EXHIBIT 10.6

 

 

 

 

 

 

 

 

 

 

RF MICRODEVICES, INC.

DIRECTORCOMPENSATION PLAN 

 

 

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RF MICRODEVICES, INC.

DIRECTOR COMPENSATIONPLAN

# 1.                 Purpose.

The purpose of the RF Micro Devices, Inc.Director Compensation Plan (the "Plan") is to formally establishand document the terms of cash and equity compensation payable to non-employeemembers of the Board of Directors (the "Board" or the "Boardof Directors") of RF Micro Devices, Inc., a North Carolina corporation(the "Company").

# 2.                 Eligibility.  

Each member of the Board who is not anemployee of the Company or any of its subsidiaries (each, a "Director")is eligible to receive compensation for services as a director under the Plan.

# 3.                 Administration.  

The Plan shall be administered by the Boardunless the Board delegates all or part of its authority to administer the Planto the Compensation Committee (the "Committee") in a mannerthat is consistent with the Company's Corporate Governance Guidelines, theCompensation Committee charter and other applicable laws, rules and regulations. Unless the Board determines otherwise, the Committee shall be comprised solelyof two or more "non-employee directors," as such term isdefined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended(the "Exchange Act"), or as may otherwise be permitted underRule 16b-3.  For the purposes of the Plan, the term "Administrator"shall refer to the Board, and upon its delegation to the Committee of authorityto administer the Plan, the Committee.  The Administrator may also delegate toone or more officers or employees of the Company the authority to manage therecord-keeping and other routine administrative duties under the Plan. 

# 4.                 Payment of Annual Fees.  

The Board shall establish the annual retainerfees, committee chair fees and any additional cash fees to be paid to Directorsfor any Plan year ("Plan Year").  Such fees shall be referredto herein as the "Annual Fees."  A Plan Year shall coincidewith the Company's fiscal year unless the Board determines otherwise.  AnnualFees shall be paid in cash quarterly on, or as close as practicable to, thefirst business day following the end of the quarter during which the AnnualFees were earned.** ** Quarterly payments of Annual Fees shall be pro ratedif a Director's service on the Board terminates or commences during a fiscalquarter.  The Board may modify the Annual Fees, or any component of such fees,at any time and from time to time, as reflected in an amendment to the Plan, byBoard resolution or by other means.   In addition, the Board may at any timeand from time to time authorize the payment of additional fees for service onthe Board (for instance, due to service on a special committee or for otherextra service) outside of the Plan. 

# 5.                 Grant of Initial Equity Awards and Annual Equity Awards. 

 

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## (a)         Each Director may elect to receive equity awards ("EquityAwards") for shares of the Company's common stock (the "CommonStock") in the form of nonqualified stock options ("Options")and/or restricted stock units ("RSUs") as provided in the Planand subject to the terms of the Company's 2006 Directors Stock Option Plan, asamended and restated effective May 7, 2009 (the "2006 Plan"), withrespect to the grant of Options, and the Company's 2003 Stock Incentive Plan,as amended June 1, 2006 (the "2003 Plan") (the 2003 Plan,the 2006 Plan and any successor equity plan(s) being also referred to hereinindividually as a "Stock Plan"), with respect to the grant ofRSUs.   An initial Equity Award  ("Initial Equity Award") maybe in the form of an Initial Option and/or an Initial RSU (each as definedbelow).  An annual Equity Award ("Annual Equity Award") may bein the form of an Annual Option and/or an Annual RSU (each as defined below).   Sharesof Common Stock subject to Equity Awards shall only be issued under theapplicable Stock Plan, and no shares shall be issued under this Plan. 

## (b)        *Grant of Initial Options and Annual Options.*  Unlessa Director makes an election to receive Initial RSUs and/or Annual RSUs asprovided in Section 5(c) or Section 5(d) herein, each eligible Directorshall be granted Initial Options and/or Annual Options (each, as defined in the2006 Plan) under the 2006 Plan. Such Annual Options and Initial Options shallbe subject to, and governed by the terms of, the 2006 Plan and the individualstock option agreement related to each such Option grant.  If a Director makesa timely election to receive 50% of the total value (as defined below) of hisEquity Awards in the form of an Initial RSU and/or an Annual RSU as provided inthis Section 5 but also elects to receive 50% of the total value of his EquityAwards in the form of an Initial Option and/or an Annual Option, such InitialOption and/or Annual Option shall be subject to all of the other termsapplicable to Initial Options and/or Annual Options, as the case may be, underthe 2006 Plan, except that the number of shares subject to such Initial Optionand/or Annual Option shall be reduced as provided in Section 5(c) and/or Section5(d) herein.  If a Director makes a timely election to receive all of hisInitial Equity Award in the form of an Initial RSU, he will not also be grantedan Initial Option.  If a Director makes a timely election to receive all of hisAnnual Equity Award in the form of an Annual RSU, he will not also be grantedan Annual Option. 

