STOCK UNIT AGREEMENT*
Exhibit 99.3
exhibit b
DIODES INCORPORATED
2013 EQUITY INCENTIVE PLAN
Diodes Incorporated, a Delaware corporation, (the “Company”), hereby commits to award Stock Units to the Participant named below. The terms and conditions of the Award are set forth in this cover sheet and in the attached Stock Unit Agreement (together, this “Agreement”) and in the Diodes Incorporated 2013 Equity Incentive Plan as it may be amended from time to time (the “Plan”). This Agreement is the Stock Unit Agreement referenced in Section 2.1(ii) of the employment agreement by and between Participant and the Company, dated July 10, 2015, (the “Employment Agreement”). For purposes of this Agreement, a “Qualifying Termination” occurs on the date of termination of Participant’s employment with the Company due to either (i) a termination by Participant for “good reason” (as defined in the Employment Agreement), (ii) a termination by the Company without “cause” (as defined in the Employment Agreement), (iii) Participant’s death, or (iv) Participant’s Disability. This Award is intended to constitute qualifying performance-based compensation under Code Section 162(m) and will be interpreted and administered in accordance with such intention.
Date of Award: July 21, 2015
Name of Participant (“Participant”, “you”, or “your”): Keh-Xxxx Xx
Number of Stock Units Potentially to be Awarded: 700,000
Expiration Date: June 1, 2025
Scheduled Dates of Grants: Subject to Participant’s continued Service through each applicable Date of Grant, the following number of Stock Units shall be granted to Participant. Except as set forth below, all Stock Units shall be unvested at the time of grant. A Stock Unit is only considered to be outstanding after its actual Date of Grant. All numbers of Stock Units reflected in this Agreement shall be subject to adjustment by the Company as specified in Section 13.
Scheduled Date of Grant |
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Number of Stock Units |
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July 21, 2015 |
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150,000 |
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July 1, 2016 |
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250,000 |
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July 1, 2017 |
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250,000 |
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July 1, 2018 |
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50,000 |
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Vesting Terms:
As of the Date of Award, none of the Stock Units subject to this Agreement are “Vested Stock Units”. Participant will receive a benefit with respect to this Award only to the extent that a Stock Unit becomes a “Vested Stock Unit”. For any Stock Unit to become a “Vested Stock Unit”, two separate vesting conditions must each be satisfied.
Accordingly, in order for a Stock Unit to become a Vested Stock Unit, one vesting condition is that such Stock Unit becomes “Service-Based Vested” (as described below) and the other vesting condition is that it becomes “Performance-Based Vested” (as described below). For avoidance of doubt, Participant will have no rights with respect to compensation under this Award to the extent that Stock Units are not Performance-Based Vested (regardless of the extent to which Stock Units are Service-Based Vested). All outstanding Stock Units that are not Vested Stock Units as of the Expiration Date shall be then forfeited without consideration.
* Confidential treatment has been requested with respect to the omitted portion of this Exhibit, which portion has been filed separately with the Securities and Exchange Commission.
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-1- |
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Service-Based Vested Requirement: The Service-Based Vested requirements will be satisfied in installments as to this Award as follows: As long as Participant renders continuous Service, the number of then outstanding Stock Units which are not Service-Based Vested will become incrementally Service-Based Vested on an annual basis in the amounts (and on the dates) shown in the table below.
Date |
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Incremental Number of Stock Units Granted |
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Incremental Number of Service-Based Units |
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July 21, 2015 |
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150,000 |
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July 1, 2016 |
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250,000 |
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100,000 |
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July 1, 2017 |
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250,000 |
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100,000 |
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July 1, 2018 |
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50,000 |
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100,000 |
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July 1, 2019 |
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100,000 |
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July 1, 2020 |
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100,000 |
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July 1, 2021 |
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100,000 |
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July 1, 2022 |
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100,000 |
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Totals |
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700,000 |
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700,000 |
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Except as otherwise provided under a Qualifying Termination or Change of Control, no Stock Units (which are not Service-Based Vested) can become Service-Based Vested before the above scheduled dates for Service-Based Vesting. Additionally, except as otherwise provided under a Qualifying Termination, no Stock Units (which are not Service-Based Vested) can become Service-Based Vested after Participant’s Service has terminated and any Stock Units that are not Service-Based Vested shall be forfeited without consideration on the Participant’s Termination Date. In all cases, the resulting aggregate number of Service-Based Vested Stock Units will be rounded down to the nearest whole number.
