Document:

Exhibit 10.2

 

 

TRINITY
CAPITAL CORPORATION

 

2005
DEFERRED INCOME PLAN

 

 

TRINITY
CAPITAL CORPORATION

 

2005
DEFERRED INCOME PLAN

 

Section 1.              Purpose

 

The purpose of the TRINITY CAPITAL CORPORATION 2005 DEFERRED INCOME PLAN (“Plan”) is to enable selected employees and officers
of TRINITY CAPITAL CORPORATION (“Company”), and any related company, to
elect to defer all or a portion of the compensation payable by the Company, or
the related company, on account of service as an employee or officer.  The Plan is intended as a means of maximizing
the effectiveness and flexibility of the compensation arrangements to a select
group of management or highly compensated employees of the Company and related
companies, and as an aid in attracting and retaining individuals of outstanding
abilities and specialized skills for service.

 

Section 2.              Effective
Date

 

The Plan is effective as of April 7,
2005.

 

Section 3.              Plan
Administration

 

The Plan shall be administered
by a committee (“Committee”), as
may be designated by the Board of Directors of the Company (“Board”) from time to time.  The Committee shall have sole authority to
select the individuals, from among those eligible, who may participate under
the Plan and to establish all other participation requirements.  The Committee is authorized, subject to Board
approval, to interpret the Plan and may from time to time adopt such rules,
regulations, forms and agreements, not inconsistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan.  All decisions made by the Committee in
administering the Plan shall be subject to Board review.

 

Section 4.              Eligibility

 

Any officer or employee of the
Company or any related company may be designated by the Board to participate in
the Plan; provided, however, that
officers or employees eligible for designation shall be limited to a select
group of management or highly compensated employees within the meaning of Section 201(2) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). 
Any such officer or employee shall be a “Participant” as of the date designated by the Board, and his
or her status as a Participant shall continue until the date on which all
payments due under the terms of the Plan have been made.

 

Section 5.              Shares
Subject to the Plan

 

The aggregate number of shares
of common stock of the Company (“Shares”)
which may be distributed to officers and employees under the Plan shall be Five
Hundred Thousand (500,000) Shares.  Any
Shares that remain unissued at the termination of the Plan shall cease to 

 

1

 

be subject to the Plan, but until termination
of the Plan, the Company shall at all times make available sufficient Shares to
meet the requirements of the Plan.  The
aggregate number of Shares which may be sold under the Plan shall be
automatically adjusted to reflect a change in capitalization of the Company,
such as a stock dividend or stock split, unless the Board determines in its
sole discretion that, based on the facts and circumstances, a formulaic
adjustment is not appropriate, and that a differing adjustment, or no
adjustment, is more equitable.

 

Section 6.              Election
to Defer Income

 

(a)           In General.  Each
Participant shall be entitled to make an irrevocable election (“Election”) to defer receipt of all or a
portion of the compensation otherwise payable to him or her in cash (“Income”). 
Income with respect to which an Election has been made (and shall not
have been revoked) shall be referred to hereinafter as “Deferred Income.”

 

(b)           Timing of Elections.  An Election to defer Income under the Plan
must be properly filed with the Company not later than the following:

 

(i)                                     the
last business day of the tax year preceding the year in which the Income is
earned, or such earlier time as established by the Committee;

 

(ii)                                  thirty (30)
days after first becoming eligible to participate in the Plan; provided such Income relates to services
performed after the date of the Election; or

 

(iii)                               six
(6) months prior to the end of an applicable performance period; provided such Election is with respect to
incentive compensation which qualifies as “bonus compensation” as defined under
Section 409A of the Internal Revenue Code of 1986, as amended (“Code”).

 

All such Elections shall continue in effect
until the Participant delivers to the Board a written revocation or
modification of such Election pursuant to paragraph (d) below.

 

(c)           Manner of Election. 
Elections to defer receipt of Income shall be made in writing
in accordance with such rules and procedures as the Committee may
prescribe; provided, however, that
each such Election to defer shall include:

 

(i)                                     the
amount to be deferred, expressed either as a fixed dollar amount or a
percentage of Income;

 

(ii)                                  the
date on which the Deferred Income shall be paid; and

 

(iii)                               the
number of annual installments for the payment of Deferred Income (maximum ten
(10)).