## (c)         *Elections Related to Initial Equity Awards; Grant ofInitial RSUs*.

(i)                 Each Director shall receive an Initial Option for 50,000 shares ofCommon Stock as provided under the terms of the 2006 Plan unless he makes atimely election to receive an RSU grant (the "Initial RSU") inlieu of all or 50% of the total value of the Initial Option.  Such electionmust be in writing and must be made at least 10 calendar days (or within suchother time period established by the Administrator) prior to the date of grant (the "Grant Date") of the Initial Option (as determined underthe 2006 Plan), and such election shall (unless the Administrator determinesotherwise) be irrevocable by the Director.  If the Director elects to receivean Initial RSU, the number of shares subject to his Initial Option shall becorrespondingly reduced so that the aggregate of the value (as defined herein) ofthe Initial Option plus the value of the Initial RSU (as defined herein) doesnot exceed the total value of the Initial Option that would otherwise begranted under the 2006 Plan.  For the purposes herein, the "total value"of an Initial Option shall equal the number of shares subject to the InitialOption (that is, 50,000 shares) multiplied by the Black-Scholes value orsimilar methodology, as used for compensation expense valuation purposes in theCompany's financial statements (the "Black-Scholes value"), ofthe Option on (or as close in time as practicable to) the Grant Date.  The "value"of an Initial RSU shall be determined by multiplying the number of sharessubject to the Initial RSU by the Black-Scholes value of the RSU on (or asclose in time as practicable to) the Grant Date. The "value"of an Initial Option shall equal the number of shares subject to the InitialOption multiplied by the Black-Scholes value of the Option on (or as close intime as practicable to) the Grant Date.   If the Director elects to receive allof his Initial Equity Award in the form of an Initial RSU, the number of sharessubject to the Initial RSU will be equal to the total value of the InitialOption divided by the Black-Scholes value for the RSU on (or as close in timeas practicable to) the Grant Date.  If the Director elects to take 50% of thetotal value of his Initial Equity Award in the form of an Initial RSU and 50% ofthe total value in the form of an Initial Option, the number of shares subjectto the Initial Option will be reduced by 50% and the number of shares subjectto the Initial RSU will equal 50% of the total value of the Initial Optiondivided by the Black-Scholes value for the RSU on (or as close in time aspracticable to) the Grant Date. The value of a Director's Initial RSU plus thevalue of the Director's Initial Option shall be as close as practicable to, butmay not exceed, the total value of the Initial Option.  

 

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*Example:  Below is an example of the implied math for illustrationpurposes only; the same principles would apply with respect to annual equityaward calculations:*

Initial Option = 50,000 shares

Black-Scholes value of Initial RSU (FMV ofCommon Stock) = $1.25

Black-Scholes value of the Initial Option= $0.60 per share

Total Value of Initial Option = $30,000.00

 

 If Director elects 100% RSU:

Number of shares subject to Initial RSU =$30,000 (total value of Initial Option) divided by $1.25 (Black-Scholes valueof RSU on grant date)

Number of shares subject to Initial RSU =24,000 shares

 

 If Director elects 50% RSU /50%Option:

Number of shares subject to Initial Option= 50,000 multiplied by 50%

Number of shares subject to Initial Option= 25,000 shares

Number of shares subject to Initial RSU =$15,000 (50 % total value of Initial Option) divided by $1.25 (Black-Scholesvalue of RSU on grant date)

Number of shares subject to Initial RSU =12,000 shares

 

### (ii)               *Terms of Initial RSUs*:  An Initial RSU shall be grantedunder, and subject to the terms of, the 2003 Plan (or other applicable StockPlan) and related initial RSU award agreement.  Without limiting theforegoing, the following terms shall apply:

#### (A)             The Grant Date shall be the date the Initial Option would otherwise be grantedunder the 2006 Plan (or other applicable Stock Plan).

#### (B)             An Initial RSU shall vest with respect to one-third of the shares subject to theInitial RSU on the Grant Date and shall vest with respect to the remaining twothirds of the shares subject to the Initial RSU in two equal annual installmentson each of the first and second anniversaries of the Grant Date, so that theInitial RSU will be vested in full on the second anniversary of the Grant Date,provided that the Director remains in service on the Board on each such vestingdate.   Notwithstanding the foregoing, however, an Initial RSU shallvest in full upon a Change of Control (as defined under the 2003 Plan) of theCompany.  

