Exhibit 10.3
HUTCHINSON TECHNOLOGY INCORPORATED
NON-EMPLOYEE DIRECTORS EQUITY PLAN
1. Purpose. The purpose of this Hutchinson Technology Incorporated Non-Employee
Directors Equity Plan (the “Plan”) is to provide non-employee members of the
Board of Directors (the “Board”) of Hutchinson Technology Incorporated (the
“Company”) with an opportunity to increase their ownership of Company common
stock by allowing each participating director to voluntarily elect to receive
all or a portion of the annual cash retainers (Board, committee and committee
chair retainers) (collectively, the “Retainer”) payable to him or her for
service as a member of the Board in the form of shares of the Company’s common
stock (the “Stock”).
2. Eligibility. Directors of the Company who are not also officers or other
employees of the Company or its subsidiaries are eligible to participate in this
Plan (each, a “Director”).
3. Election to Receive Stock. On forms provided by the Company, each eligible
Director may elect to receive, in lieu of cash, shares of Stock having a Fair
Market Value (as defined in Section 6) equal to the percentage, from 0% to 100%,
specified by the eligible Director of the Retainer payable to such Director
during the period between the Company’s next two annual meetings of shareholders
following the deadline for submission of an applicable election form. If no
election is made by an eligible Director, the entire Retainer during such period
will be paid in cash. To be effective for any period between annual Company
shareholder meetings, any election to receive Stock in lieu of cash must be
submitted to the Company (Attn: CEO Administrative Assistant) no later than
January 15 immediately prior to the first of the two succeeding annual meetings
of shareholders. Any eligible Director whose initial election to the Board
occurs during a period between annual Company shareholder meetings shall have
30 days following such election to elect to receive Stock in lieu of cash for
Retainer amounts payable after the date of election and prior to the next annual
Company shareholder meeting. Any election made in accordance with this Section 3
may not be modified or withdrawn by the Director.
4. Issuance of Stock. Shares of Stock having a Fair Market Value equal to the
portion of the Retainer to be received in Stock shall be issued to each
participating Director on each date a Retainer amount is scheduled to be paid to
eligible Directors during the applicable calendar year (currently February 15
and August 15 or, if not a business day, the first business day thereafter on
which Stock is traded on the Nasdaq Global Select Market or such other
established securities market as may then be the principal trading market for
the Stock). The number of shares of Stock to be issued on any payment date
pursuant to this Plan shall be the amount of Retainer to which the Director is
entitled as of the payment date multiplied by the percentage of such Retainer
the Director has elected to receive in Stock, divided by the Fair Market Value
of a share of Stock on the payment date. Whenever application of this formula
would otherwise result in the issuance of a fractional share, the number of
shares to be issued will be rounded down to the nearest whole share. A Director
shall be entitled to receive shares of Stock pursuant to this Plan on any
payment date only if the Director continues to be a non-employee member of the
Board as of that payment date.
5. Shares Subject to Plan. The total number of shares of Stock reserved for
issuance under the Plan shall be 100,000. If the number of outstanding shares of
Stock is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then the number of
shares reserved for issuance under this Plan will be proportionately adjusted by
the Compensation Committee of the Board (the “Committee”).
6. Fair Market Value. The Fair Market Value of each share of Stock on any date
shall be the closing sale price of one share of Stock on the Nasdaq Global
Select Market (or such other established securities market as may then be the
principal trading market for the Stock) on the relevant date or, if no sales
occurred on that date, on the next preceding date on which a sale of shares of
Stock occurred, as reported in the Wall Street Journal (or such other
authoritative source as may be designated by the Committee).

 

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7. Administration of Plan. This Plan shall be administered by the Committee.
Subject to the terms of the Plan, the Committee shall have the authority to
establish and amend rules to administer the Plan, to interpret the Plan and to
make all other determinations necessary or desirable for the administration of
the Plan. The Committee may delegate any non-discretionary administrative
oversight responsibilities under the Plan to any employee or agent of the
Company.
8. Amendment to the Plan. The Board may at any time amend, alter, suspend or
discontinue this Plan. No amendment, alteration, suspension or discontinuance
shall require shareholder approval unless such approval would be required by
applicable law or stock exchange rules. Notwithstanding any election made
pursuant to the Plan, the Committee shall have the authority to direct the
Company to make any retainer payment in cash instead of Stock if the Committee
determines, in its discretion, that it is advisable to do so.
9. Separation From Service as Director. If a Director participating in the Plan
ceases to be a member of the Board for any reason whatsoever, including death,
disability or removal in accordance with applicable law, he or she will no
longer be entitled to receive any Retainer payment in cash or in shares of Stock
pursuant to this Plan following the date of such cessation.
10. Effective Date and Duration of Plan. The Plan shall become effective on the
date it is adopted by the Board, and shall continue in effect until all shares
of Stock reserved for issuance under the Plan have been issued, or until its
earlier termination by the Board.
11. Compliance with Law. Notwithstanding any other provision of this Plan, no
shares of Stock shall be issued and delivered under this Plan unless the
issuance of such shares complies with all applicable legal requirements,
including compliance with the provisions of applicable federal and state
securities laws.
12. Governing Law. To the extent that federal laws do not otherwise control,
this Plan and all determinations made and actions taken under this Plan shall be
governed by the laws of the State of Minnesota, without regard to the conflicts
of law provisions thereof, and construed accordingly.