COMPOSITE FORM OF SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Exhibit 10.5
COMPOSITE FORM OF
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
[Explanatory Note: Plexus Corp., a Wisconsin corporation (the “Company”), and Xxxx
Xxxxxxxx (the “Employee”) entered into a Supplemental Executive Retirement Agreement dated
September 19, 1996 (the “Prior Agreement”), a First Amendment Agreement to the Prior Agreement
effective as of October 1, 1999 (the “First Amendment Agreement”), a Second Amendment Agreement to
the Prior Agreement effective as of July 1, 2002 (the “Second Amendment Agreement”), and a Third
Amendment to the Prior Agreement, effective as of July 26, 2009 (the “Third Amendment”), creating,
amending and clarifying an agreement to provide the Employee with certain deferred compensation
arrangements as set forth therein.
For ease of understanding of the terms currently governing the relationship between the parties,
the Company consolidated all of the above referenced documents into one composite form of agreement
(the “Agreement”) and eliminated superseded provisions. For clarity, the “WHEREAS” clauses and the
signature blocks have been deleted from this form of Agreement.]
NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
DEFINITIONS
1.1 “Account” means the bookkeeping reserve account for the Employee which shall be
established by the Company solely as a device for determining the amounts which may become payable
to or on behalf of the Employee hereunder. The Company shall keep a record in the Account of the
current fair values of the Additional Contribution and any Policy or other property or funds held
therein from time to time. Such Account shall not constitute or be treated as a trust fund of any
kind, it being expressly provided that the amounts credited to such Account shall at all time be
and remain the sole property of the Company. The Employee shall have no proprietary rights of any
nature whatsoever with respect thereto but shall simply be an unsecured creditor of the Company,
unless and until such time as a payment under this Agreement is made to or on behalf of the
Employee.
1.2 “Additional Contribution” means the sum of $743,578.
1.3 “Beneficiary” means any one or more primary or secondary beneficiaries designated in
writing by the Employee on a form provided by the Company to receive any benefits which may become
payable under the Prior Agreement and the First Amendment Agreement on or after the Employee’s
death. That form will also control the payment of benefits under this Agreement as well. The
Employee shall have the right to name, change or revoke his designation of Beneficiary on a form
provided by the Company. The designation on file with the Company at the time of the Employee’s
death shall be controlling. Should the Employee fail to make a valid Beneficiary designation or
leave no named Beneficiary surviving, any benefits due shall be paid to the Employee’s spouse, if
living; or if not living, then to the Employee’s estate.
1.4 “Board” means the Board of Directors of the Company.
1.5 “Change of Control” with respect to the Company means the occurrence of any one of the
following events, as a result of one transaction or a series of transaction:
(a) any “person (as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, but excluding the Company, its affiliates as of the date of this
Agreement,
and any qualified or non-qualified plan maintained by the Company or its affiliates),
becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under such Act) of
securities of the Company representing more than 25% of the combined voting power of the
Company’s then outstanding voting securities;
(b) individuals who constitute a majority of the Board immediately prior to a contested
election for positions in the Board cease to constitute a majority as a result of such
contested election;
(c) the Company is combined with or acquired by (by merger, share exchange,
consolidation, tender offer or otherwise) another corporation or business entity and a
result thereof, less than 67% of the outstanding securities of or voting power in the
surviving or resulting corporation or other business entity is owned in the aggregate by the
former shareholders of the Company;
(d) the Company sells, leases, or otherwise transfers all or substantially all of its
properties or assets not in the ordinary course of business to another person or entity;
(e) the Board determines in its sole and absolute discretion either that there has been
a change in control of the Company or that such change in control is imminent; or
(f) the outstanding voting securities of the Company are no longer listed on either the
NASDAQ National Market System, the New York Stock Exchange or the American Stock Exchange or
the Company is no longer registered under Section 12 of the Securities Exchange Act of 1934,
as amended.
1.6 “Policy” means any policy or policies of life insurance which the Company may purchase on
the life of the Employee with the Additional Contribution and hold in the Account. While any such
Policy may be used as a device for measuring the amounts which may become payable to or on behalf
of the Employee under this Agreement, the Company (or the trustee of any grantor Trust established
by the Company) shall be the applicant, owner and sole beneficiary of the Policy, with all rights
and all incidents of ownership. The Employee shall have no proprietary rights of any nature
whatsoever with respect to the Policy, unless and until otherwise provided under this Agreement.