#### (C)             Unless the Administrator determines otherwise, if the Director's service as amember of the Board is terminated for any reason and all or part of his InitialRSU has not vested, the Initial RSU, to the extent not then vested, shall beforfeited immediately upon such termination and the Director shall have nofurther rights with respect thereto. 

#### (D)             Each Initial RSU shall also be subject to such other terms and conditions as mayapply under the terms of the 2003 Plan (or other Stock Plan) and relatedindividual RSU agreement.****

 

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## (d)        *Elections Related to Annual Equity Grants; Grant of AnnualRSUs*.

### (i)                 Each Director shall receive an Annual Option for 25,000 shares (or, inthe case of the nonemployee chairman of the Board, 30,000 shares) of CommonStock as provided under the terms of the 2006 Plan unless he makes a timelyelection to receive an RSU grant (the "Annual RSU") in lieu ofall or 50% of the total value (as defined below) of the Annual Option.  Suchelection must be in writing and must be made at least 10 calendar days (orwithin such other time period established by the Administrator) prior to the GrantDate of the Annual Option (as determined under the 2006 Plan) and such electionshall (unless the Administrator determines otherwise) be irrevocable by theDirector.  If the Director elects to receive an Annual RSU, the number ofshares subject to his Annual Option shall be correspondingly reduced so thatthe aggregate of the value (as defined below) of the Annual Option plus thevalue (as defined below) of the Annual RSU does not exceed the total value ofthe Annual Option that would otherwise be granted under the 2006 Plan.  For thepurposes herein, the "total value" of an Annual Option shallequal the number of shares of Common Stock subject to the Annual Option (thatis, 25,000 shares, or in the case of the nonemployee chairman of the Board,30,000 shares) multiplied by the Black-Scholes value of the Option on (or asclose in time as practicable to) the Grant Date.  The "value"of an Annual RSU shall be determined by multiplying the number of sharessubject to the Annual RSU by the Black-Scholes value of the RSU on (or as closein time as practicable to) the Grant Date. The "value" of an AnnualOption shall equal the number of shares subject to the Annual Option multipliedby the Black-Scholes value on (or as close in time as practicable to) the GrantDate.  If the Director elects to receive all of his Annual Equity Award in theform of an Annual RSU, the number of shares subject to the Annual RSU will beequal to the total value of the Annual Option divided by the Black-Scholesvalue for the RSU on (or as close in time as practicable to) the Grant Date. If the Director elects to take 50% of the total value of his Annual EquityAward in the form of an Annual RSU and 50% of the total value in the form of anAnnual Option, the number of shares subject to the Annual Option will bereduced by 50% and the number of shares subject to the Annual RSU will equal50% of the total value of the Annual Option divided by the Black-Scholes valuefor the RSU on (or as close in time as practicable to) the Grant Date. Thevalue of a Director's Annual RSU plus the value of the Director's Annual Optionshall be as close as practicable to, but may not exceed, the total value of theAnnual Option. 

### (ii)               *Terms of Annual RSUs*:  An Annual RSU shall be grantedunder, and subject to the terms of, the 2003 Plan (or other applicable Stock Plan)and related annual RSU award agreement.  Without limiting the foregoing, thefollowing terms should apply:

#### (A)             The Grant Date shall be the date the Annual Option would otherwise begranted under the 2006 Plan (or other applicable Stock Plan);

#### (B)             An Annual RSU shall vest on the first anniversary of the Grant Date,subject to the continued service of the Director on the vesting date. Notwithstanding the foregoing, an Annual RSU shall vest in full in the event ofa Change of Control (as defined under the 2003 Plan) of the Company.  

#### (C)             Unless the Administrator determines otherwise, if the Director's serviceas a member of the Board is terminated for any reason and all or part of hisAnnual RSU has not vested, the Annual RSU, to the extent not then vested, shallbe forfeited immediately upon such termination and the Director shall have nofurther rights with respect thereto. 

