Document:

iivi-ex1018_329.htm

 

Exhibit 10.18

THE EXECUTIVE NONQUALIFIED EXCESS PLAN 

PLAN DOCUMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DD 2326-6

 

 

THE EXECUTIVE NONQUALIFIED EXCESS PLAN

Section 1.       Purpose:

By execution of the Adoption Agreement, the Employer has adopted the Plan set forth herein, and in the Adoption Agreement, to provide a means by which certain management Employees or Independent Contractors of the Employer may elect to defer receipt of current Compensation from the Employer in order to provide retirement and other benefits on behalf of such Employees or Independent Contractors of the Employer, as selected in the Adoption Agreement. The Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code (the “Code”). The Plan is also intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(l) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and independent contractors. Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

Section 2.       Definitions:

As used in the Plan, including this Section 2, references to one gender shall include the other, unless otherwise indicated by the context:

2.1       “Active Participant” means, with respect to any day or date, a Participant who is in Service on such day or date; provided, that a Participant shall cease to be an Active Participant (i) immediately upon a determination by the Committee that the Participant has ceased to be an Employee or Independent Contractor, or (ii) at the end of the Plan Year that the Committee determines the Participant no longer meets the eligibility requirements of the Plan.

2.2       “Adoption Agreement” means the written agreement pursuant to which the Employer adopts the Plan. The Adoption Agreement is a part of the Plan as applied to the Employer.

2.3       “Beneficiary” means the person, persons, entity or entities designated or determined pursuant to the provisions of Section 13 of the Plan.

2.4       “Board” means the Board of Directors of the Company, if the Company is a corporation. If the Company is not a corporation, “Board” shall mean the Company.

2.5       “Change in Control Event” means an event described in Section 409A(a)(2)(A)(v) of the Code (or any successor provision thereto) and the regulations thereunder.

2.6       “Committee” means the persons or entity designated in the Adoption Agreement to administer the Plan. If the Committee designated in the Adoption Agreement is unable to serve, the Employer shall satisfy the duties of the Committee provided for in Section 9.

2.7       “Company” means the company designated in the Adoption Agreement as such.

2.8       “Compensation” shall have the meaning designated in the Adoption Agreement.

2.9       “Crediting Date” means the date designated in the Adoption Agreement for crediting the amount of any Participant Deferral Credits or Employer Credits to the Deferred Compensation Account of a Participant.

2.10     “Deferred Compensation Account” means the account maintained with respect to each Participant under the Plan. The Deferred Compensation Account shall be credited with Participant Deferral Credits and Employer Credits, credited or debited for deemed investment gains or losses, and adjusted for payments in accordance with the rules and elections in effect under Section 8. The Deferred Compensation Account of a Participant shall include any In-Service or Education Account of the Participant, if applicable.

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2.11     “Disabled” means Disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees of the Employer.

2.12     “Education Account” is an In-Service Account which will be used by the Participant for educational purposes.

2.13     “Effective Date” shall be the date designated in the Adoption Agreement.

2.14     “Employee” means an individual in the Service of the Employer if the relationship between the individual and the Employer is the legal relationship of employer and employee. An individual shall cease to be an Employee upon the Employee’s Separation from Service.

2.15     “Employer” means the Company, as identified in the Adoption Agreement, and any Participating Employer which adopts this Plan. An Employer may be a corporation, a limited liability company, a partnership or sole proprietorship.

2.16     “Employer Credits” means the amounts credited to the Participant’s Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.2.

2.17     “Grandfathered Amounts” means, if applicable, the amounts that were deferred under the Plan and were earned and vested within the meaning of Section 409A of the Code and regulations thereunder as of December 31, 2004. Grandfathered Amounts shall be subject to the terms designated in the Adoption Agreement.

2.18     “Independent Contractor” means an individual in the Service of the Employer if the relationship between the individual and the Employer is not the legal relationship of employer and employee. An individual shall cease to be an Independent Contractor upon the termination of the Independent Contractor’s Service. An Independent Contractor shall include a director of the Employer who is not an Employee.

2.19     “In-Service Account” means a separate account to be kept for each Participant that has elected to take in-service distributions as described in Section 5.4. The In-Service Account shall be adjusted in the same manner and at the same time as the Deferred Compensation Account under Section 8 and in accordance with the rules and elections in effect under Section 8.

2.20     “Normal Retirement Age” of a Participant means the age designated in the Adoption Agreement.

2.21     “Participant” means with respect to any Plan Year an Employee or Independent Contractor who has been designated by the Committee as a Participant and who has entered the Plan or who has a Deferred Compensation Account under the Plan; provided that if the Participant is an Employee, the individual must be a highly compensated or management employee of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

2.22     “Participant Deferral Credits” means the amounts credited to the Participant’s Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.1.

2.23     “Participating Employer” means any trade or business (whether or not incorporated) which adopts this Plan with the consent of the Company identified in the Adoption Agreement.

2.24     “Participation Agreement” means a written agreement entered into between a Participant and the Employer pursuant to the provisions of Section 4.1

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2.25     “Performance-Based Compensation” means compensation where the amount of, or entitlement to, the compensation is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least twelve months. Organizational or individual performance criteria are considered preestablished if established in writing within 90 days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-based compensation may include payments based upon subjective performance criteria as provided in regulations and administrative guidance promulgated under Section 409A of the Code.

2.26     “Plan” means The Executive Nonqualified Excess Plan, as herein set out and as set out in the Adoption Agreement, or as duly amended. The name of the Plan as applied to the Employer shall be designated in the Adoption Agreement.

2.27     “Plan-Approved Domestic Relations Order” shall mean a judgment, decree, or order (including the approval of a settlement agreement) which is:

2.27.1  Issued pursuant to a State’s domestic relations law;

2.27.2  Relates to the provision of child support, alimony payments or marital property rights to a Spouse, former Spouse, child or other dependent of the Participant;

2.27.3  Creates or recognizes the right of a Spouse, former Spouse, child or other dependent of the Participant to receive all or a portion of the Participant’s benefits under the Plan;

2.27.4  Requires payment to such person of their interest in the Participant’s benefits in a lump sum payment at a specific time; and

2.27.5  Meets such other requirements established by the Committee.

2.28     “Plan Year” means the twelve-month period ending on the last day of the month designated in the Adoption Agreement; provided that the initial Plan Year may have fewer than twelve months.

2.29     “Qualifying Distribution Event” means (i) the Separation from Service of the Participant, (ii) the date the Participant becomes Disabled, (iii) the death of the Participant, (iv) the time specified by the Participant for an In-Service or Education Distribution, (v) a Change in Control Event, or (vi) an Unforeseeable Emergency, each to the extent provided in Section 5.

2.30     “Seniority Date” shall have the meaning designated in the Adoption Agreement.

2.31    “Separation from Service” or “Separates from Service” means a “separation from service” within the meaning of Section 409A of the Code.

2.32     “Service” means employment by the Employer as an Employee. For purposes of the Plan, the employment relationship is treated as continuing intact while the Employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment is provided either by statute or contract. If the Participant is an Independent Contractor, “Service” shall mean the period during which the contractual relationship exists between the Employer and the Participant. The contractual relationship is not terminated if the Participant anticipates a renewal of the contract or becomes an Employee.

2.33     “Service Bonus” means any bonus paid to a Participant by the Employer which is not Performance-Based Compensation.

2.34     “Specified Employee” means an Employee who meets the requirements for key employee treatment under Section 416(i)(l)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Section 416(i)(5) of the Code) at any time during the twelve month period ending on December 

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31 of each year (the “identification date”). Unless binding corporate action is taken to establish different rules for determining Specified Employees for all plans of the Company and its controlled group members that are subject to Section 409A of the Code, the foregoing rules and the other default rules under the regulations of Section 409A of the Code shall apply. If the person is a key employee as of any identification date, the person is treated as a Specified Employee for the twelve-month period beginning on the first day of the fourth month following the identification date.

2.35     “Spouse” or “Surviving Spouse” means, except as otherwise provided in the Plan, a person who is the legally married spouse or surviving spouse of a Participant.

2.36     “Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning of Section 409A of the Code.

2.37     “Years of Service” means each Plan Year of Service completed by the Participant. For vesting purposes, Years of Service shall be calculated from the date designated in the Adoption Agreement and Service shall be based on service with the Company and all Participating Employers.

Section 3.       Participation:

The Committee in its discretion shall designate each Employee or Independent Contractor who is eligible to participate in the Plan. A Participant who Separates from Service with the Employer and who later returns to Service will not be an Active Participant under the Plan except upon satisfaction of such terms and conditions as the Committee shall establish upon the Participant’s return to Service, whether or not the Participant shall have a balance remaining in the Deferred Compensation Account under the Plan on the date of the return to Service.

Section 4.       Credits to Deferred Compensation Account:

4.1       Participant Deferral Credits. To the extent provided in the Adoption Agreement, each Active Participant may elect, by entering into a Participation Agreement with the Employer, to defer the receipt of Compensation from the Employer by a dollar amount or percentage specified in the Participation Agreement. The amount of Compensation the Participant elects to defer, the Participant Deferral Credit, shall be credited by the Employer to the Deferred Compensation Account maintained for the Participant pursuant to Section 8. The following special provisions shall apply with respect to the Participant Deferral Credits of a Participant:

4.1.1    The Employer shall credit to the Participant’s Deferred Compensation Account on each Crediting Date an amount equal to the total Participant Deferral Credit for the period ending on such Crediting Date.

4.1.2    An election pursuant to this Section 4.1 shall be made by the Participant by executing and delivering a Participation Agreement to the Committee. Except as otherwise provided in this Section 4.1, the Participation Agreement shall become effective with respect to such Participant as of the first day of January following the date such Participation Agreement is received by the Committee. A Participant’s election may be changed at any time prior to the last permissible date for making the election as permitted in this Section 4.1, and shall thereafter be irrevocable. The election of a Participant shall continue in effect for subsequent years until modified by the Participant as permitted in this Section 4.1.

4.1.3    A Participant may execute and deliver a Participation Agreement to the Committee within 30 days after the date the Participant first becomes eligible to participate in the Plan to be effective as of the first payroll period next following the date the Participation Agreement is fully executed by the Participant. Whether a Participant is treated as newly eligible for participation under this Section shall be determined in accordance with Section 409A of the Code and the regulations thereunder, including (i) rules that treat all elective deferral account balance plans as one plan, and (ii) rules that treat a previously eligible Employee as newly eligible if his benefits had been previously distributed or if he has been ineligible for 24 months. For Compensation that is earned based upon a specified performance period (for example, an annual bonus), where a deferral election is made under this Section but after the beginning of the performance period, the election will only apply to the portion of the Compensation equal to the total amount of the Compensation for the service period multiplied by the ratio of the 

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number of days remaining in the performance period after the election over the total number of days in the performance period.