1.7 “Trust” means such grantor trust (a “rabbi trust”) as the Company shall establish to serve
as a vehicle to hold any Policy or contributions held in the Account as the Company may choose to
make in connection with this Agreement, but the Trust shall be designed so that all assets therein
are subject to the claims of the Company or any of its affiliates which have used such rabbi trust
in the event of insolvency, consistent with the provision of Revenue Procedure 92-64 issued by the
Internal Revenue Service. Notwithstanding the existence of such a rabbi trust, this Agreement
shall remain an unfunded agreement, with the Employee’s rights to benefits hereunder being those of
an unsecured creditor.
1.8 “Annual Cycle” means a 12-month period commencing on any July 1; provided, however, that
the first Annual Cycle shall be the period commencing on July 26, 2009 (the “Amendment Effective
Date”) and ending on July 31, 2010, and the last Annual Cycle shall be the 12-month period
commencing July 1, 2016.
1.9 “Payroll Date” means each regular biweekly payroll date under the Company’s payroll system
occurring during an Annual Cycle.
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SECTION 2
CONTRIBUTION TO ACCOUNT
CONTRIBUTION TO ACCOUNT
2.1 Contribution. The Company will credit to the Employee’s Account an amount equal
to the Additional Contribution, effective as of May 22, 2002.
2.2 Credits to Account. The Additional Contribution credited to the Employee’s
Account shall be invested in a Policy which shall be held in the Trust.
SECTION 3
PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFITS
PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFITS
3.1 Retirement Payments. On each Payroll Date during any Annual Cycle, the Company
shall pay Employee an amount equal to (i) the annual amount set forth in Appendix A hereto for such
Annual Cycle, divided by (ii) the number of scheduled Payroll Dates in such Annual Cycle.
3.2 Death After the Employee has Begun Receiving Payments. Should the Employee die
after he has begun to receive the payments provided in under paragraph 3.1 above, but before all
fifteen annual payments have been made, the Company shall make a lump sum payment to the Employee’s
Beneficiary in an amount equal to the death proceeds then payable under the Policy, minus the total
amount of annual payments previously made to the Employee.
SECTION 4
CLAIMS PROCEDURE
CLAIMS PROCEDURE
4.1 Claim Review. If the Employee or his Beneficiary (a “Claimant”) is denied all or
a portion of a benefit under this Agreement, he or she may file a written claim for benefits with
the Company. The Company shall review the claim and notify the Claimant of the Company’s decision
within sixty (60) days of receipt of such claim, unless the Claimant receives written notice prior
to the end of the sixty (60) day period stating that special circumstances require an extension of
the time for decision. The Company’s decision shall be in writing, sent by mail to the Claimant’s
last known address, and if a denial of the claim, must contain the specific reasons for the denial,
reference to pertinent provisions of this Agreement on which the denial is based, a designation of
any additional material necessary to perfect the claim, and an explanation of the claim review
procedure.
4.2 Appeal Procedure to the Board. A Claimant is entitled to request a review of any
denial by the full Board by written request to the Chair of the Board within 60 days of receipt of
the denial. Absent a request for review within the 60-day period, the claim will be deemed to be
conclusively denied. The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review decision in writing,
all within sixty (60) days after receipt of a request for review (provided that, in special
circumstances the Board may extend the time for decision by not more than sixty (60) days upon
written notice to the Claimant.) The Board’s review decision shall contain specific reasons for
the decision and reference to the pertinent provisions of this Agreement.
4.3 Attorney’s Fees. The Company agrees to pay, as incurred, to the fullest extent
permitted by law, all legal fees and expenses that the Employee may reasonably incur as a result of
any contest (regardless of the outcome) by the Company, the Employee or others of the validity or
enforceability of, or liability under, or otherwise involving any provision of this Agreement.
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SECTION 5
MISCELLANEOUS
MISCELLANEOUS
5.1 Non-Assignability. This Agreement is personal to the Employee and, without the
prior written consent of the Company, shall not be assignable by the Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and shall also be enforceable by the
Employee’s legal representatives.
5.2 Successors. The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company expressly to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean both the Company as
defined above and any such successor that assumes and agrees to perform this Agreement, by
operation of law or otherwise.
5.3 Taxes. No later than the date as of which an amount first becomes includible in
the income of the Employee for purposes of employment or income taxes, the Employee agrees to pay
to the Company, or make satisfactory arrangements with the Company regarding the payment of any
federal, state or other taxes of any kind required to be withheld with respect to such amount.