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#### (D)             Each Annual RSU shall also be subject to such other terms and conditionsas may apply under the terms of the 2003 Plan (or other Stock Plan) and relatedindividual RSU agreement.****

# 6.                 Terms of Supplemental Equity Awards.  

## (a)         *General*:  In addition to the grant of InitialEquity Awards and Annual Equity Awards, the Board may from time to time approvethe grant of supplemental Equity Awards ("Supplemental Equity Awards")to one or more Directors.  Supplemental Equity Awards may be in the form ofsupplemental Options ("Supplemental Options") and/orsupplemental RSUs ("Supplemental RSUs").  The grant of aSupplemental Equity Award at any one time does not create a right to any futuregrant of such awards.  Supplemental Equity Awards may be designed to augmentthe equity compensation provided to Directors in the form of Initial Awards andAnnual Awards.  A Supplemental Equity Award may be based on a fixed dollar amount,a fixed number of shares of Common Stock,  a fixed Black-Scholes value or suchother valuation formula or factors as the Board determines in its discretion.Supplemental Options shall be granted under the 2006 Plan and Supplemental RSUsshall be granted under the 2003 Plan (or other applicable successor StockPlan). 

## (b)        *Form of Supplemental Equity Award*:  Unless theBoard determines otherwise, the form of a Supplemental Equity Award (SupplementalOption, Supplemental RSU or a combination) shall be based on the election made bythe Director with respect to the applicable Plan Year.

## (c)         *Terms of Supplemental Equity Awards*:  Unless theBoard determines otherwise, if the Board grants a Supplemental Equity Awardthat is intended to supplement an Initial Equity Award, the Supplemental EquityAward shall have the same Grant Date, vesting, option price and option period (inthe case of Supplemental Options) and other terms and conditions as thecorresponding Initial Option and/or Initial RSU, as the case may be. Similarly, unless the Board determines otherwise, if the Board grants aSupplemental Equity Award that is intended to supplement an Annual EquityAward, the Supplemental Equity Award shall have the same Grant Date, vesting,option price and option period (in the case of Supplemental Options) and otherterms and conditions as the corresponding Annual Option and/or Annual RSU, asthe case may be.  Notwithstanding the foregoing, the Board shall havediscretion to grant Supplemental Equity Awards that are not intended tosupplement Initial Equity Awards or Annual Equity Awards, in which case eachsuch Supplemental Equity Award shall be subject to such terms and conditions asmay be established by the Board, or as may apply under the Plan, the respectiveStock Plan and the applicable award agreement.

# 7.                 Plan Effective Date; Amendment and Termination. 

The Plan shall be effective as of May 7, 2009and shall continue until terminated by the Board.  The Plan and any award maybe amended, altered and/or terminated at any time by the Board; provided, thatapproval of an amendment to the Plan by the shareholders of the Company shallbe required to the extent, if any, that shareholder approval of such amendmentis required by applicable law, rule or regulation.  

# 8.                 No Right or Obligation of Continued Service.

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Neither the Plan, the grant of a benefit underthe Plan nor any other action related to the Plan shall confer upon anyDirector any right to continue in the service of the Company as a Director orto interfere in any way with the right of the Company to terminate theDirector's service at any time.  Except as may be otherwise provided in thePlan, the applicable Stock Plan or related award agreement (or as may beotherwise determined by the Administrator), all rights of a Director withrespect to benefits conferred under the Plan shall terminate immediately uponthe Director's termination of service as a Director.  

# 9.                 Restrictions on Benefits. 

The Company may impose such restrictions on EquityAwards, shares of Common Stock, cash or any other benefits contemplated underthe Plan as it may deem advisable, including without limitation restrictions thatmay apply under applicable laws, rules and regulations. Notwithstanding anyother Plan provision to the contrary, the Company shall not be obligated to provideany benefits or take any other action unless such action is in compliance withall applicable laws, rules and regulations.  

# 10.             Compliance with Code Section 409A.

Notwithstanding any other provision in thePlan to the contrary, if and to the extent that Code Section 409A is deemed to apply to the Plan or any benefit granted under the Plan, it is the general intention of the Company that the Plan and all such benefits shall, to the extent practicable, comply with, or be exempt from, Code Section 409A, and the Plan and any such benefit shall, to the extent practicable, be construed in accordance therewith.  Deferrals pursuant to a benefit otherwise exempt from Code Section 409A in a manner that would cause Code Section 409A to apply shall not be permitted unless such deferrals are in compliance with Code Section 409A.  Without limiting the effect of the foregoing, Annual Fees and shares of Common Stock subject to an RSU (and other awards, if and to the extent required under Code Section 409A) shall, upon vesting of the award, be distributed to the Director (or his beneficiary) no later than the later of (a) the 15th day of the third month following the end of the Director's first taxable year in which the amount is nolonger subject to a substantial risk of forfeiture, or (b) the 15thday of the third month following the end of the Company's first taxable year inwhich the amount is no longer subject to a substantial risk of forfeiture, orotherwise in accordance with Code Section 409A.  In addition, in the event that Code Section 409A requires that any special terms, provisions or conditions be included in the Plan or any benefit, then such terms, provisions and conditions shall, to the extent practicable, be deemed to be made a part of the Plan or benefit, as applicable. Further, in the event that the Plan or any benefit shall be deemed not tocomply with Code Section 409A, then neither the Company, the Administrator nor its or their designees or agents shall be liable to any Participant or other person for actions, decisions or determinations made in good faith.  