4.1.4    A Participant may unilaterally modify a Participation Agreement (either to terminate, increase or decrease the portion of his future Compensation which is subject to deferral within the percentage limits set forth in Section 4.1 of the Adoption Agreement) by providing a written modification of the Participation Agreement to the Committee. The modification shall become effective as of the first day of January following the date such written modification is received by the Committee.

4.1.5    If the Participant performed services continuously from the later of the beginning of the performance period or the date upon which the performance criteria are established through the date upon which the Participant makes an initial deferral election, a Participation Agreement relating to the deferral of Performance-Based Compensation may be executed and delivered to the Committee no later than the date which is 6 months prior to the end of the performance period, provided that in no event may an election to defer Performance-Based Compensation be made after such Compensation has become readily ascertainable.

4.1.6    If the Employer has a fiscal year other than the calendar year, Compensation relating to Service in the fiscal year of the Employer (such as a bonus based on the fiscal year of the Employer), of which no amount is paid or payable during the fiscal year, may be deferred at the Participant’s election if the election to defer is made not later than the close of the Employer’s fiscal year next preceding the first fiscal year in which the Participant performs any services for which such Compensation is  payable.

4.1.7    Compensation payable after the last day of the Participant’s taxable year solely for services provided during the final payroll period containing the last day of the Participant’s taxable year (i.e., December 31) is treated for purposes of this Section 4.1 as Compensation for services performed in the subsequent taxable year.

4.1.8    The Committee may from time to time establish policies or rules consistent with the requirements of Section 409A of the Code to govern the manner in which Participant Deferral Credits may be made.

4.1.9    If a Participant becomes Disabled all currently effective deferral elections for such Participant shall be cancelled. At the time the participant is no longer Disabled, subsequent elections to defer future compensation will be permitted under this Section 4.

4.1.10  If a Participant applies for and receives a distribution on account of an Unforeseeable Emergency, all currently effective deferral elections for such Participant shall be cancelled. Subsequent elections to defer future compensation will be permitted under this Section 4.

4.1.11  If a Participant receives a hardship distribution under Section 1.401(k)-1(d)(3) of the Code or any other similar provision, all currently effective deferral elections shall be cancelled. Subsequent elections to defer future compensation under this Section 4 will not be effective until the later of the beginning of the next calendar year or six months after the date of the hardship distribution. 

4.2       Employer Credits. If designated by the Employer in the Adoption Agreement, the Employer shall cause the Committee to credit to the Deferred 10 Compensation Account of each Active Participant an Employer Credit as determined in accordance with the Adoption Agreement. A Participant must make distribution elections with respect to any Employer Credits credited to his Deferred Compensation Account by the deadline that would apply under Section 4.1 for distribution elections with respect to Participant Deferral Credits credited at the same time, on a Participation Agreement that is timely executed and delivered to the Committee pursuant to Section 4.1.

4.3       Deferred Compensation Account. All Participant Deferral Credits and Employer Credits shall be credited to the Deferred Compensation Account of the Participant as provided in Section 8.

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Section 5.       Qualifying Distribution Events:

5.1       Separation from Service. If the Participant Separates from Service with the Employer, the vested balance in the Deferred Compensation Account shall be paid to the Participant by the Employer as provided in Section 7. Notwithstanding the foregoing, no distribution shall be made earlier than six months after the date of Separation from Service (or, if earlier, the date of death) with respect to a Participant who as of the date of Separation from Service is a Specified Employee of a corporation the stock in which is traded on an established securities market or otherwise. Any payments to which such Specified Employee would be entitled during the first six months following the date of Separation from Service shall be accumulated and paid on the first day of the seventh month following the date of Separation from Service, and shall be adjusted for deemed investment gain and loss incurred during the six month period.

5.2       Disability. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan when a Participant becomes Disabled, and the Participant becomes Disabled while in Service, the vested balance in the Deferred Compensation Account shall be paid to the Participant by the Employer as provided in Section 7.

5.3       Death. If the Participant dies while in Service, the Employer shall pay a benefit to the Participant’s Beneficiary in the amount designated in the Adoption Agreement. Payment of such benefit shall be made by the Employer as provided in Section 7. 

5.4       In-Service or Education Distributions. If the Employer designates in the Adoption Agreement that in-service or education distributions are permitted under the Plan, a Participant may designate in the Participation Agreement to have a specified amount credited to the Participant’s In-Service or Education Account for in-service or education distributions at the date specified by the Participant. In no event may an in-service or education distribution of an amount be made before the date that is two years after the first day of the year in which any deferral election to such In-Service or Education Account became effective. Notwithstanding the foregoing, if a Participant incurs a Qualifying Distribution Event prior to the date on which the entire balance in the In-Service or Education Account has been distributed, then the balance in the In-Service or Education Account on the date of the Qualifying Distribution Event shall be paid as provided under Section 7.1 for payments on such Qualifying Distribution Event. 

5.5       Change in Control Event. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan upon the occurrence of a Change in Control Event, the Participant may designate in the Participation Agreement to have the vested balance in the Deferred Compensation Account paid to the Participant upon a Change in Control Event by the Employer as provided in Section 7.

5.6       Unforeseeable Emergency. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan upon the occurrence of an Unforeseeable Emergency event, a distribution from the Deferred Compensation Account may be made to a Participant in the event of an Unforeseeable Emergency, subject to the following provisions:

5.6.1    A Participant may, at any time prior to his Separation from Service for any reason, make application to the Committee to receive a distribution in a lump sum of all or a portion of the vested balance in the Deferred Compensation Account (determined as of the date the distribution, if any, is made under this Section 5.6) because of an Unforeseeable Emergency. A distribution because of an Unforeseeable Emergency shall not exceed the amount required to satisfy the Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution, after taking into account the extent to which the Unforeseeable Emergency may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by stopping current deferrals under the Plan pursuant to Section 4.1.10.

5.6.2    The Participant’s request for a distribution on account of Unforeseeable Emergency must be made in writing to the Committee. The request must specify the nature of the financial hardship, the total amount requested to be distributed from the Deferred Compensation Account, and the total amount of the actual expense incurred or to be incurred on account of the Unforeseeable Emergency.

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5.6.3    If a distribution under this Section 5.6 is approved by the Committee, such distribution will be made as soon as practicable following the date it is approved. The processing of the request shall be completed as soon as practicable from the date on which the Committee receives the properly completed written request for a distribution on account of an Unforeseeable Emergency. If a Participant’s Separation from Service occurs after a request is approved in accordance with this Section 5.6.3, but prior to distribution of the full amount approved, the approval of the request shall be automatically null and void and the benefits which the Participant is entitled to receive under the Plan shall be distributed in accordance with the applicable distribution provisions of the Plan.

5.6.4    The Committee may from time to time adopt additional policies or rules consistent with the requirements of Section 409A of the Code to govern the manner in which such distributions may be made so that the Plan may be conveniently administered.

Section 6.       Vesting:

A Participant shall be fully vested in the portion of his Deferred Compensation Account attributable to Participant Deferral Credits, and all income, gains and losses attributable thereto. A Participant shall become fully vested in the portion of his Deferred Compensation Account attributable to Employer Credits, and income, gains and losses attributable thereto, in accordance with the vesting schedule and provisions designated by the Employer in the Adoption Agreement. If a Participant’s Deferred Compensation Account is not fully vested upon Separation from Service, the portion of the Deferred Compensation Account that is not fully vested shall thereupon be forfeited.

Section 7.       Distribution Rules:

7.1       Payment Options. The Employer shall designate in the Adoption Agreement the payment options which may be elected by the Participant (lump sum, annual installments, or a combination of both). Different payment options may be made available for each Qualifying Distribution Event, and different payment options may be available for different types of Separations from Service, all as designated in the Adoption Agreement. The Participant shall elect in the Participation Agreement the method under which the vested balance in the Deferred Compensation Account will be distributed from among the designated payment options. The Participant may at such time elect a different method of payment for each Qualifying Distribution Event as specified in the Adoption Agreement. If the Participant is permitted by the Employer in the Adoption Agreement to elect different payment options and does not make a valid election, the vested balance in the Deferred Compensation Account will be distributed as a lump sum.

Notwithstanding the foregoing, if certain Qualifying Distribution Events occur prior to the date on which the vested balance of a Participant’s Deferred Compensation Account is completely paid pursuant to this Section 7.1 following the occurrence of certain initial Qualifying Distribution Events, the following rules apply:

7.1.1    If the initial Qualifying Distribution Event is a Separation from Service or Disability, and the Participant subsequently dies, the remaining unpaid vested balance of a Participant’s Deferred Compensation Account shall be paid as a lump sum.

7.1.2    If the initial Qualifying Distribution Event is a Change in Control Event, and any subsequent Qualifying Distribution Event occurs (except an In-Service or Education Distribution described in Section 2.29(iv)), the remaining unpaid vested balance of a Participant’s Deferred Compensation Account shall be paid as provided under Section 7.1 for payments on such subsequent Qualifying Distribution Event.

7.2       Timing of Payments. Payment shall be made in the manner elected by the Participant and shall commence as soon as practicable after (but no later than 60 days after) the distribution date elected for the Qualifying Distribution Event. In the event the Participant fails to make a valid election of the payment method, the distribution will be made in a single lump sum payment as soon as practicable after (but no later than 60 days after) the Qualifying Distribution Event. A payment may be further delayed to the extent permitted in accordance with regulations and guidance under Section 409A of the Code. 

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7.3       Installment Payments. If the Participant elects to receive installment payments upon a Qualifying Distribution Event, the payment of each installment shall be made on the anniversary of the date of the first installment payment, and the amount of the installment shall be adjusted on such anniversary for credits or debits to the Participant’s account pursuant to Section 8 of the Plan. Such adjustment shall be made by dividing the balance in the Deferred Compensation Account on such date by the number of installments remaining to be paid hereunder; provided that the last installment due under the Plan shall be the entire amount credited to the Participant’s account on the date of payment. 