5.4 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Wisconsin, without reference to principles of conflict of laws, to
the extent not preempted by federal law. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their respective successors and
legal representatives.
5.5 Notices. All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
| If to the Employee: | Xxxx Xxxxxxxx | |||
| 0000 Xxxxx Xxxxxx Xxxxx | ||||
| Xxxxxxxx, XX 00000 | ||||
| If to the Company: | Plexus Corp. | |||
| Attn: Corporate Secretary | ||||
| 00 Xxxxxxxx Xxxx Xxxxx | ||||
| Xxxxxx, XX 00000-0000 |
or to such other address as either party furnishes to the other in writing in accordance with this
paragraph. Notices and communications shall be effective when actually received by the addressee.
5.6 Construction. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining
portion of such provision, together with all other provisions of this Agreement, shall remain valid
and enforceable and continue in full force and effect to the fullest extent consistent with law.
Nothing contained in this Agreement shall give the Employee the right to be retained in the
employment of the Company or affect the right of the Company to dismiss the Employee.
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5.7 Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution by the Company to or for the benefit of the
Employee (whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any additional payments
required under this paragraph 5.7) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or any
interest or penalties are incurred by the Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Employee shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Employee of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph 5.7(c), all determinations required to be
made under this paragraph 5.7, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by such certified public accounting firm as may be designated
by the Employee (the “Accounting Firm”) which shall provide detailed supporting calculations
both to the Company and the Employee within 15 business days of the receipt of notice from
the Employee that there has been a Payment, or such earlier time as is requested by the
Company, but in no event later than the last day of the year following the year of payment
of the Excise Tax to which the Gross-Up Payment relates. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this paragraph 5.7, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with
a written opinion that failure to report the Excise Tax on the Employee’s applicable federal
income tax return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon the Company and the Employee.
As a result of the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the
event that the Company exhausts its remedies pursuant to paragraph 5.7(c) and the Employee
thereafter is required to make payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
ten business days after the Employee is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such a claim is due). If the
Company notifies the Employee in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
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(i) Give the Company any information reasonably requested by the Company
relating to such claim,
(ii) Take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) Cooperate with the Company in good faith in order to effectively contest
such claim, and
(iv) Permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Employee harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this paragraph 5.7 (c),
the Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the Employee to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to the Employee, on an interest-free basis
and shall indemnify and hold the Employee harmless, on an after-tax basis, from any
Excise Tax or income tax including interest or penalties with respect to any imputed
income with respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Employee with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant
to paragraph 5.7 (c), the Employee becomes entitled to receive any refund with respect to
such claim, the Employee shall (subject to the Company’s complying with the requirements of
paragraph 5.7 (c) ) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by
the Employee of an amount advanced by the Company pursuant to paragraph 5.7 (c), a
determination is made that the Employee shall not be entitled to any refund with respect to
such claim and the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.
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5.8 Amendment; Entire Agreement; Amendment of the Prior Agreement. This Agreement may
be amended by a written instrument signed by both parties. This Agreement contains the entire
agreement between the parties on the subjects covered and replaces all prior writings, proposals,
specifications or other oral or written materials relating thereto, including, without limitation,
the Prior Agreement and the First Amendment Agreement.
5.9 Section 409A. This Agreement is intended to comply on and after the Amendment
Effective Date with Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder (“Section 409A”), and shall be administered accordingly. A right to a
series of installment payments under the Agreement is to be treated as a right to a series of
separate payments for purposes of Section 409A. If an operational failure occurs with respect to
Section 409A, Employee shall fully cooperate with the Company to correct the failure, to the extent
possible, in accordance with any correction procedure established by the Internal Revenue Service.
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APPENDIX A
| Annual Cycle Year | Annual Cycle Period | Annual Amount | ||
1 |
July 26, 2009 to June 30, 2010 | $309,750 | ||
2 |
July 1, 2010 to June 30, 2011 | $348,985 | ||
3 |
July 1, 2011 to June 30, 2012 | $362,945 | ||
4 |
July 1, 2012 to June 30, 2013 | $377,462 | ||
5 |
July 1, 2013 to June 30, 2014 | $392,561 | ||
6 |
July 1, 2014 to June 30, 2015 | $408,263 | ||
7 |
July 1, 2015 to June 30, 2016 | $424,594 | ||
8 |
July 1, 2016 to June 30, 2017 | $441,577 |
