EXHIBIT 10.40

SANMINA-SCI CORPORATION
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS

(Originally effective June 1, 2002)
Amended and restated effective January 1, 2009

 

 

 

 

 
 

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TABLE OF CONTENTS
     
Page
ARTICLE I
PURPOSE
4
ARTICLE II
DEFINITIONS
4
2.1
Account
4
2.2
Beneficiary
4
2.3
Board
4
2.4
Change of Control
4
2.5
Code
5
2.6
Code section 409A
5
2.7
Committee
5
2.8
Committee Charter
5
2.9
Compensation Committee
5
2.10
Common Stock
5
2.11
Company
5
2.12
Compensation
5
2.13
Deferral Commitment
5
2.14
Deferral Period
5
2.15
Deferred Compensation
5
2.16
Eligible Director
5
2.17
Market Value
6
2.18
Participant
6
2.19
Participation Agreement
6
2.20
Plan Year
6
2.21
Share Units
6
2.22
Separation from Service
6
ARTICLE III
DEFERRAL COMMITMENTS
6
3.1
Participation
6
3.2
Initial Year of Participation
6
3.3
Elective Deferrals
6
3.4
Limitations on Deferral Commitments
6
ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
7
4.1
Accounts
7
4.2
Deferred Compensation
7
4.3
Share Units
7
4.4
Dividends
7
4.5
Determination of Accounts
7
4.6
Vesting of Accounts
8
4.7
Statement of Accounts
8
4.8
Adjustment of Share Units
8
ARTICLE V
PLAN BENEFITS
8
5.1
After Separation from Service
8
5.2
Change of Control
8
5.3
Tax Withholding
8
5.4
Payment to Guardian
9
ARTICLE VI
BENEFICIARY DESIGNATION
9
6.1
Beneficiary Designation
9
6.2
Changing Beneficiary
9
6.3
Community Property
9
6.4
No Beneficiary Designation
9
ARTICLE VII
ADMINISTRATION
10
7.1
Committee
10
7.2
Agents and Delegation
10
7.3
Binding Effect of Decisions
10
7.4
Indemnification of Committee
10
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
10
8.1
Amendment
10
8.2
Right to Terminate Plan
10
ARTICLE IX
MISCELLANEOUS
11
9.1
Unfunded Plan
11
9.2
Trust Fund
11
9.3
Nonalienability
12
9.4
Governing Law
12
9.5
Validity
12
9.6
Notice
12
9.7
Successors
12

 
 

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SANMINA-SCI CORPORATION
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
 
ARTICLE I
 
PURPOSE
 
Effective June 1, 2002 the Board of Directors of Sanmina-SCI Corporation
(“Sanmina-SCI”) approved the establishment of the Sanmina-SCI Corporation
Deferred Compensation Plan for Outside Directors (the “Plan”).  The Plan is
intended to provide eligible Sanmina-SCI Directors an opportunity to defer
payment of all or part of the Compensation which is payable to them for acting
as Directors of Sanmina-SCI.  Sanmina-SCI now approves the amendment and
restatement of the Plan effective January 1, 2009.  The Plan is intended to
reflect the requirements of section 409A of the Internal Revenue Code and the
regulations issued thereunder, and, in all respects, shall be administered and
construed in accordance with such requirements.  Prior to 2009, the Plan was
administered in accordance with Code section 409A.
 
ARTICLE II
 
DEFINITIONS
 
For purposes of this Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:

2.1 Account.  “Account” means the account established for a Participant pursuant
to Article IV. A Participant’s Account shall be utilized solely as a device for
the determination and measurement of the amounts to be paid to the Participant
pursuant to this Plan and shall not constitute or be treated as a trust fund of
any kind.
 
2.2 Beneficiary. “Beneficiary” means the person, persons or entity entitled
under Article VI to receive any Plan benefits payable under Article V after a
Participant’s death.
 
