Xxxx Lu | ||||||||||