 

(d)           Changes to Elections.    Modifications to existing Elections which
change the timing or method of payment shall be subject to the following:

 

2

 

(i)                                     A
revised Election must be made not later than twelve (12) months prior to the
scheduled payment date reflected in the most recent Election; and

 

(ii)                                  To
the extent required under Code Section 409A, the revised payment date must
be not sooner than the five (5) year anniversary of the previously
scheduled payment date.

 

Section 7.              Record
and Crediting of Deferred Amounts

 

(a)           Deferred Income. 
The Company shall credit the amount of any Deferred Income to
a memorandum account for the benefit of the Participant (“Deferred Income Account”) no later than the
last day of the calendar quarter in which such Income would otherwise have been
paid to the Participant.

 

(b)           Investment Direction. 
The Committee will allow a Participant to direct the
investment of his or her Deferred Income Account in accordance with such rules and
procedures as the Committee may prescribe, in its sole discretion, which may
include a single investment selection, including shares of the Company’s common
stock.  The Company will be relieved of
all investment responsibility and liability for such investment direction.  A direction to purchase Shares may not be
made within six (6) months of a direction to sell Shares, and a direction
to sell Shares may not be made within six (6) months of a direction to
purchase Shares, under the Plan or any other plan or program maintained by the
Company.

 

(c)           Value and Statement of Account.  The Committee shall provide each
Participant with a statement of the value of his or her Deferred Income
Account, including the amount of Deferred Income and income thereon, determined
as of each December 31 (the “Valuation
Date”).

 

Section 8.              Payment
of Deferred Account

 

(a)           In General.  No
withdrawals or payment shall be made from the Participant’s Deferred Income
Account except as provided in this Section 8.

 

(b)           Payment Event. 
The value of a Participant’s Deferred Income Account shall be
payable in either a single payment or up to ten (10) annual installments
commencing on the March 15, or the next business day following March 15,
following the occurrence of a “payment event,” as shall be reflected in the
most recently applicable Election.  A “Payment Event” shall be the date specified
in the Participant’s Election, which may be any one of the following:

 

(i)                                     the
date of the Participant’s separation from service with the Company or related
company (six (6) months from such date if the Participant is a “Key
Employee” as defined under Code Section 409A);

 

(ii)                                  the
date the Participant attains an age specified in the Election; or

 

(iii)                               the
first or later to occur of either of such dates, as may be specified in the
Election.

 

3

 

(c)           Manner of Payment.

 

(i)                                     If
a Participant elects a single installment, the value of Participant’s entire
Deferred Income Account as of the Valuation Date preceding payment shall be
paid to him or her in one lump sum.

 

(ii)                                  If
a Participant elects two (2) or more installment payments, the amount of
an installment payment shall be a fraction of the value of the Participant’s
Deferred Income Account on the Valuation Date preceding such installment
payment date, the numerator of which is one (1) and the denominator which
is the total number of installments elected minus the number of installments
previously paid.

 

(d)           Hardship Distributions.  The Committee, in its sole
discretion, and whether or not a Payment Event shall have occurred, may
accelerate payment of amounts credited to a Participant’s Deferred Income
Account if requested to do so and if the requirements of this paragraph (d) are met.  Such acceleration may occur only in the event
of an unforeseeable financial emergency and the amount of any distribution is
limited to the amount deemed reasonably necessary to satisfy such unforeseeable
financial emergency.  For purposes of
this paragraph (d), an “Unforeseeable Financial Emergency” is an
unanticipated emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the participant
resulting from (i) a sudden and unexpected illness or accident of the
Participant or a dependent of the Participant, (ii) a loss of the
Participant’s property due to casualty, or (iii) such other extraordinary
and unforeseeable circumstances arising as a result of events beyond the
control of the Participant, all as determined in the sole discretion of the
Committee.

 

(e)           Death of Participant. 
In the event that a Participant shall die at any time prior
to complete distribution of all amounts payable to him or her under the
provisions of the Plan, the unpaid balance of the Participant’s Deferred Income
Account shall be paid to the Participant’s beneficiary or beneficiaries in a
lump sum, unless another form is provided in the Participant’s most recent
Election.

 

Section 9.              Designation
of Beneficiary

 

Participants shall designate in
writing, in accordance with such rules and procedures as the Committee may
prescribe, the beneficiary or beneficiaries who are to receive the Participant’s
Deferred Income Account in the event of the Participant’s death.