2.3 Board.  “Board” means the Board of Directors of Sanmina-SCI.
 
2.4 Change of Control.  “Change of Control” means:
 
(a) A change in the effective control of the Company as defined under Treasury
Regulations section 1.409A-3(i)(5)(vi)(A)(1);
 
(b) A change in the ownership of the Company as defined under Code section 409A;
or,
 

 
 

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(c) A change in the ownership of a substantial portion of the Company’s assets
as defined under Code section 409A.
 
2.5 Code.  “Code” means the Internal Revenue Code, as amended from time to time.
 
2.6 Code section 409A.  Code section 409A shall refer to, collectively, section
409A of the Code and the regulations and IRS guidance issued thereunder.
 
2.7 Committee.  “Committee” means the Deferred Compensation Plans Committee
established pursuant to the Committee Charter.
 
2.8 Committee Charter.  “Committee Charter” means the Sanmina-SCI Corporation
Deferred Compensation Plans Committee Charter.
 
2.9 Compensation Committee.  “Compensation Committee” means the Compensation
Committee of the Board.
 
2.10 Common Stock.  “Common Stock” means the shares of common stock of the
Company.
 
2.11 Company.  “Company” means Sanmina-SCI Corporation and any successor
thereto.
 
2.12 Compensation.  “Compensation” means all fees payable to such Director
during the year, including the retainer for service as a member of the Board or
any committees thereof and meeting fees. Fees payable in the form of Common
Stock and any expense reimbursements for attending Board or committee meetings
shall not be included in the definition of Compensation.
 
2.13 Deferral Commitment.  “Deferral Commitment” means an election to defer
Compensation made by a Participant pursuant to Article III and submitted in a
Participation Agreement.
 
2.14 Deferral Period.  “Deferral Period” means the period over which a Director
has elected to defer his Compensation. Each calendar year shall be a separate
Deferral Period.
 
2.15 Deferred Compensation.  “Deferred Compensation,” means the amount of
Compensation that a Participant elects to defer pursuant to a Deferral
Commitment.
 
2.16 Eligible Director.  “Eligible Director” means any individual who is a
member of the Board and who is not an employee of the Company or any of its
subsidiaries.  An individual shall become an Eligible Director only upon
notification of his eligibility to participate and the material terms of
participation.
 

 
 

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2.17 Market Value.  “Market Value” means, with respect to one share of Common
Stock on any date, the closing price for Common Stock listed in the composite
tables in the “Wall Street Journal” for the applicable date.
 
2.18 Participant.  “Participant” means any Eligible Director who has made an
election under Article III to defer any portion of his or her Compensation for
any Plan Year.
 
2.19 Participation Agreement.  “Participation Agreement” means the Deferral
Commitment agreement submitted by a Participant to the Committee pursuant to
Article III.
 
2.20 Plan Year.  “Plan Year” means the calendar year.
 
2.21 Share Units. “Share Units” means a unit of measurement equivalent to one
share of Common Stock, with none of the attendant rights of a holder of such
share, including, without limitation, the right to vote such share and the right
to receive dividends thereon, except to the extent otherwise specifically
provided herein.
 
2.22 Separation from Service.  “Separation from Service” shall have the meaning
as set forth in Code section 409A.
 
 
ARTICLE III
 
DEFERRAL COMMITMENTS
 
3.1 Participation.  An Eligible Director may elect to participate in this Plan
with respect to any Deferral Period by submitting a Participation Agreement to
the Committee, prior to the date established by the Committee, in the calendar
year immediately preceding the Deferral Period.
 
3.2 Initial Year of Participation. In the event that an Eligible Director first
becomes eligible to participate during a calendar year, a Participation
Agreement must be submitted to the Committee no later than thirty (30) days
following the date the Director becomes an Eligible Director.  Such
Participation Agreement shall be effective only with regard to Compensation
earned following the submission of the Participation Agreement to the Committee.
 
3.3 Elective Deferrals. An Eligible Director’s Deferral Commitment may defer all
or part of the Compensation payable to the Director during the Plan Year.  Once
made, a Deferral Commitment shall be irrevocable for the Plan Year and, to the
extent permitted by the Committee, shall be effective for subsequent Plan Years
unless and until it is revoked.
 