7.4       De Minimis Amounts. Notwithstanding any payment election made by the Participant, if the Employer designates a pre-determined de minimis amount in the Adoption Agreement, the vested balance in the Deferred Compensation Account of the Participant will be distributed in a single lump sum payment if at the time of a permitted Qualifying Distribution Event the vested balance does not exceed such pre-determined de minimis amount; provided, however, that such distribution will be made only where the Qualifying Distribution Event is a Separation from Service, death, Disability (if applicable) or Change in Control Event (if applicable). Such payment shall be made on or before the later of (i) December 31 of the calendar year in which the Qualifying Distribution Event occurs, or (ii) the date that is 2-1/2 months after the Qualifying Distribution Event occurs. In addition, the Employer may distribute a Participant’s vested balance at any time if the balance does not exceed the limit in Section 402(g)(1)(B) of the Code and results in the termination of the Participant’s entire interest in the Plan as provided under Section 409A of the Code.

7.5       Subsequent Elections. With the consent of the Committee, a Participant may delay or change the method of payment of the Deferred Compensation Account subject to the following requirements:

7.5.1    The new election may not take effect until at least 12 months after the date on which the new election is made.

7.5.2    If the new election relates to a payment for a Qualifying Distribution Event other than the death of the Participant, the Participant becoming Disabled, or an Unforeseeable Emergency, the new election must provide for the deferral of the payment for a period of at least five years from the date such payment would otherwise have been made. 

7.5.3    If the new election relates to a payment from the In-Service or Education Account, the new election must be made at least 12 months prior to the date of the first scheduled payment from such account. For purposes of this Section 7.5 and Section 7.6, a payment is each separately identified amount to which the Participant is entitled under the Plan; provided, that entitlement to a series of installment payments is treated as the entitlement to a single payment.

7.6       Acceleration Prohibited. The acceleration of the time or schedule of any payment due under the Plan is prohibited except as expressly provided in regulations and administrative guidance promulgated under Section 409A of the Code (such as accelerations for domestic relations orders and employment taxes). It is not an acceleration of the time or schedule of payment if the Employer waives or accelerates the vesting requirements applicable to a benefit under the Plan.

Section 8.       Accounts; Deemed Investment; Adjustments to Account:

8.1       Accounts. The Committee shall establish a book reserve account, entitled the “Deferred Compensation Account,” on behalf of each Participant. The Committee shall also establish an In-Service or Education Account as a part of the Deferred Compensation Account of each Participant, if applicable. The amount credited to the Deferred Compensation Account shall be adjusted pursuant to the provisions of Section 8.3. 

8.2       Deemed Investments. The Deferred Compensation Account of a Participant shall be credited with an investment return determined as if the account were invested in one or more investment funds made available by the Committee. The Participant shall elect the investment funds in which his Deferred Compensation Account shall be deemed to be invested. Such election shall be made in the manner prescribed by the Committee and shall take effect upon the entry of the Participant into the Plan. The investment election of the Participant shall remain in effect until 

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a new election is made by the Participant. In the event the Participant fails for any reason to make an effective election of the investment return to be credited to his account, the investment return shall be determined by the Committee.

8.3       Adjustments to Deferred Compensation Account. With respect to each Participant who has a Deferred Compensation Account under the Plan, the amount credited to such account shall be adjusted by the following debits and credits, at the times and in the order stated:

8.3.1    The Deferred Compensation Account shall be debited each business day with the total amount of any payments made from such account since the last preceding business day to him or for his benefit. Unless otherwise specified by the Employer, each deemed investment fund will be debited pro-rata based on the value of the investment funds as of the end of the preceding business day.

8.3.2    The Deferred Compensation Account shall be credited on each Crediting Date with the total amount of any Participant Deferral Credits and Employer Credits to such account since the last preceding Crediting Date.

8.3.3    The Deferred Compensation Account shall be credited or debited on each day securities are traded on a national stock exchange with the amount of deemed investment gain or loss resulting from the performance of the deemed investment funds elected by the Participant in accordance with Section 8.2. The amount of such deemed investment gain or loss shall be determined by the Committee and such determination shall be final and conclusive upon all concerned.

Section 9.       Administration by Committee:

9.1       Membership of Committee. If the Committee consists of individuals appointed by the Board, they will serve at the pleasure of the Board. Any member of the Committee may resign, and his successor, if any, shall be appointed by the Board. 

9.2       General Administration. The Committee shall be responsible for the operation and administration of the Plan and for carrying out its provisions. The Committee shall have the full authority and discretion to make, amend, 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 in connection with this Plan. Any such action taken by the Committee shall be final and conclusive on any party. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Employer with respect to the Plan. The Committee may, from time to time, employ agents and delegate to such agents, including Employees of the Employer, such administrative or other duties as it sees fit.

9.3       Indemnification. To the extent not covered by insurance, the Employer shall indemnify the Committee, each Employee, officer, director, and agent of the Employer, and all persons formerly serving in such capacities, against any and all liabilities or expenses, including all legal fees relating thereto, arising in connection with the exercise of their duties and responsibilities with respect to the Plan, provided however that the Employer shall not indemnify any person for liabilities or expenses due to that person’s own gross negligence or willful misconduct.

Section 10.     Contractual Liability, Trust:

10.1     Contractual Liability. Unless otherwise elected in the Adoption Agreement, the Company shall be obligated to make all payments hereunder. This obligation shall constitute a contractual liability of the Company to the Participants, and such payments shall be made from the general funds of the Company. The Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and the Participants shall not have any interest in any particular assets of the Company by reason of its obligations hereunder. To the extent that any person acquires a right to receive payment from the Company, such right shall be no greater than the right of an unsecured creditor of the Company.

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10.2     Trust. The Employer may establish a trust to assist it in meeting its obligations under the Plan. Any such trust shall conform to the requirements of a grantor trust under Revenue Procedures 92-64 and 92-65 and at all times during the continuance of the trust the principal and income of the trust shall be subject to claims of general creditors of the Employer under federal and state law. The establishment of such a trust would not be intended to cause Participants to realize current income on amounts contributed thereto, and the trust would be so interpreted and administered.

Section 11.     Allocation of Responsibilities:

The persons responsible for the Plan and the duties and responsibilities allocated to each are as follows:

	
11.1
	
Board.

	
(i)
	
To amend the Plan;

	
(ii)
	
To appoint and remove members of the Committee; and

	
(iii)
	
To terminate the Plan as permitted in Section 14.

	
11.2
	
Committee.

	
(i)
	
To designate Participants;

	
(ii)
	
To interpret the provisions of the Plan and to determine the rights of the Participants under the Plan, except to the extent otherwise provided in Section 16 relating to claims procedure;

	
(iii)
	
To administer the Plan in accordance with its terms, except to the extent powers to administer the Plan are specifically delegated to another person or persons as provided in the Plan;

	
(iv)
	
To account for the amount credited to the Deferred Compensation Account of a Participant;

	
(v)
	
To direct the Employer in the payment of benefits;

	
(vi)
	
To file such reports as may be required with the United States Department of Labor, the Internal Revenue Service and any other government agency to which reports may be required to be submitted from time to time; and

	
(vii)
	
To administer the claims procedure to the extent provided in Section 16.

Section 12.     Benefits Not Assignable; Facility of Payments:

12.1     Benefits Not Assignable. No portion of any benefit credited or paid under the Plan with respect to any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void, nor shall any portion of such benefit be in any manner payable to any assignee, receiver or any one trustee, or be liable for his debts, contracts, liabilities, engagements or torts.

12.2     Plan-Approved Domestic Relations Orders. The Committee shall establish procedures for determining whether an order directed to the Plan is a Plan-Approved Domestic Relations Order. If the Committee determines that an order is a Plan-Approved Domestic Relations Order, the Committee shall cause the payment of amounts pursuant to or segregate a separate account as provided by (and to prevent any payment or act which might be inconsistent with) the Plan-Approved Domestic Relations Order.

12.3     Payments to Minors and Others. If any individual entitled to receive a payment under the Plan shall be physically, mentally or legally incapable of receiving or acknowledging receipt of such payment, the Committee, 

DD2320-5

 

upon the receipt of satisfactory evidence of his incapacity and satisfactory evidence that another person or institution is maintaining him and that no guardian or committee has been appointed for him, may cause any payment otherwise payable to him to be made to such person or institution so maintaining him. Payment to such person or institution shall be in full satisfaction of all claims by or through the Participant to the extent of the amount thereof.

Section 13.     Beneficiary:

The Participant’s beneficiary shall be the person, persons, entity or entities designated by the Participant on the beneficiary designation form provided by and filed with the Committee or its designee. If the Participant does not designate a beneficiary, the beneficiary shall be his Surviving Spouse. If the Participant does not designate a beneficiary and has no Surviving Spouse, the beneficiary shall be the Participant’s estate. The designation of a beneficiary may be changed or revoked only by filing a new beneficiary designation form with the Committee or its designee. If a beneficiary (the “primary beneficiary”) is receiving or is entitled to receive payments under the Plan and dies before receiving all of the payments due him, the balance to which he is entitled shall be paid to the contingent beneficiary, if any, named in the Participant’s current beneficiary designation form. If there is no contingent beneficiary, the balance shall be paid to the estate of the primary beneficiary. Any beneficiary may disclaim all or any part of any benefit to which such beneficiary shall be entitled hereunder by filing a written disclaimer with the Committee before payment of such benefit is to be made. Such a disclaimer shall be made in a form satisfactory to the Committee and shall be irrevocable when filed. Any benefit disclaimed shall be payable from the Plan in the same manner as if the beneficiary who filed the disclaimer had predeceased the Participant.

Section 14.     Amendment and Termination of Plan:

The Company may amend any provision of the Plan or terminate the Plan at any time; provided, that in no event shall such amendment or termination reduce the balance in any Participant’s Deferred Compensation Account as of the date of such amendment or termination, nor shall any such amendment affect the terms of the Plan relating to the payment of such Deferred Compensation Account. Notwithstanding the foregoing, the following special provisions shall apply:

14.1     Termination in the Discretion of the Employer. Except as otherwise provided in Sections 14.2, the Company in its discretion may terminate the Plan and distribute benefits to Participants subject to the following requirements and any others specified under Section 409A of the Code:

14.1.1  All arrangements sponsored by the Employer that would be aggregated with the Plan under Section 1.409A-l(c) of the Treasury Regulations are terminated.

14.1.2  No payments other than payments that would be payable under the terms of the Plan if the termination had not occurred are made within 12 months of the termination date.

14.1.3  All benefits under the Plan are paid within 24 months of the termination date.

14.1.4  The Employer does not adopt a new arrangement that would be aggregated with the Plan under Section 1.409A-1(c) of the Treasury Regulations providing for the deferral of compensation at any time within 3 years following the date of termination of the Plan.