Performance-Based Vested Requirement: Provided that the Participant is still then rendering continuous Service, the Performance-Based Vested requirements will be deemed satisfied (if ever) for all outstanding Stock Units as of the third business day after the date that the Company files with the SEC an Annual Report on Form 10-K (or Form 10-K/A) or a Quarterly Report on Form 10-Q (or Form 10-Q/A) which contains financial statements stating that the Company’s aggregate gross profit (as determined in accordance with GAAP) for the four most recently completed fiscal quarters equals or exceeds the “Goal Gross Profit” (the date of such satisfaction is the “Performance Goal Attainment”). If before the occurrence of any Performance Goal Attainment, either the Participant experiences a Qualifying Termination or there is a Change of Control, then Stock Units can become Performance-Based Vested based on the Pro-Rata Performance Percentage as set forth below. In all cases, the resulting aggregate number of Performance-Based Vested Stock Units will be rounded down to the nearest whole number. Any grants of Stock Units under this Agreement that are issued after Performance Goal Attainment shall be granted as Performance-Based Vested Stock Units. As of the Date of the Award, the Goal Gross Profit is $[REDACTED]* million.
For purposes of this Agreement, “Change of Control” shall have the same definition provided to “Change in Control” in the Plan except that in subclause (i) of such Change in Control definition, twenty-five percent (25%) shall be replaced by fifty percent (50%).
For purposes of this Agreement, “Pro-Rata Performance Percentage” means, as of any point in time, a percentage (not to exceed 100% and not to be less than 0%) that is equal to the quotient of (i) the Company’s aggregate gross profit for the most recently completed Company fiscal quarters (the “Four Quarter Gross Profit”) minus the Base Gross Profit, divided by (ii) the Increase Gross Profit. As of the Date of the Award, the Base Gross Profit is $[REDACTED]* million and the Increase Gross Profit is $[REDACTED]* million.
As permitted by the Plan, the Goal Gross Profit, Four Quarter Gross Profit, Increase Gross Profit and Base Gross Profit figures will be proportionately adjusted by the Committee in the event that after the Date of Award and before the Expiration Date the Company effects in any 12 month period any divestiture (or series of divestitures) of operating assets transaction(s) in which the disposed of assets in the aggregate directly generated more than twenty percent of the Company’s gross profit for the four most recently completed fiscal quarters preceding the initial divestiture. However, the Goal Gross Profit, Four Quarter Gross Profit, Increase Gross Profit and Base Gross Profit figures will not be adjusted in the event of Company acquisitions of third party companies, businesses or assets.
* Confidential treatment has been requested with respect to the omitted portion of this Exhibit, which portion has been filed separately with the Securities and Exchange Commission.
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Qualifying Termination: Upon a Qualifying Termination that occurs before Performance Goal Attainment, the number of then outstanding Stock Units shall be multiplied by the Pro-Rata Performance Percentage to determine how many (if any) Stock Units become Performance-Based Vested. Upon a Qualifying Termination that occurs (i) on or after Performance Goal Attainment and (ii) before a scheduled date of grant for Stock Units that were supposed to be granted in the Fiscal Year in which Participant’s Termination Date occurs, then such number of ungranted Stock Units shall be deemed granted as Vested Stock Units as of Participant’s Termination Date. No further Stock Units shall be granted after a Qualifying Termination. All outstanding Stock Units shall be Service-Based Vested upon a Qualifying Termination.
Change of Control: Upon a Change of Control that occurs before Performance Goal Attainment, the number of then outstanding Stock Units shall be multiplied by the Pro-Rata Performance Percentage to determine how many (if any) Stock Units become Performance-Based Vested. Upon a Change of Control that occurs (i) on or after Performance Goal Attainment and (ii) before a scheduled date of grant for Stock Units that were supposed to be granted in the Fiscal Year in which Participant’s Termination Date occurs, then such number of ungranted Stock Units shall be deemed granted as Vested Stock Units as of immediately before the Change of Control. No further Stock Units shall be granted after a Change of Control. All outstanding Stock Units shall be Service-Based Vested upon a Change of Control.