3.4 Limitations on Deferral Commitments.  The following limitations shall apply
to Deferral Commitments:
 

 
 

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(a) Minimum. The minimum Deferral Commitment shall be two thousand dollars
($2,000) per Deferral Period.
 
(b) Maximum. The maximum Deferral Commitment shall be one hundred percent (100%)
of the Participant’s Compensation.
 
(c) Changes in Minimum or Maximum. The Committee may amend the Plan to change
the minimum or maximum deferral amounts from time to time by giving written
notice to all Participants. No such change may affect a Deferral Commitment made
prior to the Committee’s action.
 
 
ARTICLE IV
 
DEFERRED COMPENSATION ACCOUNTS
 
4.1 Accounts.  For record keeping purposes only, separate accounts shall be
maintained on the Company’s books and records for each Participant to reflect
the Participant’s interest under the Plan.
 
4.2 Deferred Compensation.  The amount of Compensation deferred by each
Participant shall be credited to his or her Account as of the date the Deferred
Compensation would otherwise have been payable.  Any withholding of taxes or
other amounts which is required by state, federal or local law with respect to
Deferred Compensation shall be withheld from the Participant’s non-deferred
Compensation to the maximum extent possible with any excess reducing the amount
deferred.
 
4.3 Share Units.  The amounts credited to a Participant’s Account shall be
converted into Share Units. The number of Share Units shall be determined by
dividing the Compensation deferred by the Market Value of one share of Common
Stock on the date as of which the amount is credited.
 
4.4 Dividends.  On each dividend record date, the Participant’s Accounts shall
be credited with the cash equivalent of any dividends which the Company would
have otherwise paid on Common Stock shares equal to the number of Share Units
credited to the Accounts. Such contributions shall be converted into additional
Share Units based on the valuation method provided in Section 4.3. In addition,
the stock equivalent of any stock dividends paid on Common Stock shall be
credited to the Participant’s Account on the record date and will be reflected
as additional Share Units. Dividends shall continue to be credited to a
Participant’s Account until the final payment is made from the Account.
 
4.5 Determination of Accounts.  The value of each Participant’s Account shall be
determined at the end of each trading day. The value shall be based on the
Market Value for that day times the number of Share Units credited to the
Account.
 

 
 

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4.6 Vesting of Accounts. Participants shall be 100% vested in their Accounts at
all times.
 
4.7 Statement of Accounts.  The Committee shall submit to each Participant,
within thirty (30) days after the close of each calendar quarter and at such
other time as determined by the Committee, a statement setting forth the balance
of and the credits to the Accounts maintained for such Participant.
 
4.8 Adjustment of Share Units.  In the event of any change in the Common Stock
occurring by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or any
rights offering to purchase such shares at a price substantially below fair
market value, or any similar change affecting the Common Stock, the number and
kind of shares represented by the Share Units shall be appropriately adjusted
consistent with such change in such manner as the Committee, in its sole
discretion, may deem equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, the Participants hereunder.  The
Committee shall give notice to each Participant of any adjustment made pursuant
to this Section and, upon such notice; such adjustment shall be effective and
binding for all purposes of the Plan.
 
ARTICLE V
 
PLAN BENEFITS
 
5.1 After Separation from Service.  Upon a Participant’s Separation from
Service, the Participant shall become entitled to receive the payment of the
Participant’s Account.  The value of the Participant’s Account as of such date
shall be payable in whole shares of Common Stock (and cash to the extent of any
fractional shares) in a single payment no later than sixty (60) days
thereafter.  In the event the Participant is a “specified employee” (as defined
under Code section 409A) at the time of such Separation from Service, payment of
the Participant’s Account shall not commence any earlier than six months
following the Participant’s Separation from Service (except in the event of
death).  In the event of the Participant’s Separation from Service because of
his or her death, payment will be made to the Participant’s Beneficiary within
sixty (60) days of Participant’s death.
 