14.1.5  The termination does not occur proximate to a downturn in the financial health of the Employer.

14.2     Termination Upon Change in Control Event. If the Company terminates the Plan within thirty days preceding or twelve months following a Change in Control Event, the Deferred Compensation Account of each Participant shall become fully vested and payable to the Participant in a lump sum within twelve months following the date of termination, subject to the requirements of Section 409A of the Code.

DD2320-5

 

Section 15.     Communication to Participants:

The Employer shall make a copy of the Plan available for inspection by Participants and their beneficiaries during reasonable hours at the principal office of the Employer.

Section 16.     Claims Procedure:

The following claims procedure shall apply with respect to the Plan:

16.1     Filing of a Claim for Benefits. If a Participant or Beneficiary (the “claimant”) believes that he is entitled to benefits under the Plan which are not being paid to him or which are not being accrued for his benefit, he shall file a written claim therefore with the Committee.

16.2     Notification to Claimant of Decision. Within 90 days after receipt of a claim by the Committee (or within 180 days if special circumstances require an extension of time), the Committee shall notify the claimant of the decision with regard to the claim.  In the event of such special circumstances requiring an extension of time, there shall be furnished to the claimant prior to expiration of the initial 90-day period written notice of the extension, which notice shall set forth the special circumstances and the date by which the decision shall be furnished. If such claim shall be wholly or partially denied, notice thereof shall be in writing and worded in a manner calculated to be understood by the claimant, and shall set forth: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the procedure for review of the denial and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA following an adverse benefit determination on review. Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee shall notify the claimant of the decision within 45 days (which may be extended for an additional 30 days if required by special circumstances).

16.3     Procedure for Review. Within 60 days following receipt by the claimant of notice denying his claim, in whole or in part, or, if such notice shall not be given, within 60 days following the latest date on which such notice could have been timely given, the claimant may appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully and fairly review the decision denying the claim. Prior to the decision of the Committee, the claimant shall be given an opportunity to review pertinent documents and to submit issues and comments in writing.

16.4     Decision on Review. The decision on review of a claim denied in whole or in part by the Committee shall be made in the following manner:

16.4.1  Within 60 days following receipt by the Committee of the request for review (or within 120 days if special circumstances require an extension of time), the Committee shall notify the claimant in writing of its decision with regard to the claim. In the event of such special circumstances requiring an extension of time, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee shall notify the claimant of the decision within 45 days (which may be extended for an additional 45 days if required by special circumstances).

16.4.2  With respect to a claim that is denied in whole or in part, the decision on review shall set forth specific reasons for the decision, shall be written in a manner calculated to be understood by the claimant, and shall set forth:

	
(i)
	
the specific reason or reasons for the adverse determination;

	
(ii)
	
specific reference to pertinent Plan provisions on which the adverse determination is based;

DD2320-5

 

	
(iii)
	
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and 

	
(iv)
	
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring an action under ERISA section 502(a).

16.4.3  The decision of the Committee shall be final and conclusive.

16.5     Action by Authorized Representative of Claimant. All actions set forth in this Section 16 to be taken by the claimant may likewise be taken by a representative of the claimant duly authorized by him to act in his behalf on such matters. The Committee may require such evidence as either may reasonably deem necessary or advisable of the authority to act of any such representative.

Section 17.     Miscellaneous Provisions:

17.1     Set off. The Employer may at any time offset a Participant’s Deferral Compensation Account by an amount up to $5,000 to collect the amount of any loan, cash advance, extension of other credit or other obligation of the Participant to the Employer that is then due and payable in accordance with the requirements of Section 409A of the Code.

17.2     Notices. Each Participant who is not in Service and each Beneficiary shall be responsible for furnishing the Committee or its designee with his current address for the mailing of notices and benefit payments. Any notice required or permitted to be given to such Participant or Beneficiary shall be deemed given if directed to such address and mailed by regular United States mail, first class, postage prepaid. If any check mailed to such address is returned as undeliverable to the addressee, mailing of checks will be suspended until the Participant or Beneficiary furnishes the proper address. This provision shall not be construed as requiring the mailing of any notice or notification otherwise permitted to be given by posting or by other publication.

17.3     Lost Distributees. A benefit shall be deemed forfeited if the Committee is unable to locate the Participant or Beneficiary to whom payment is due by the fifth anniversary of the date payment is to be made or commence; provided, that the deemed investment rate of return pursuant to Section 8.2 shall cease to be applied to the Participant’s account following the first anniversary of such date; provided further, however, that such benefit shall be reinstated if a valid claim is made by or on behalf of the Participant or Beneficiary for all or part of the forfeited benefit.

17.4     Reliance on Data. The Employer and the Committee shall have the right to rely on any data provided by the Participant or by any Beneficiary. Representations of such data shall be binding upon any party seeking to claim a benefit through a Participant, and the Employer and the Committee shall have no obligation to inquire into the accuracy of any representation made at any time by a Participant or Beneficiary.

17.5     Headings. The headings and subheadings of the Plan have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof.

17.6     Continuation of Employment. The establishment of the Plan shall not be construed as conferring any legal or other rights upon any Employee or any persons for continuation of employment, nor shall it interfere with the right of the Employer to discharge any Employee or to deal with him without regard to the effect thereof under the Plan.

17.7     Merger or Consolidation; Assumption of Plan. No Employer shall consolidate or merge into or with another corporation or entity, or transfer all or substantially all of its assets to another corporation, partnership, trust or other entity (a “Successor Entity”) unless such Successor Entity shall assume the rights, obligations and liabilities of the Employer under the Plan and upon such assumption, the Successor Entity shall become obligated to 

DD2320-5

 

perform the terms and conditions of the Plan. Nothing herein shall prohibit the assumption of the obligations and liabilities of the Employer under the Plan by any Successor Entity.

17.8     Construction. The Employer shall designate in the Adoption Agreement the state according to whose laws the provisions of the Plan shall be construed and enforced, except to the extent that such laws are superseded by ERISA and the applicable requirements of the Code.

17.9     Taxes. The Employer or other payor may withhold a benefit payment under the Plan or a Participant’s wages, or the Employer may reduce a Participant’s Account balance, in order to meet any federal, state, or local or employment tax withholding obligations with respect to Plan benefits, as permitted under Section 409A of the Code. The Employer or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

Section 18.     Transition Rules:

This Section 18 does not apply to plans newly established on or after January 1, 2009.

18.1     2005 Election Termination. Notwithstanding Section 4.1.4, at any time during 2005, a Participant may terminate a Participation Agreement, or modify a Participation Agreement to reduce the amount of Compensation subject to the deferral election, so long as the Compensation subject to the terminated or modified Participation Agreement is includible in the income of the Participant in 2005 or, if later, in the taxable year in which the amounts are earned and vested.

18.2     2005 Deferral Election. The requirements of Section 4.1.2 relating to the timing of the Participation Agreement shall not apply to any deferral elections made on or before March 15, 2005, provided that (a) the amounts to which the deferral election relate have not been paid or become payable at the time of the election, (b) the Plan was in existence on or before December 31, 2004, (c) the election to defer compensation is made in accordance with the terms of the Plan as in effect on December 31, 2005 (other than a requirement to make a deferral election after March 15, 2005), and (d) the Plan is otherwise operated in accordance with the requirements of Section 409A of the Code.

18.3     2005 Termination of Participation; Distribution. Notwithstanding anything in this Plan to the contrary, at any time during 2005, a Participant may terminate his or her participation in the Plan and receive a distribution of his Deferred Compensation Account balance on account of that termination, so long as the full amount of such distribution is includible in the Participant’s income in 2005 or, if later, in the taxable year of the Participant in which the amount is earned and vested.

18.4     Payment Elections. Notwithstanding the provisions of Sections 7.1 or 7.5 of the Plan, a Participant may elect on or before December 31, 2008, the time or form of payment of amounts subject to Section 409A of the Code provided that such election applies only to amounts that would not otherwise be payable in the year of the election and does not cause an amount to paid in the year of the election that would not otherwise be payable in such year.

DD2320-5

 

NOTE: Execution of this Adoption Agreement creates a legal liability of the Employer with significant tax consequences to the Employer and Participants. Principal Life Insurance Company disclaims all liability for the legal and tax consequences which result from the elections made by the Employer in this Adoption Agreement.

 

	
	
Principal Life Insurance Company, Raleigh, NC 27612

	
A member of the Principal Financial Group®

THE EXECUTIVE NONQUALIFIED "EXCESS" PLAN

ADOPTION AGREEMENT

THIS AGREEMENT is the adoption by II-VI Incorporated (the "Company") of the Executive Nonqualified Excess Plan ("Plan").

W I T N E S S E T H:

WHEREAS, the Company desires to adopt the Plan as an unfunded, nonqualified deferred compensation plan; and

WHEREAS, the provisions of the Plan are intended to comply with the requirements of Section 409A of the Code and the regulations thereunder and shall apply to amounts subject to section 409A; and

WHEREAS, the Company has been advised by Principal Life Insurance Company to obtain legal and tax advice from its professional advisors before adopting the Plan,

NOW, THEREFORE, the Company hereby adopts the Plan in accordance with the terms and conditions set forth in this Adoption Agreement:

ARTICLE I

Terms used in this Adoption Agreement shall have the same meaning as in the Plan, unless some other meaning is expressly herein set forth. The Employer hereby represents and warrants that the Plan has been adopted by the Employer upon proper authorization and the Employer hereby elects to adopt the Plan for the benefit of its Participants as referred to in the Plan. By the execution of this Adoption Agreement, the Employer hereby agrees to be bound by the terms of the Plan.

ARTICLE II

The Employer hereby makes the following designations or elections for the purpose of the Plan:

 

2.6Committee: The duties of the Committee set forth in the Plan shall be satisfied by:

 

	
 
	
XX
	
(a)
	
Company

	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
The administrative committee appointed by the Board to serve at the pleasure of the Board.

	
 
	
 
	
 
	
 

	
 
	
__
	
(c)
	
Board.

	
 
	
 
	
 
	
 

	
 
	
__
	
(d)
	
Other (specify):
	
 
	
.

 

 

DD2320-5

 

2.8Compensation: The "Compensation" of a Participant shall mean all of a Participant's:

 

	
 
	
XX
	
(a)
	
Base salary.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(b)
	
Service Bonus.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(c)
	
Performance-Based Compensation earned in a period of 12 months or more.