 

Section 10.            Unsecured
Obligations

 

The obligation of the Company
to make payments under the Plan shall be a general obligation of the Company,
and such payments shall be made from general assets and property of the
Company.  The Participant’s relationship
to the Company under the Plan shall be only that of a general unsecured
creditor and neither this Plan nor any agreement entered into hereunder or
action taken pursuant hereto shall create or be construed to create a trust or
fiduciary relationship 

 

4

 

of any kind. 
The Company may establish an irrevocable grantor trust for purposes of
holding and investing the Deferred Income Account balances but such
establishment shall not create any rights in or against any amount so held,
except that the trustee of such trust may vote any Shares thereunder in
accordance with the direction of the Participants.

 

Section 11.            Amendment
and Termination

 

(a)           The
Board may amend, suspend or terminate the Plan or any portion thereof at any
time; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Participant in such Participant’s Deferred Income Account under the Plan,
without such Participant’s consent.

 

(b)           Notwithstanding
the foregoing, the Board shall retain the right to amend the Plan or any
portion thereof at any time, or from time to time, without the consent of the
Participants, to the extent deemed necessary by the Board, in its sole
discretion, in order for the Plan and Deferred Income to be compliant with the
requirements of Code Section 409A.

 

Section 12.            Effect
of Transfer

 

(a)           In the event of a
Change in Control of the Company, the entire unpaid balance of each Deferred
Income Account shall be paid in a single lump sum to the Participant as of the
effective date thereof.

 

(b)           For
purposes of this Plan, the term Change in Control shall be as defined in Code Section 409A
and Internal Revenue Service Notice 2005-1 and any subsequent guidance provided
with respect to Code Section 409A.

 

Section 13.            Non-Assignability

 

No right to receive payments
under the provisions of this Plan shall be transferable or assignable by a
Participant, except by will or the laws of descent and distribution or by
gifting for the benefit of descendants in estate planning situations, and
during his or her lifetime payment may only be received by the Participant or
his or her legal representative or guardian.

 

Section 14.            Delivery
and Registration of Stock

 

The Company’s obligation to
deliver Shares shall, if the Committee so requests, be conditioned upon the
receipt of a representation as to the investment intention of the individual to
whom such Shares are to be delivered, in such form as the Committee shall
determine to be necessary or advisable to comply with the provisions of the
Securities Act of 1933 (“Act”) or
any other federal, state or local securities legislation or regulation.  It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under securities
legislation.  The Company shall not be
required to deliver any Shares under the Plan prior to (i) the admission
of such Shares to listing on any stock exchange on which Shares may then be
listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or federal law, rule or
regulation, as the Committee shall determine to be necessary or advisable.

 

5

 

This Plan is intended to comply
with Rule 16b-3 under the Act.  Any
provision of the Plan which is inconsistent with said rule shall, to the
extent of such inconsistency, be inoperative and shall not affect the validity
of the remaining provisions of the Plan.

 

Section 15.            Binding
Provisions

 

All of the provisions of this
Plan shall be binding upon all persons who shall be entitled to any benefits
hereunder and their heirs and personal representatives.

 

Section 16.            Claims
Procedure

 

If any
benefits become payable under this Plan, the Participant (or designated
beneficiary in the case of the Participant’s death) shall file a claim for
benefits by notifying the Committee in writing. 
If the claim is wholly or partially denied, the Committee shall provide
a written notice of the denial.  This
written notice must be provided within a reasonable period of time (generally
90 days) after the receipt of the claim by the Committee.  The written notice must contain the following
information:

 

(a)                                  the specific reason or reasons for the denial;

 

(b)                                 specific reference to those Plan provisions on which
the denial is based;

 

(c)                                  a
description of any additional information or material necessary to correct the
claim and an explanation of why such material or information is necessary; and

 

(d)                                 appropriate information as to the steps to be taken if
the Particiapnt or beneficiary wants to submit the claim for review.

 

If notice of
the denial of a claim is not furnished within a reasonable period of time, the
claim will be deemed denied.

 

Upon the denial of a claim
for benefits, the Participant (or designated beneficiary in the case of the
Participant’s death) may file a claim for review, in writing, with the
Committee within sixty (60) days after receipt of a written notice of a denial
of a claim.  In requesting a review, the
Participant or beneficiary may review Plan documents and submit any written
issues and comments he or she feels are appropriate.  The Committee shall then give a full and fair
review to the claim.  If the claim is
denied, the Committee shall provide the Participant or beneficiary with written
notice of this denial within sixty (60) days after the Committee’s receipt of
the request for review.  This decision
shall state the specific reasons for the decision and shall include references
to specific Plan provisions on which the decision is based.