# 11.             General Provisions.

## (a)         *Unfunded Plan; No Effect on Other Plans*:  

### (i)                 The Plan shall be unfunded, and the Company shall not be required tocreate a trust or segregate any assets that may at any time be represented by benefitsconferred under the Plan.  The Plan shall not establish any fiduciaryrelationship between the Company and any Director or other person.  Neither a Directornor any other person shall, by reason of the Plan, acquire any right in ortitle to any assets, funds or property of the Company, including, withoutlimitation, any specific funds, assets or other property which the Company, in itsdiscretion, may set aside in anticipation of a liability under the Plan.  A Directorshall have only a contractual right to benefits, if any, payable under thePlan, unsecured by any assets of the Company.  Nothing contained in the Planshall constitute a guarantee that the assets of such entities shall besufficient to pay any benefits to any person.

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### (ii)               The amount of any compensation deemed to be received by a Directorpursuant to the Plan shall not constitute compensation with respect to whichany other benefits of such Director are determined, except as otherwisespecifically provided by the terms of such plan or as may be determined by theAdministrator.

### (iii)              The adoption of the Plan shall not affect any other stock incentive orother compensation plans in effect for the Company, nor shall the Plan precludethe Company from establishing any other forms of stock incentive or othercompensation for employees or service providers of the Company.

## (b)        *Applicable Law*:  The Plan shall be governed by andconstrued in accordance with the laws of the State of North Carolina, withoutregard to the conflict of laws provisions of any state, and in accordance withapplicable federal laws of the United States.

## (c)         *Beneficiary Designation*:  The Administrator maypermit a Director to designate in writing a person or persons as beneficiary,which beneficiary shall be entitled to receive settlement of benefits (if any)to which the Director is otherwise entitled in the event of death.  In theabsence of such designation by a Director, and in the event of the Director'sdeath, the estate of the Director shall be treated as beneficiary for purposesof the Plan, unless the Administrator determines otherwise. The Administratorshall have sole discretion to approve and interpret the form or forms of suchbeneficiary designation.  A beneficiary, legal guardian, legal representativeor other person claiming any rights pursuant to the Plan is subject to allterms and conditions of the Plan, and to any additional restrictions deemednecessary or appropriate by the Administrator.

## (d)        *Gender and Number*:  Except where otherwiseindicated by the context, words in any gender shall include any other gender,words in the singular shall include the plural and words in the plural shallinclude the singular.

## (e)         *Severability*:  If any provision of the Plan shallbe held illegal or invalid for any reason, such illegality or invalidity shallnot affect the remaining parts of the Plan, and the Plan shall be construed andenforced as if the illegal or invalid provision had not been included.

## (f)          *Rules of Construction*:  Headings are given to the sectionsof this Plan solely as a convenience to facilitate reference.  The referenceto any statute, regulation or other provision of law shall be construed torefer to any amendment to or successor of such provision of law.

## (g)        *Successors and Assigns*:  The Plan shall be bindingupon the Company, its successors and assigns, and Directors, their executors,administrators and permitted transferees and beneficiaries.

## (h)        *Right of Offset*:  Notwithstanding any otherprovision of the Plan or any award conferred under the Plan, the Company may (subjectto any Code Section 409A considerations) reduce the amount of any benefitotherwise distributable to or on behalf of a Director by the amount of anyobligation of the Director to the Company that is or becomes due and payable.

## (i)          *Nontransferability*:  Benefits provided under thePlan shall not be transferable (including by sale, assignment, pledge orhypothecation) other than by will or the laws of intestate succession.  Thedesignation of a beneficiary in accordance with the Plan does not constitute atransfer. 

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IN WITNESSWHEREOF, this RF Micro Devices, Inc. Director Compensation Plan, is, by theauthority of the Board of Directors of the Company, executed in behalf of the Company,effective as of the 7th day of May, 2009.

** **

**RF MICRO DEVICES, INC.**

By:       /s/ Robert A. Bruggeworth

Robert A. Bruggeworth

Chief Executive Officer

ATTEST:

/s/ William A. Priddy, Jr.

Secretary/Asst. Secretary

[Corporate Seal]

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