	
 
	
 
	
 
	
 

	
 
	
__
	
(d)
	
Commissions.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(e)
	
Compensation received as an Independent Contractor reportable on Form 1099.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(f)
	
Other: Performance Shares and Restricted Stock.

 

2.9Crediting Date: The Deferred Compensation Account of a Participant shall be credited as follows:

 

	
Participant Deferral Credits at the time designated below:

	
 
	
 
	
 
	
 

	
 
	
__
	
(a)
	
The last business day of each Plan Year.

	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
The last business day of each calendar quarter during the Plan Year.

	
 
	
 
	
 
	
 

	
 
	
__
	
(c)
	
The last business day of each month during the Plan Year.

	
 
	
 
	
 
	
 

	
 
	
__
	
(d)
	
The last business day of each payroll period during the Plan Year.

	
 
	
 
	
 
	
 

	
 
	
__
	
(e)
	
Each pay day as reported by the Employer.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(f)
	
On any business day as specified by the Employer.

	
 
	
 
	
 
	
 

	
 
	
__
	
(g)
	
Other:
	
 
	
.

 

	
Employer Credits at the time designated below:

	
 
	
 
	
 
	
 

	
 
	
XX
	
(a)
	
On any business day as specified by the Employer.

	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
 

 

DD 2326-6

1

 

2.13Effective Date:

 

	
 
	
__
	
(a)
	
This is a newly-established Plan, and the Effective Date of the Plan is

	
 
	
 
	
 
	
 
	
 
	
.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(b)
	
This is an amendment and restatement of a plan named II-VI Incorporated Deferred Compensation Plan with an effective date of June 30, 1996, amended on October 1, 2002, and previously amended and restated on November 1, 2010. The Effective Date of this amended and restated Plan is November 7, 2012. This is amendment number 6.

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(i)
	
All amounts in Deferred Compensation Accounts shall be subject to the provisions of this amended and restated Plan.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
XX
	
(ii)
	
Any Grandfathered Amounts shall be subject to the Plan rules in effect on October 3, 2004.

 

2.20Normal Retirement Age: The Normal Retirement Age of a Participant shall be:

 

	
 
	
__
	
(a)
	
Age __.

	
 
	
 
	
 
	
 

	
 
	
XX
	
(b)
	
The later of age 65 or the 5th anniversary of the participation commencement date. The participation commencement date is the first day of the first Plan Year in which the Participant commenced participation in the Plan.

	
 
	
 
	
 
	
 

	
 
	
__
	
(c)
	
Other:
	
 
	
.

 

2.23Participating Employer(s): As of the Effective Date, the following Participating Employer(s) are parties to the Plan:

 

	
Name of Employer
	
 
	
Address
	
 
	
Telephone No.
	
 
	
EIN

	
II-VI, Incorporated
	
 
	
375 Saxonburg Blvd.
	
 
	
(724) 352-4455
	
 
	
25-1214948

	
 
	
 
	
Saxonburg, PA 16056
	
 
	
 
	
 
	
 

 

2.26Plan: The name of the Plan is II-VI Incorporated Deferred Compensation Plan.

 

2.28Plan Year: The Plan Year shall end each year on the last day of the month of June.

 

2.30Seniority Date: The date on which a Participant has:

 

	
 
	
__
	
(a)
	
Attained age __.

	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
Completed __ Years of Service from First Date of Service.

	
 
	
 
	
 
	
 

	
 
	
__
	
(c)
	
Attained age __ and completed __ Years of Service from First Date of Service.

	
 
	
 
	
 
	
 

	
 
	
__
	
(d)
	
Attained an age as elected by the Participant.

	
 
	
 
	
 
	
 

	
 
	
__
	
(e)
	
Not applicable – distribution elections for Separation from Service are not based on Seniority Date

 

DD 2326-6

2

 

4.1Participant Deferral Credits: Subject to the limitations in Section 4.1 of the Plan, a Participant may elect to have his Compensation (as selected in Section 2.8 of this Adoption Agreement) deferred within the annual limits below by the following percentage or amount as designated in writing to the Committee:

 

	
 
	
XX
	
(a)
	
Base salary:

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
minimum deferral: 
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
maximum deferral:
	
$
	
 
	
 or
	
100
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(b)
	
Service Bonus:

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
minimum deferral:
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
maximum deferral:
	
$
	
 
	
 or
	
100
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(c)
	
Performance-Based Compensation:

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
minimum deferral:
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
maximum deferral:
	
$
	
 
	
 or
	
100
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(d)
	
Commissions:

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
minimum deferral:
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
maximum deferral:
	
$
	
 
	
 or
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(e)
	
Form 1099 Compensation:

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
minimum deferral:
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
maximum deferral:
	
$
	
 
	
 or
	
100
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(f)
	
Other: Performance Shares and Restricted Stock

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
minimum deferral:
	
 
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
maximum deferral:
	
$
	
 
	
 or
	
100
	
%

	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(g)
	
Participant deferrals not allowed.

 

DD 2326-6

3

 

4.2Employer Credits: Employer Credits will be made in the following manner:

 

	
 
	
XX
	
(a)
	
Employer Discretionary Credits: The Employer may make discretionary credits to the Deferred Compensation Account of each Active Participant in an amount determined as follows:

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
XX
	
(i)
	
An amount determined each Plan Year by the Employer.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(ii)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
Other Employer Credits: The Employer may make other credits to the Deferred Compensation Account of each Active Participant in an amount determined as follows:

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(i)
	
An amount determined each Plan Year by the Employer.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(ii)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(c)
	
Employer Credits not allowed.

 

5.2Disability of a Participant:

 

	
 
	
XX
	
(a)
	
A Participant's becoming Disabled shall be a Qualifying Distribution Event and the Deferred Compensation Account shall be paid by the Employer as provided in Section 7.1.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
A Participant becoming Disabled shall not be a Qualifying Distribution Event.

 

5.3Death of a Participant: If the Participant dies while in Service, the Employer shall pay a benefit to the Beneficiary in an amount equal to the vested balance in the Deferred Compensation Account of the Participant determined as of the date payments to the Beneficiary commence, plus:

 

	
 
	
__
	
(a)
	
An amount to be determined by the Committee.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(c)
	
No additional benefits.

 

DD 2326-6

4

 

5.4In-Service or Education Distributions: In-Service and Education Accounts are permitted under the Plan:

 

	
 
	
XX
	
(a)
	
In-Service Accounts are allowed with respect to:
	
 

	
 
	
 
	
 
	
XX
	
Participant Deferral Credits only.

	
 
	
 
	
 
	
__
	
Employer Credits only.

	
 
	
 
	
 
	
__
	
Participant Deferral and Employer Credits.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
In-service distributions may be made in the following manner:

	
 
	
 
	
 
	
XX
	
Single lump sum payment.

	
 
	
 
	
 
	
XX
	
Annual installments over a term certain not to exceed  10  years.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Education Accounts are allowed with respect to:

	
 
	
 
	
 
	
XX
	
Participant Deferral Credits only.

	
 
	
 
	
 
	
__
	
Employer Credits only.

	
 
	
 
	
 
	
__
	
Participant Deferral and Employer Credits.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Education Accounts distributions may be made in the following manner:

	
 
	
 
	
 
	
XX
	
Single lump sum payment.

	
 
	
 
	
 
	
XX
	
Annual installments over a term certain not to exceed  5  years.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
If applicable, amounts not vested at the time payments due under this Section cease will be:

	
 
	
 
	
 
	
__
	
Forfeited

	
 
	
 
	
 
	
__
	
Distributed at Separation from Service if vested at that time

	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
No In-Service or Education Distributions permitted.

 

5.5Change in Control Event:

 

	
 
	
XX
	
(a)
	
Participants may elect upon initial enrollment to have accounts distributed upon a Change in Control Event.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
A Change in Control shall not be a Qualifying Distribution Event.

 

5.6Unforeseeable Emergency Event:

 

	
 
	
XX
	
(a)
	
Participants may apply to have accounts distributed upon an Unforeseeable Emergency event.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(b)
	
An Unforeseeable Emergency shall not be a Qualifying Distribution Event

DD 2326-6

5

 

6.Vesting: An Active Participant shall be fully vested in the Employer Credits made to the Deferred Compensation Account upon the first to occur of the following events:

 

	
 
	
XX
	
(a)
	
Normal Retirement Age.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(b)
	
Death.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(c)
	
Disability.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(d)
	
Change in Control Event

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
__
	
(e)
	
Other:
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
XX
	
(f)
	
Satisfaction of the vesting requirement as specified below:

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
XX
	
Employer Discretionary Credits:

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
XX
	
(i)
	
Immediate 100% vesting.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(ii)
	
100% vesting after __ Years of Service.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(iii)
	
100% vesting at age __.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(iv)
	
Number of Years of Service
	
 
	
Vested Percentage

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
Less than
	
1
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
1
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
2
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
3
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
4
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
5
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
6
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
7
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
8
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
9
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
10 or more
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
For this purpose, Years of Service of a Participant shall be calculated from the date designated below:

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
XX
	
(1)
	
First Day of Service.
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(2)
	
Effective Date of Plan Participation.

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(3)
	
Each Crediting Date. Under this option (3), each Employer Credit shall vest based on the Years of Service of a Participant from the Crediting Date on which each Employer Discretionary Credit is made to his or her Deferred Compensation Account.

 

DD 2326-6

6

 

	
 
	
 
	
__
	
Other Employer Credits:

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(i)
	
Immediate 100% vesting.

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(ii)
	
100% vesting after __ Years of Service.

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(iii)
	
100% vesting at age __.

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(iv)
	
Number of Years of Service
	
Vested Percentage

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
Less than
	
1
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
1
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
2
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
3
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
4
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
5
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
6
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
7
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
8
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
9
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
10 or more
	
 
	
__%

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
For this purpose, Years of Service of a Participant shall be calculated from the date designated below:

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(1)
	
First Day of Service.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(2)
	
Effective Date of Plan Participation.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(3)
	
Each Crediting Date. Under this option (3), each Employer Credit shall vest based on the Years of Service of a Participant from the Crediting Date on which each Employer Discretionary Credit is made to his or her Deferred Compensation Account.

 

7.1Payment Options: Any benefit payable under the Plan upon a permitted Qualifying Distribution Event may be made to the Participant or his Beneficiary (as applicable) in any of the following payment forms, as selected by the Participant in the Participation Agreement:

 

	
 
	
(a)
	
 
	
Separation from Service prior to Seniority Date, or Separation from Service if Seniority Date is Not Applicable

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
XX
	
(i)
	
A lump sum.