Upon termination of your Service at any time (whether before or after Performance Goal Attainment) due to either your resignation without good reason or termination by the Company for cause (as such terms are defined in the Employment Agreement), then no further grants of Stock Units shall be issued under this Agreement and all then outstanding Stock Units subject to this Agreement shall be forfeited to the Company without consideration as of your Termination Date.
Vesting of Stock Units shall be provided only as expressly enumerated above and otherwise no partial vesting credit will be provided no matter when your Termination Date occurs.
By signing this cover sheet, you agree to all of the terms and conditions described in this Agreement and in the Plan. You are also acknowledging receipt of this Agreement and a copy of the Plan and the Plan’s prospectus. Any inconsistency between this Agreement and the Plan shall be resolved by reference to the Plan.
Participant: |
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/S/ Keh-Xxxx Xx |
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(Signature) |
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Company: |
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/S/ Xxxxxxx X. Xxxxx |
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(Signature) |
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Title: |
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Chief Financial Officer |
Attachment
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DIODES INCORPORATED
2013 EQUITY INCENTIVE PLAN
1. |
The Plan and Other Agreements |
The text of the Plan is incorporated in this Agreement by reference. You and the Company agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. Unless otherwise defined in this Agreement, certain capitalized terms used in this Agreement are defined in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Award of Stock Units. Any prior agreements, commitments or negotiations concerning this Award are superseded. |
2. |
Award of Stock Units |
Subject to the terms of this Agreement, the Company commits to award you the number of Stock Units shown on the cover sheet of this Agreement. The Award is subject to the terms and conditions of this Agreement and the Plan. The Company will not issue any Shares if the issuance of such Shares at that time would violate any law or regulation. |
3. |
Vesting and Settlement |
This Award will vest according to the Vesting Terms described in the cover sheet of this Agreement. To the extent a Stock Unit becomes a Vested Stock Unit and subject to your satisfaction of any tax withholding obligations as discussed below, each Vested Stock Unit will entitle you to receive one Share which will be distributed to you on the applicable vesting date as set forth in this Agreement. Issuance of such Shares shall be in complete satisfaction of such Vested Stock Units. Such settled Stock Units shall be immediately cancelled and no longer outstanding and you shall have no further rights or entitlements related to those settled Stock Units.
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4. |
Transfer of Award |
You cannot gift, transfer, assign, alienate, pledge, hypothecate, attach, sell, or encumber this Award. If you attempt to do any of these things, this Award will immediately become invalid. You may, however, dispose of this Award in your will or it may be transferred by the laws of descent and distribution. Regardless of any marital property settlement agreement, the Company is not obligated to recognize your spouse’s interest in your Award in any other way. |
5. |
Leaves of Absence |
For purposes of this Award, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of the leave of absence provide for Service crediting, or when Service crediting is required by applicable law. Your Service terminates in any event when the approved leave of absence ends unless you immediately return to active work. The Company determines which leaves of absence count for this purpose (along with determining the effect of a leave of absence on vesting of the Award), and when your Service terminates for all purposes under the Plan. |
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Extraordinary Compensation |
This Award and the Shares subject to the Award are not intended to constitute or replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. |
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13. |
Adjustments |
In the event of a stock split, a stock dividend or a similar change in the Company stock, the total number of Stock Units covered by this Award, the then number of outstanding Stock Units, and the number of Stock Units potentially to be granted shall each be adjusted (and rounded down to the nearest whole number) pursuant to the Plan. Your Stock Units shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. |
14. |
Legends |
All certificates or book entries representing the Common Stock issued under this Award may, where applicable, have endorsed thereon the following notations or legends and any other notation or legend the Company determines appropriate: “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.” “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR QUALIFICATION UNDER APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.” |
15. |
Applicable Law |
This Agreement will be interpreted and enforced under the laws of the State of Delaware without reference to the conflicts of law provisions thereof. |
16. |
Regulatory Compliance |
The issuance of Common Stock pursuant to this Agreement shall be subject to full compliance with all applicable requirements of law and the requirements of any stock exchange or interdealer quotation system upon which the Common Stock may be listed or traded.
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17. |
Binding Effect; No Third Party Beneficiaries |
This Agreement shall be binding upon and inure to the benefit of the Company and you and any respective heirs, representatives, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any person other than the Company and you and any respective heirs, representatives, successors and permitted assigns. The parties agree that this Agreement shall survive the settlement or termination of the Award.
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