5.2 Change of Control.  Notwithstanding the foregoing, in the event of the
occurrence of a Change of Control, the value of each Participant’s Account,
determined as of the date of the Change of Control, shall be paid to each
Participant in cash in a single payment no later than ten (10) days following
such Change of Control.
 
5.3 Tax Withholding.  To the extent required by federal, state, or local law in
effect at the time payments are made, the Company shall withhold from any amount
that is included in the Participant’s income hereunder any taxes required to be
withheld by such law(s).
 

 
 

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5.4 Payment to Guardian. The Committee may direct payment to the duly appointed
guardian, conservator, or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal
representative, the Committee may, in its sole and absolute discretion, make
payment to a person having the care and custody of a minor, incompetent or
person incapable of handling the disposition of property upon proof satisfactory
to the Committee of incompetence, minority, or incapacity.  Such distribution
shall completely discharge the Committee from all liability with respect to such
benefit.
 
 
ARTICLE VI
 
BENEFICIARY DESIGNATION
 
6.1 Beneficiary Designation.  Subject to Section 6.3, each Participant shall
have the right, at any time, to designate one (1) or more persons or an entity
as Beneficiary (both primary as well as secondary) to whom benefits under this
Plan shall be paid in the event of such Participant’s death prior to complete
distribution of the Participant’s Accounts.  Each Beneficiary designation shall
be in a written form prescribed by the Committee and shall be effective only
when filed with the Committee during the Participant’s lifetime.
 
6.2 Changing Beneficiary.  Subject to Section 6.3, any Beneficiary designation,
other than the Participant’s spouse, may be changed by a Participant without the
consent of the previously named Beneficiary by the filing of a new Beneficiary
designation with the Committee.  The filing of a new properly completed
Beneficiary designation shall cancel all Beneficiary designations previously
filed.
 
6.3 Community Property.  If the Participant resides in a community property
state, any Beneficiary designation shall be valid or effective only as permitted
under applicable law.
 
6.4 No Beneficiary Designation. If any Participant fails to designate a
Beneficiary in the manner provided in Section 6.1 and subject to Section 6.3, if
the Beneficiary designation is void, or if the Beneficiary designated by a
deceased Participant dies before the Participant or before complete distribution
of the Participant’s Accounts, the Participant’s Beneficiary shall be the person
in the first of the following classes in which there is a survivor:
 
(a) The Participant’s spouse;
 
(b) The Participant’s children in equal shares, except that if any of the
children predeceases the Participant but leaves issue surviving, then such issue
shall take, by right of representation, the share the parent would have taken if
living; or
 
(c) The Participant’s estate.
 

 
 

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ARTICLE VII
 
ADMINISTRATION
 
7.1 Committee.  This Plan shall be administered by the Committee, in accordance
with the Committee Charter.  The Committee shall have the discretionary
authority to interpret and enforce all appropriate rules and regulations for the
administration of this Plan and decide or resolve any and all questions,
including interpretations of this Plan, as may arise.  Members of the Committee
may be Participants under this Plan.
 
7.2 Agents and Delegation.  The Committee may, from time to time, employ agents
and delegate to them such administrative duties as it sees fit, and may, from
time to time, consult with counsel who may be counsel to the Company. Any
reference in the Plan to the Committee shall be deemed to include a reference to
any delegate of the Committee.
 
7.3 Binding Effect of Decisions.  The decision or action of the Committee with
respect to any question arising out of or in connection with the administration,
interpretation and application of this Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in this Plan.
 
7.4 Indemnification of Committee.  The Company shall indemnify and hold harmless
the members of the Committee against any and all claims, loss, damage, expense
or liability arising from any action or failure to act with respect to this Plan
on account of such member’s service on the Committee, except in the case of
gross negligence or willful misconduct by such member or as expressly provided
by statute.
 
ARTICLE VIII
 
AMENDMENT AND TERMINATION OF PLAN
 
8.1 Amendment.  Subject to any limitations described in the Committee Charter,
the Committee may at any time amend this Plan by written instrument. No
amendment shall reduce the amount accrued in any Accounts as of the date such
notice of the amendment is given. After a Change of Control of the Company, this
Plan may not be amended without the consent of at least 75% of the Participants.
 