	
 
	
 
	
 
	
XX
	
(ii)
	
Annual installments over a term certain as elected by the Participant not to exceed 10 years.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
__
	
(iii)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

DD 2326-6

7

 

	
 
	
(b)
	
 
	
Separation from Service on or After Seniority Date, If Applicable

	
 
	
 
	
 
	
XX
	
(i)
	
A lump sum.

	
 
	
 
	
 
	
XX
	
(ii)
	
Annual installments over a term certain as elected by the Participant not to exceed 10 years.

	
 
	
 
	
 
	
__
	
(iii)
	
Other:
	
 
	
.

	
 
	
(c)
	
 
	
Separation from Service Upon a Change in Control Event

	
 
	
 
	
 
	
XX
	
(i)
	
A lump sum.

	
 
	
 
	
 
	
XX
	
(ii)
	
Annual installments over a term certain as elected by the Participant not to exceed 10 years.

	
 
	
 
	
 
	
__
	
(iii)
	
Other:
	
 
	
.

	
 
	
(d)
	
 
	
Death
	
 

	
 
	
 
	
 
	
XX
	
(i)
	
A lump sum.

	
 
	
 
	
 
	
XX
	
(ii)
	
Annual installments over a term certain as elected by the Participant not to exceed 10 years.

	
 
	
 
	
 
	
__
	
(iii)
	
Other:
	
 
	
.

	
 
	
(e)
	
 
	
Disability
	
 

	
 
	
 
	
 
	
XX
	
(i)
	
A lump sum.

	
 
	
 
	
 
	
XX
	
(ii)
	
Annual installments over a term certain as elected by the Participant not to exceed 10 years.

	
 
	
 
	
 
	
__
	
(iii)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
__
	
(iv)
	
Not applicable.

	
 
	
 
	
 
	
If applicable, amounts not vested at the time payments due under this Section cease will be:

	
 
	
 
	
 
	
__
	
Forfeited

	
 
	
 
	
 
	
__
	
Distributed at Separation from Service if vested at that time

	
 
	
(f)
	
 
	
Change in Control Event
	
 

	
 
	
 
	
 
	
XX
	
(i)
	
A lump sum.

	
 
	
 
	
 
	
__
	
(ii)
	
Annual installments over a term certain as elected by the Participant not to exceed _____ years.

	
 
	
 
	
 
	
__
	
(iii)
	
Other:
	
 
	
.

	
 
	
 
	
 
	
__
	
(iv)
	
Not applicable.

	
 
	
 
	
 
	
 
	
 
	
 

DD 2326-6

8

 

	
 
	
 
	
 
	
If applicable, amounts not vested at the time payments due under this Section cease will be:

	
 
	
 
	
 
	
__
	
Forfeited
	
 

	
 
	
 
	
 
	
__
	
Distributed at Separation from Service if vested at that time

 

7.4De Minimis Amounts.

 

				
	
 
	
XX
	
(a)
	
Notwithstanding any payment election made by the Participant, the vested balance in the Deferred Compensation Account of the Participant will be distributed in a single lump sum payment at the time designated under the Plan if at the time of a permitted Qualifying Distribution Event that is either a Separation from Service, death, Disability (if applicable) or Change in Control Event (if applicable) the vested balance does not exceed $ 10,000. In addition, the Employer may distribute a Participant's vested balance at any time if the balance does not exceed the limit in Section 402(g)(1)(B) of the Code and results in the termination of the Participant's entire interest in the Plan

	
 
	
__
	
(b)
	
There shall be no pre-determined de minimis amount under the Plan; however, the Employer may distribute a Participant's vested balance at any time if the balance does not exceed the limit in Section 402(g)(1)(B) of the Code and results in the termination of the Participant's entire interest in the Plan.

 

10.1Contractual Liability: Liability for payments under the Plan shall be the responsibility of the:

 

				
	
 
	
XX
	
(a)
	
Company.

	
 
	
__
	
(b)
	
Employer or Participating Employer who employed the Participant when amounts were deferred.

14.Amendment and Termination of Plan: Notwithstanding any provision in this Adoption Agreement or the Plan to the contrary, Section 2.30 and 8.2 of the Plan shall be amended to read as provided in attached Exhibit A.

 

					
	
 
	
 
	
 
	
__
	
There are no amendments to the Plan.

	
 
	
 
	
 
	
 
	
 

 

DD 2326-6

9

 

17.9Construction: The provisions of the Plan shall be construed and enforced according to the laws of the State of Pennsylvania, except to the extent that such laws are superseded by ERISA and the applicable provisions of the Code. 

 

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year stated below. 

 

	
II-VI, Incorporated

	
Name of Employer

	
By:
	
/s/ David G. Wagner

	
Authorized Person

	
Date:
	
7/29/2014

 

The Plan is adopted by the following Participating Employers: 

 

	
II-VI, Incorporated

	
Name of Employer

	
By:
	
/s/ David G. Wagner

	
Authorized Person

	
Date:
	
7/29/2014

 

DD 2326-6

10

 

EXHIBIT A

2.30Seniority Date: The date on which a Participant has: 

The later of age 65 or the 5th anniversary of the participant commencement date.  The participant commencement date is the first day of the first Plan Year in which the Participant commenced  participation in the Plan. 

Section 8.2 Deemed Investments shall be amended by adding the following language after the current final sentence. 

The Committee is making available to the Participant an investment fund that is entirely invested in Employer stock (the “Stock Investment Fund”). Amounts credited to that account may be adjusted as described in Section 8.3. 

However, notwithstanding any language in the plan to the contrary: 

	
A)
	
The participant will receive any Qualifying Event distribution from the Stock Investment Fund account in shares of Employer Stock with partial shares redeemed in cash calculated as of the appropriate valuation date. 

	
B)
	
The Participant will receive any Qualifying Event distribution from the Stock Investment Fund account in shares of Employer Stock with partial shares redeemed in cash calculated as of the appropriate valuation date. 

This amendment is effective Jun 1, 2007 and applies to all current and future balances of the Stock Investment Fund as well as credits to the fund and distributions there from. 

 

 

DD 2326-6

11iivi-ex1036_343.htm

 

Exhibit 10.36

 

II-VI INCORPORATED

PERFORMANCE SHARE AWARD AGREEMENT

THIS PERFORMANCE SHARE AWARD AGREEMENT (this “Agreement”) is dated as of the Grant Date, as specified in the applicable Summary of Award (as defined below), by and between II-VI Incorporated, a Pennsylvania corporation (“II-VI”), and the Recipient, as specified in the applicable Summary of Award, who is a director, employee or consultant of II-VI or one of its subsidiaries (the “Recipient”). For purposes of this Agreement, the term “Company” shall include II-VI and/or any Subsidiary of II-VI that the Recipient is employed by or may become employed by or provide services to during the Recipient’s employment by II-VI or any such Subsidiary. 

Reference is made to the Summary of Award (the “Summary of Award”) issued to the Recipient with respect to the applicable Award, which may be found on Morgan Stanley StockPlan Connect system www.stockplanconnect.com (or any successor system selected by II-VI) (the “StockPlan Connect System”). Reference further is made to the Summary Plan Description relating to the Plan (as defined below) which also may be found on the StockPlan Connect System.

All capitalized terms used herein, to the extent not defined herein, shall have the meanings set forth in the II-VI 2012 Omnibus Incentive Plan (as amended and/or restated from time to time, the “Plan”), a copy of which can be found on the StockPlan Connect System, and/or the applicable Summary of Award.  Terms of the Plan and the Summary of Award are incorporated herein by reference.  This Agreement shall constitute an Award Agreement as that term is defined in the Plan and is intended to be a Qualified Performance-Based Award within the meaning of Section 2.28 of the Plan.   

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Recipient and II-VI agree as follows: 

1.      Performance Share Award.  II-VI hereby grants to Recipient an Award of the number of Performance Shares specified in the Summary of Award, to be earned based upon achievement of the Performance Objectives in accordance with Section 2 below (this “Award”).  For the purposes of this Award:  (1) “Performance Period” shall mean the period from                     through and including                    ; (2) “Target Award” shall mean the Target Award set forth in the Summary of Award; and (3) “Maximum Award” means the maximum number of Performance Shares that may be earned under this Agreement as set forth in the Summary of Award, which number represents 200% of the Target Award. 

 

Page 1 of 9

 

2.      Determination of Shares Earned.  Subject to Sections 5 and 6 below, Performance Shares shall be earned in accordance with the following schedule: 

 

		
	
 
	
Performance Shares Earned as a

Percentage of Target Award (3)

 

	
If II-VI Consolidated Cash Flow from Operations is less than 79.99% of the Cash Flow Target
	
0%

	
If II-VI Consolidated Cash Flow from Operations is greater than or equal to 80.00% and less than 100.0% of the Cash Flow Target
	
50.0% to 99.99%(1)

	
If II-VI Consolidated Cash Flow from Operations equals 100.0% of the Cash Flow Target
	
100.0%

	
If II-VI Consolidated Cash Flow from Operations is greater than 100.0% and less than 140.0% of the Cash Flow Target
	
100.01% to 199.99%(2)

	
If II-VI Consolidated Cash Flow from Operations is greater than or equal to 140.0% of the Cash Flow Target
	
200.0% (Maximum Award)

 

 

	
(1)
	
In the event that the II-VI Consolidated Cash Flow from Operations is greater than or equal to 80.0% and less than 100.0% of the Cash Flow Target, the Performance Shares earned as a percentage of the Target Award will be a percentage determined on a linear basis between 50.0% and 99.99% by adding 50.0% to the product of (A) 50.0% and (B)(i) the II-VI Consolidated Cash Flow from Operations as a percentage of the Cash Flow Target less 80.0% divided by (ii) 20.0% (which product cannot exceed 49.99%). 

	
(2)
	
In the event that the II-VI Consolidated Cash Flow from Operations is greater than 100.0% and less than 140.0% of the Cash Flow Target, the Performance Shares earned as a percentage of the Target Award will be a percentage determined on a linear basis between 100.01% and 199.99% by adding 100.0% to the product of (A) 100.0% and (B)(i) the II-VI Consolidated Cash Flow from Operations as a percentage of the Cash Flow Target less 100.0% divided by (ii) 40.0% (which product cannot exceed 99.99%). 

	
(3)
	
As further detailed in Attachment A, performance against target will be determined as follows: 

(A) II-VI Consolidated Cash Flow from Operations during the Performance Period shall be compared to the Cash Flow Target; and 

(B) II-VI Consolidated Cash Flow from Operations during each of the four six-month periods comprising the Performance Period will be measured against the applicable target set forth in Attachment A for such six-month period, and the results obtained for each of the six-month periods shall be aggregated and measured against the Cash Flow Target. 