 

6Exhibit 10.1

 

SUMMARY
OF OFFICER COMPENSATION ARRANGEMENTS

 

The following table sets
forth the revised salary and bonus arrangements of certain “named executive
officers,” as defined in Item 402 of Regulation S-K, of Digirad
Corporation (the “Company”) for
2005.  The named executive officers of the Company listed below are also
eligible to receive option grants under the Company’s 2004 Stock Incentive
Plan, at the discretion of, and on the terms approved by, the board of
directors.  The determination of who constitutes a named executive officer
is being made as of July 27, 2005 and may subsequently change, depending
on the amount of cash bonuses awarded by the board of directors to the Company’s
officers with respect to services performed during the fiscal year.

 

	
   

  	
   

  	
   

  	
   

  	
  2005 Compensation

  	
   

  
	
  Executive
  Officer

  	
   

  	
  Position

  	
   

  	
  Salary (1)

  	
   

  	
  Bonus

  	
   

  
	
  Gerhard
  F. Burbach (2)

  	
   

  	
  President and Chief
  Executive Officer

  	
   

  	
  $

  	
  325,000

  	
   

  	
   

  	
  (3)

  
	
  Vera
  P. Pardee

  	
   

  	
  Vice President, General
  Counsel and Secretary

  	
   

  	
  230,000

  	
   

  	
   

  	
  (4)

  
	
  Todd
  P. Clyde

  	
   

  	
  Chief Financial Officer

  	
   

  	
  225,000

  	
   

  	
   

  	
  (4)

  
	
  Peter
  M. Sullivan (5)

  	
   

  	
  Senior Vice President
  of Operations

  	
   

  	
  200,000

  	
   

  	
   

  	
  (3)

  
	
  David
  M. Sheehan (6)

  	
   

  	
  Former President and
  Former Chief Executive Officer

  	
   

  	
  300,000

  	
   

  	
   

  	
  (4)

  
	
  Herbert
  J. Bellucci (7)

  	
   

  	
  Former Senior Vice President
  of Operations

  	
   

  	
  188,000

  	
   

  	
   

  	
  (4)

  
									

 

(1)          All salaries effective
as of April 1, 2005, other than the salaries for (a) Mr. Burbach,
which is effective as of April 25, 2005 and (b) Mr. Sullivan,
which is effective as of April 28, 2005.

 

(2)          Mr. Burbach
commenced serving as the Company’s President and Chief Executive Officer as of April 21,
2005.  Mr. Burbach has served as a
member of the Company’s board of directors since October 2004.  Mr. Burbach will also be entitled to be
reimbursed for reasonable travel and living expenses and for reasonable
expenses incurred in connection with any relocation.

 

(3)          Each of Mr. Burbach
and Mr. Sullivan is eligible to receive an annual bonus at the discretion
of the Company’s board of directors based upon meeting certain financial and
other performance criteria to be established for each such person.

 

(4)          The aggregate bonus
amount payable to the Company’s executive officers eligible to receive such
bonuses (the “Aggregate Bonus Amount”) in 2005 is equal to (i) 1.667% of
each dollar of the Company’s revenue over $68.0 million plus (ii) 5% of
each dollar of the Company’s net income if total net income is above $1.0
million.  In the event, however, that certain minimum revenue and net
income thresholds are not met, no bonuses will be paid.  Each executive
officer eligible to receive bonuses will be entitled to receive that portion of
the Aggregate Bonus Amount which is equal to the quotient obtained by dividing (i) such
executive officer’s base salary by (ii) the sum of all base salaries for
the Company’s executive officers eligible to receive bonuses.  The bonus
amounts payable to each of the Company’s executive officers may be reduced in
the event that the individual goals for each such executive officer are not
achieved.  The bonus amounts will be accrued quarterly and paid following
the completion of the Company’s 2005 audit.

 

(5)          Mr. Sullivan
commenced serving as the Company’s Senior Vice President of Operations as of April 28,
2005.  Mr. Sullivan has provided
consulting services to the Company since January 2005.  Mr. Sullivan will also be entitled to be
reimbursed for reasonable travel and living expenses and for reasonable
expenses incurred in connection with any relocation.

 

(6)          Mr. Sheehan ceased
serving as the Company’s President and Chief Executive Officer as of April 21,
2005.

 

(7)          Mr. Bellucci ceased
serving as the Company’s Senior Vice President of Operations as of April 21,
2005.

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