8.2 Right to Terminate Plan.  Subject to 8.2(c) the Compensation Committee may
partially or completely terminate this Plan if, in its judgment, the tax,
accounting, or other effects of the continuance of this Plan would not be in the
best interests of the Company.
 

 
 

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(a) Partial Termination.  The Compensation Committee may partially terminate
this Plan by instructing the Committee not to accept any additional Deferral
Commitments.  If such a partial termination occurs, this Plan shall continue to
operate and be effective with regard to Deferral Commitments entered into prior
to the effective date of such partial termination.
 
(b) Complete Termination.  The Compensation Committee may completely terminate
this Plan by choosing not to accept any additional Deferral Commitments, and by
terminating all ongoing Deferral Commitments, provided that such termination
complies with Code section 409A.  If such a complete termination occurs, this
Plan shall cease to operate and the Company shall pay out all Accounts in a lump
sum in accordance with Code section 409A.
 
(c) Termination After Change of Control. After a Change of Control, this Plan
may not be completely or partially terminated without the consent of at least
75% of the Participants.
 
 
ARTICLE IX
 
MISCELLANEOUS
 
9.1 Unfunded Plan.  A Participant shall have the status of a general unsecured
creditor of the Company with respect to his or her right to receive any payment
under the Plan.  The Plan shall constitute a mere promise by the Company to make
payments in the future of the benefits provided for herein. It is intended that
the arrangements reflected in this Plan be treated as unfunded for tax purposes.
 
9.2 Trust Fund. The Company may, but shall not be required to, establish a trust
to assist it in providing for any of its payment obligations under the Plan.  If
any such trust is established, all of the assets of the trust shall, at all
times prior to payment to Participants, remain subject to the claims of the
Company’s creditors; and no Participant or Beneficiary shall have any preferred
claim on, or any beneficial ownership interest in, any assets of the trust. Any
trust so established shall also contain such other terms and provisions as will
permit the trust to be treated as a “grantor trust” under the Internal Revenue
Code of 1986, of which the Company is the grantor.  If any such trust is
established, the Company shall be relieved of its obligation hereunder to pay
any amounts or shares of Common Stock to any Participant or Beneficiary, to the
extent that such amounts or shares are paid to the Participant or Beneficiary
from such trust.
 

 
 

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9.3 Nonalienability. The Committee may recognize the right of an alternate payee
named in a domestic relations order to receive all or a portion of a
Participant’s benefit under this Plan, provided that (a) the domestic relations
order would be a “qualified domestic relations order” within the meaning of Code
Section 414(p) if Code Section 414(p) were applicable to this Plan; and (b) the
domestic relations order does not purport to give the alternate payee any right
to assets of the Company or its affiliates. Except as set forth in the preceding
two sentences with respect to domestic relations orders, and except as required
under applicable federal, state, or local laws concerning the withholding of
tax, rights to benefits payable under this Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, attachment or
other legal process, or encumbrance of any kind.  Any attempt to alienate, sell,
transfer, assign, pledge, or otherwise encumber any such supplemental benefit,
whether currently or thereafter payable, shall be void.
 
9.4 Governing Law.  The provisions of this Plan shall be construed and
interpreted according to the laws of the state of California.
 
9.5 Validity.  In case any provision of this Plan shall be held 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 and invalid provision had never been inserted herein.
 
9.6 Notice.  Any notice required or permitted under this Plan shall be
sufficient if in writing and hand delivered or sent by registered or certified
mail.  Such notice shall be deemed as 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.  Mailed notice to the Committee shall be
directed to the Company’s address.  Mailed notice to a Participant or
Beneficiary shall be directed to the individual’s last known address in the
Company’s records.
 
9.7 Successors. The obligations of the Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company.
 
IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute this Plan as of the 12th day of March, 2009.
 

 
SANMINA-SCI CORPORATION
     
By: /s/ Jure Sola
     
Its: Chief Executive Officer