The calculation above (clause (A) or clause (B)) yielding the higher percentage of the Cash Flow Target shall determine the number of Performance Shares earned.

For the purposes of this Award (i) “II-VI Consolidated Cash Flow from Operations” shall mean the consolidated “Net cash flow provided by operating activities” of II-VI for the Performance Period, determined in accordance with generally accepted accounting principles in the United States, consistently applied, (ii) all targets are expressed in US dollars and performance for II-VI businesses that do not use US dollars as their reporting currency will be translated into US dollars via II-VI’s financial consolidation system at the appropriate exchange rates and (iii) “Cash Flow Target” shall mean $                                   . 

Only whole Performance Shares shall be earned in accordance with this Section 2. By way of example and not limitation, earning 66.67% of a Target Award of 100 Performance Shares would result in delivery of 66 Performance Shares. 

 

Page 2 of 9

 

3.      Delivery of Shares. Unless Recipient has elected to defer receipt of the Performance Shares in accordance with Section 4, and except as otherwise provided in Section 2, II-VI shall cause a stock certificate (or equivalent electronic book entry) representing shares of II-VI Common Stock, no par value (“II-VI Common Stock”) equal to the number of Performance Shares earned as provided in Section 2 to be issued or credited, as applicable, to Recipient no later than the seventy-fifth (75th) calendar day following the end of the Performance Period.

4.      Deferral. A Recipient that is subject to US Federal income tax may elect in writing on or before the date that is twelve (12) months prior to the end of the Performance Period, or such earlier date as may be designated in writing by II-VI (the “Latest Deferral Date”) in order to satisfy the deferral election requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), to defer the issuance of all or part of the Performance Shares earned. Any such election shall: (1) specify the date of issuance for the earned Performance Shares, which shall not be earlier than the fifth (5th) anniversary of the original payment date or such other minimum deferral period as may be designated by II-VI in order to satisfy the deferral election requirements of Section 409A of the Code; and (2) comply with all other applicable deferral election requirements of Section 409A of the Code. 

5.      Limitation of Rights; Dividend Equivalents. Recipient shall not have any rights of ownership of the shares of II-VI’s Common Stock underlying the Performance Shares before the issuance of such shares, including the right to vote such shares.  Recipient, however, shall be entitled to receive, following the completion of the Performance Period but in no event later than March 15th of the calendar year following the completion of the Performance Period, a cash payment equal to the cash dividends that would have been paid during the Performance Period on the applicable number of shares underlying the Performance Shares earned as provided in Section 2 if such shares had been issued and outstanding during the Performance Period.   

6.       Termination of Employment.

(a)      Except as provided in Section 6(b) and Section 7 below or as may be otherwise determined by the Committee, in its sole discretion, if Recipient’s employment with or service to the Company terminates before the end of the Performance Period, this Award shall be forfeited on the date of such termination. 

(b)      Prorating in Certain Circumstances.  Notwithstanding Section 6(a), if Recipient’s employment with the Company terminates during the Performance Period due to Recipient’s normal retirement as defined in II-VI’s Global Retirement Policy, or Recipient’s employment with or service to the Company terminates during the Performance Period due to Recipient’s death or permanent and total disability, as defined in Code Section 22(e)(3), Recipient shall be entitled to a prorated portion of the Performance Shares to the extent earned pursuant to Section 2 above, determined at the end of the Performance Period and based on the ratio of the number of complete months Recipient was employed or served (as applicable) during the Performance Period to the total number of months in the Performance Period.  In the event of the death of the Recipient, delivery of the applicable number of shares of II-VI Common Stock shall be made to the Recipient’s estate as soon as administratively practicable after the end of the Performance Period. 

7.      Change in Control. Notwithstanding any provision to the contrary in any employment or similar agreement between the Recipient and the Company that discusses the effect of a Change in Control on the Recipient’s Awards, in the event of a Change in Control, the following provisions shall apply, unless provided otherwise by the Committee prior to the date of the Change in Control:  

(a)      Immediately prior to the Change in Control, if (A) Performance Shares have been earned but shares of II-VI Common Stock have not yet been delivered or deferred in accordance with Section 3 or Section 4, as applicable, the applicable number of shares of II-VI Common Stock shall be delivered or deferred in accordance with Section 3 or Section 4, as applicable , and (B) the Performance Period has not expired, this Award shall be cancelled in exchange for a cash payment to be made within thirty (30) days after the Change in Control equal to the product of (1) the Fair Market Value of the shares of II-VI Common Stock underlying the Target Award as of the date of the Change in Control and (2) a fraction, the numerator of which is the number of completed months in the Performance Period preceding the date of the Change in Control, and the denominator of which is the total number of months in the Performance Period. 

 

Page 3 of 9

 

(b)      Notwithstanding any provision of this Agreement to the contrary, in the event that II-VI determines that all or part of the consideration or compensation to be paid to the Recipient under this Agreement constitutes a “parachute payment” under Code Section 280G(b)(2), then, if the aggregate present value of such parachute payments, together with the aggregate present value of any consideration, compensation or benefits to be paid to the Recipient under any other plan, arrangement or agreement which constitute “parachute payments” (collectively, the “Total Payments”) exceeds 2.99 times the Recipient’s “base amount,” as defined in Code Section 280G(b)(3) (the “Recipient’s Base Amount”), the Recipient acknowledges and agrees that the “parachute payments” which would otherwise be payable to or for the benefit of the Recipient shall be reduced to the extent necessary so that the Total Payments are equal to 2.99 times the Recipient’s Base Amount.  The Company shall make any such required reduction from any specified type of Total Payments that does not constitute deferred compensation and is otherwise exempt or excepted from coverage under Section 409A (but excluding stock options or other stock rights).  

8.      Nontransferability. Except as otherwise provided in the Plan, the Performance Shares shall not be sold, pledged, assigned, hypothecated, transferred or disposed of (a “Transfer”) in any manner, other than by will or the laws of descent and distribution.  Any attempt to Transfer the Performance Shares in violation of this Section or the Plan shall render the Award null and void. 

10.      Adjustments. The number of securities underlying the Performance Shares and, if applicable, the type of securities underlying the Performance Shares, shall be adjusted to reflect any stock dividend, stock split, or combination of the shares of II-VI Common Stock.  In addition, the Committee may make or provide for such adjustments in the Performance Shares as it in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or enlargement of Recipient’s rights that otherwise would result from (a) any exchange of shares of II-VI Common Stock, recapitalization or other change in the capital structure of II-VI, (b) any Change in Control, merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), or issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.  Moreover, in the event of any such transaction or event, the Committee may provide in substitution for the Performance Shares such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of the Performance Shares so substituted.  Notwithstanding the foregoing, no adjustment shall be made which: (A) would be inconsistent with meeting the requirements of Section 162(m) of the Code, unless otherwise determined by the Board, or (B) would cause the Award to fail to comply with Section 409A (or an exception thereto).   

11.      Fractional Shares. II-VI shall not be required to issue any fractional Shares pursuant to the Award, and II-VI may round fractional Shares down to the nearest whole Share.  

12.      Withholding. Recipient shall pay to II-VI, and II-VI shall have the right to withhold from payments made to the Recipient pursuant to this Award, or to withhold from other compensation payable to the Recipient, all applicable federal, state and local income and employment taxes (including taxes of any foreign jurisdiction) which II-VI is required to withhold at any time with respect to the Performance Shares and any cash dividend equivalents paid thereon.  Shares of II-VI Common Stock tendered in payment of required withholding obligations shall be valued at the closing price per share of II-VI Common Stock on the date such withholding obligation arises. 

13.      Plan Provisions. In the event of any conflict between the provisions of this Agreement and the Plan, the Plan shall control, except that capitalized terms specifically defined in this Agreement shall have the meaning given to them in this Agreement with respect to their usage in this Agreement, notwithstanding the definitions given to such terms in the Plan (which definitions shall control as they relate to the usage of such terms in the Plan). 

14.      No Continued Rights. The granting of the Award shall not give Recipient any rights to similar grants in future years or any right to continuance of employment or other service with II-VI or its Subsidiaries, nor shall it interfere in any way with any right that the Company would otherwise have to terminate Recipient’s employment or other service at any time, or the right of Recipient to terminate his or her employment or other service at any time. 

15.      Rights Unsecured. II-VI shall remain the owner of all Performance Shares deferred by Recipient pursuant to Section 4 and Recipient shall have only II-VI’s unfunded, unsecured promise to pay pursuant to the terms of this Agreement and the II-VI Non-Qualified Executive Plan, as it may be amended and/or restated from 

 

Page 4 of 9

 

time to time, and any predecessor or successor plan thereto.  The rights of Recipient hereunder and thereunder shall be those of a general unsecured creditor of II-VI and Recipient shall not have any security interest in any assets of II-VI. 

16.      Non-Competition; Non-Solicitation; Confidentiality.

(a)      While the Recipient is employed by the Company and for a period of one (1) year after the termination of such employment for any reason (the “Restricted Period”), the Recipient will not directly or indirectly: 

(i)      engage in any business or enterprise (whether as owner, partner, officer, director, employee, consultant, investor, lender or otherwise, except as the holder of not more than 1% of the outstanding stock of a publicly-held company), that develops, manufactures, markets or sells any product or service that competes with any product or service developed, manufactured, marketed or sold or, to Recipient’s knowledge, planned to be developed, manufactured, marketed or sold, by II-VI or its Subsidiaries while the Recipient was employed by the Company, within the United States of America and/or any other country within which II-VI or its Subsidiaries have customers or prospective customers as of the date of such termination or cessation. 

(ii)      (A) solicit for the purpose of selling or distributing any products or services that are the same or similar to those developed, manufactured, marketed or sold by II-VI or its Subsidiaries, (1) any customers of II-VI or its Subsidiaries, (2) any prospective customers known by Recipient to have been solicited by II-VI or its Subsidiaries within the twelve (12) months prior to the Recipient’s termination or cessation of employment, or (3) any distributors, sales agents or other third-parties who sell to or refer potential customers in need of the types of products and services produced, marketed, licensed, sold or provided by II-VI or its Subsidiaries who have become known to Recipient as a result of his/her employment with the Company, or (B) induce or attempt to induce any vendor, supplier, licensee or other business relation of II-VI or its Subsidiaries to cease or restrict doing business with II-VI or its Subsidiaries, or in any way interfere with the relationship between any such vendor, supplier, licensee or business relation and II-VI or its Subsidiaries.   

(iii)      either alone or in association with others (A) solicit, or permit any organization directly or indirectly controlled by the Recipient to solicit, any employee of II-VI or its Subsidiaries to leave the employ of II-VI or its Subsidiaries, or (B) solicit for employment, hire or engage as an independent contractor, or permit any organization directly or indirectly controlled by the Recipient to solicit for employment, hire or engage as an independent contractor, any person who was employed by II-VI or its Subsidiaries at any time during the term of the Recipient’s employment with the Company; provided, that this clause (C) shall not apply to any individual whose employment with II-VI or its Subsidiaries has been terminated for a period of one year or longer. 

(b)      The Recipient acknowledges that certain materials, including, but not limited to, information, data, technology and other materials relating to customers, programs, costs, marketing, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of II-VI and its Subsidiaries constitute proprietary confidential information and trade secrets.  Accordingly, the Recipient will not at any time during or after the Recipient’s employment with the Company disclose or use for the Recipient’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise, other than the Company, any proprietary confidential information or trade secrets;  provided that the foregoing shall not apply to information which is not unique to II-VI and its Subsidiaries or which is generally known to the industry or the public other than as a result of the Recipient’s breach of this covenant.  The Recipient agrees that, upon termination of employment with the Company for any reason, the Recipient will immediately return to II-VI all property of II-VI and its Subsidiaries including all memoranda, books, technical and/or lab notebooks, customer product and pricing data, papers, plans, information, letters and other data, and all copies thereof or therefrom, which in any way relate to the business of II-VI and its Subsidiaries, except that the Recipient may retain personal items.  The Recipient further agrees that the Recipient will not retain or use for the Recipient’s account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of II-VI and its Subsidiaries. 

 

Page 5 of 9

 

The Restricted Period will be tolled during and for any period of time during which the Recipient is in violation of the restrictive covenants contained in this Section 16 and for any period of time which may be necessary to secure an order of court or injunction, either preliminary or permanent, to enforce such covenants, such that the cumulative time period during which the Recipient is in compliance with the restrictive covenants contained in Section 16 will not exceed the one (1) year period set forth above.   

17.      Remedies; Clawback.

(a)      II-VI and Recipient acknowledge and agree that that any violation by Recipient of any of the restrictive covenants contained in Section 16 would cause immediate, material and irreparable harm to II-VI and its Subsidiaries which may not adequately be compensated by money damages and, therefore, II-VI and its Subsidiaries shall be entitled to injunctive relief (including, without limitation, one or more preliminary injunctions and/or ex parte restraining orders) in addition to, and not in derogation of, any other remedies provided by law, in equity or otherwise for such a violation including, but not limited to, the right to have such covenants specifically enforced by any court of competent jurisdiction, the rights under Section 17(b) below, and the right to require Recipient to account for and pay over to II-VI all benefits derived or received by Recipient as a result of any such breach of covenant together with interest thereon, from the date of such initial violation until such sums are received by II-VI. 

(b)      In the event that the Recipient violates or breaches any of the covenants set forth in Section 16 of this Agreement, the Performance Shares and the right to receive shares of II-VI Common Stock in exchange for such Performance Shares shall be forfeited.  II-VI shall also have the right, in its sole discretion, in addition to any other remedies or damages provided by law, in equity or otherwise, to demand and require the Recipient, to the extent that any shares of II-VI Common Stock were received with respect to such Performance Shares (i) return and transfer to II-VI any such shares directly or beneficially owned by the Recipient, and (ii) to the extent that the Recipient sold or transferred any such Shares, disgorge and/or repay to II-VI any profits or other economic value (as determined by II-VI) made or realized by the Recipient with respect to such Shares, including but not limited to the value of any gift thereof. 

(c)      The Recipient further agrees, as a condition to acceptance of these Performance Shares, that these Performance Shares, as well as any other incentive award previously granted to Recipient by II-VI, may be subject to recoupment by II-VI under the provisions of any other forfeiture or clawback policy that has been or may be adopted by II-VI in the future, or as required by any applicable law then in effect. 

18.      Recipient Acknowledgments. Recipient acknowledges and agrees that (i) as a result of Recipient’s previous, current and future employment with the Company, Recipient has had access to, will have access to and/or possesses or will possess confidential and proprietary information of II-VI and its Subsidiaries, (ii) II-VI and its Subsidiaries are engaged in a highly competitive business conduct such business worldwide, (iii) this Agreement does not constitute a contract of employment, does not imply that the Company will continue the Recipient’s employment for any period of time and does not change the at-will nature of the Recipient’s employment, except as set forth in a separate written employment agreement between the Company and the Recipient, (iv) the restrictive covenants set forth in Section 16 are necessary and reasonable in time and scope (including the period, geographic, product and service and other restrictions) to protect the legitimate business interests of II-VI and its Subsidiaries, (v) the remedy, forfeiture and payment provisions contained in Section 17 are reasonable and necessary to protect the legitimate business interests of II-VI and its Subsidiaries, (vi) acceptance of these Performance Shares and agreement to be bound by the provisions hereof is not a condition of Recipient’s employment, and (vii) Recipient’s receipt of the benefits provided under this Agreement is adequate consideration for the enforcement of the provisions contained in Section 16 hereof.  

19.      Severability; Waiver. If any term, provision, covenant or restriction contained in the Agreement is held by a court or a federal regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions contained in the Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated.  In particular, in the event that any of such provisions shall be adjudicated to exceed the time, geographic, product and service or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, product and service or other limitations permitted by applicable law.  No delay or 

 

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omission by II-VI in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by II-VI on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.   

20.      Notice. II-VI may require any notice required or permitted under this Agreement to be transmitted, submitted or received, by II-VI or the Recipient, via the StockPlan Connect System in accordance with the procedures established by II-VI for such notice.  Otherwise, any written notice required or permitted by this Agreement shall be mailed, certified mail (return receipt requested) or by overnight carrier, to II-VI at the following address:  

 

II-VI Incorporated

Attention: Chief Financial Officer 

375 Saxonburg Boulevard 

Saxonburg, Pennsylvania 16056

or to Recipient at his or her most recent home address on record with II-VI. Notices are effective upon receipt.  

21.      Controlling Law. The validity, construction and effect of this Agreement will be determined in accordance with the internal laws of the Commonwealth of Pennsylvania without giving effect to the conflict of laws principles thereof.  Recipient and II-VI hereby irrevocably submit to the exclusive jurisdiction of the state and Federal courts located in the Commonwealth of Pennsylvania and consent to the jurisdiction of any such court; provided, however, that, notwithstanding anything to the contrary set forth above, II-VI may file an action to enforce the covenants contained in Section 16 by seeking injunctive or other equitable relief in any appropriate court having jurisdiction, including but not limited to where the Recipient resides or where the Recipient was employed by the Company.  Recipient and II-VI also both irrevocably waive, to the fullest extent permitted by applicable law, any objection either may now or hereafter have to the laying of venue of any such dispute brought or injunctive or equitable relief sought in such court or any defense of inconvenient forum for the maintenance of such dispute and consent to the personal jurisdiction of any such court.  The Company shall be a third-party beneficiary of this Agreement. 

22.      Entire Agreement. This Agreement (including the Plan and the Summary of Award) contains the entire understanding between the parties and supersedes any prior understanding and agreements between them regarding the subject matter hereof with respect to the Award, and there are no other representations, agreements, arrangements or understandings, oral or written, between the parties relating to the Award which are not fully expressed herein.  Notwithstanding anything to the contrary set forth in this Agreement, any restrictive covenants contained in this Agreement are independent, and are not intended to limit the enforceability, of any restrictive or other covenants contained in any other agreement between the Company and the Recipient. 

23.      Captions. Section and other headings contained in this Agreement are for reference purposes only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. 

24.      Limitation of Actions. Any lawsuit commenced by the Recipient with respect to any matter arising out of or relating to this Agreement must be filed no later than one (1) year after the date that a denial of any claim hereunder is made or any earlier date that the claim otherwise accrues. 

25.      Section 409A. This Agreement and the Award are intended to satisfy all applicable requirements of Section 409A or an exception thereto and shall be construed accordingly.  II-VI may in its discretion, and without the Recipient’s consent, take any action it deems necessary to comply with the requirements of Section 409A or an exception thereto, including amending the terms of the Award and this Agreement, in any manner it deems necessary to cause the Award and this Agreement to be excepted from Section 409A (or to comply therewith to the extent that II-VI determines it is not excepted).  Notwithstanding, Recipient recognizes and acknowledges that Section 409A may affect the timing and recognition of payments due hereunder, and may impose upon the Recipient certain taxes or other charges for which the Recipient is and shall remain solely responsible. 

 

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26.      Assignment. Except as provided in Section 8, Recipient’s rights and obligations under this Agreement shall not be transferable by Recipient, by assignment or otherwise, and any purported assignment, transfer or delegation thereof by Recipient shall be void.  II-VI and the Company may assign/delegate all or any portion of this Agreement and its rights hereunder without prior notice to the Recipient and without the Recipient providing any additional consent thereto, whereupon the Recipient shall continue to be bound hereby with respect to such assignee/delegatee. 

27.      Electronic Delivery. II-VI may, in its sole discretion, deliver any documents or correspondence related to this Agreement, the Plan, the Performance Shares, the Recipient’s participation in the Plan, or future awards that may be granted to the Recipient under the Plan, by electronic means.  The Recipient hereby consents to receive such documents by electronic delivery and to Recipient’s participation in the Plan through an on-line or electronic system established and maintained by II-VI or another third party designated by II-VI, including but not limited to the StockPlan Connect System.  Likewise, II-VI may require the Recipient to deliver or receive any documents or correspondence related to this Agreement by such electronic means.  

28.      Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto, or as otherwise provided under the Plan or this Agreement. 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Grant Date set forth above.  Electronic acceptance of this Agreement by the Recipient pursuant to II-VI’s instructions to the Recipient (including through the StockPlan Connect System) shall constitute execution of this Agreement by the Recipient. 

The Recipient agrees that his or her electronic acceptance of this Agreement, including but not limited to via the StockPlan Connect System, shall constitute his or her signature, and that he or she agrees to be bound by all of the terms and conditions of this Agreement.  

 

		
	
II-VI INCORPORATED

	
By:
	

	
Name: David G. Wagner

	
Title: Vice President, Human Resources

	
PARTICIPANT

	
Electronic Acceptance via the

	
StockPlan Connect System

 

 

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