Exhibit 10.12
FORM OF
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS CHANGE OF CONTROL SEVERANCE AGREEMENT ("Agreement") is made and
entered into as of the ____ day of ___, 2006, by and between Suntron
Corporation, a Delaware corporation (the "Company"), and ________ (the
"Executive").
RECITALS:
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined below) of
the Company.
The Board believes it is imperative to diminish the inevitable distraction
of the Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control, to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation arrangements upon a Change of Control which provide the Executive
with individual financial security and which are competitive with those of other
corporations and, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Company is terminated prior to the date on which
a Change of Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control, or (ii) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination.
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the first anniversary of such date.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean the occurrence of any of the following events: (i) a
reorganization, merger or consolidation with respect to which persons who were
the stockholders of the Company immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's (or entity's) then outstanding
voting securities in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, or consolidation, (ii) a
liquidation or dissolution of the Company, or (iii) the sale of all or
substantially all of the assets of the Company, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale is
subsequently abandoned.
3. Employment Period.
The Company hereby agrees to continue the Executive in its employ, and the
Executive hereby agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the first anniversary of such
date (the "Employment Period").
4. Terms of Employment.
(a) Position and Responsibilities.
(i) During the Employment Period, (1) the Executive's position
and responsibilities shall be at least commensurate in all material respects
with the most significant of those held, exercised and assigned at any time
during the 180-day period immediately preceding the Effective Date, and (2) the
Executive's services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or location less
than fifty (50) miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (3) manage personal investments, so long
as such activities listed in clauses (1) - (3) do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that to the extent that the Board was aware of any such activities conducted by
the Executive prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive a base salary ("Base Salary") at a monthly rate at least equal to
the highest monthly base salary paid or payable to the Executive by the Company
during the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base salary awarded
in the ordinary course of business to other key executives of the Company. Any
increase in Base Salary shall not serve to limit or reduce any other obligation
to the Executive under this Agreement. Base Salary shall not be reduced after
any such increase.
(ii) Incentive, Savings and Retirement Plans. In addition to Base
Salary and Annual Bonus payable as hereinabove provided, the Executive shall be
entitled to participate during the Employment Period in all incentive, savings
and retirement plans, practices, policies and programs applicable to other key
executives of the Company (including its successors or assigns) and its
affiliates, in each case comparable to those in effect on the Effective Date or
as subsequently amended. Such plans, practices, policies and programs, in the
aggregate, shall provide the Executive with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such compensation,
benefits and reward opportunities provided by the Company for the Executive
under such plans, practices, policies and programs as in effect at any time
during the 180-day period immediately preceding
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the Effective Date or, if more favorable to the Executive, as provided at any
time thereafter with respect to other key executives.
(iii) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs), at least as favorable as the most favorable of such plans,
practices, policies and programs in effect at any time during the 180-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter with respect
to other key executives.
(iv) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in connection with the business of the Company in accordance
with the most favorable policies, practices and procedures of the Company in
effect at any time during the 180-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect at any time thereafter
with respect to other key executives.
(v) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company in effect at any time
during the 180-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter with respect to
other key executives.
(vi) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company at any time during the 180-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided at any time
thereafter with respect to other key executives of the Company.
(vii) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices provided to the Executive by the Company as in
effect at any time during the 180-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect at any time thereafter
with respect to other key executives of the Company.
5. Termination
(a) Death or Disability. This Agreement shall terminate automatically
upon the Executive's death. If the Company determines in good faith that the
Disability of the Executive has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Executive written notice of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" means a mental or physical incapacity,
illness or disability which renders the Executive unable to perform his duties
and responsibilities for the Company and which, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment for
"Cause." For purposes of this Agreement, "Cause" shall mean (i) the failure or
refusal of the Executive to perform
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the duties or render the duties reasonably assigned to him from time to time by
the Company, (ii) gross negligence or willful misconduct by the Executive in the
performance of his duties as an employee of the Company, (iii) the charging or
indictment of the Executive in connection with a felony or crime involving moral
turpitude, (iv) the association, directly or indirectly of the Executive, for
his profit or financial benefit, with any person, firm, partnership,
association, entity or corporation that competes, in any material way, with the
Company, (v) the disclosing or using of any material confidential information or
trade secrets of the Company at any time by the Executive, except as required in
connection with his duties to the Company, (vi) the breach by the Executive of
his fiduciary duty or duty of trust to the Company, including the commission by
the Executive of an act of fraud, personal dishonesty or embezzlement against
the Company, (vii) chronic absenteeism, (viii) substance abuse, or (ix) any
other breach by the Executive of any of the terms or provisions of this
Agreement or any other agreement between the Company and the Executive, which
other breach is not cured within ten (10) business days of notice by the
Company.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for "Good Reason." For purposes of this Agreement, "Good Reason"
means:
(i) the assignment to the Executive of any duties that are
materially inconsistent with the Executive's duties at the Company prior to the
Change of Control, or any other action by the Company which results in a
diminution in the Executive's responsibilities at the Company from those in
effect immediately prior to the Change of Control, excluding for this purpose
(i) any transfer or promotion to a position of equal or enhanced responsibility
and (ii) any isolated, insubstantial or inadvertent action that is remedied by
the Company within thirty (30) days after receipt of notice thereof given by the
Executive;
(ii) any material breach by the Company of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(2) hereof,
except for travel reasonably required in the performance of the Executive's
responsibilities consistent with practices in effect prior to the Effective
Date; or
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause or
by the Executive for Good Reason shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 10(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than fifteen (15)
days after the giving of such notice). The failure by the Executive to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason shall not waive any right of the Executive hereunder or
preclude the Executive from asserting such fact or circumstance in enforcing his
rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein, as the
case may be; provided, however, that (i) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Executive receives the Company's
notice of such termination, and (ii) if the Executive's employment is terminated
by reason of death or Disability, the Date
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of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. Obligations of the Company upon Termination
(a) Death. If during the Employment Period the Executive's employment
is terminated by reason of the Executive's death, this Agreement shall terminate
without further obligation to the Executive's legal representatives under this
Agreement, other than those obligations accrued or earned and vested (if
applicable) by the Executive as of the Date of Termination, including, for this
purpose (i) the Executive's full Base Salary through the Date of Termination at
the rate in effect on the Date of Termination, and (ii) any compensation
previously deferred by the Executive (together with any accrued interest
thereon) and not yet paid by the Company and any accrued vacation pay not yet
paid by the Company (such amounts specified in clauses (i) and (ii) are
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to surviving families of executives of the Company under
such plans, programs, practices and policies relating to family death benefits,
if any, in accordance with the most favorable plans, programs, practices and
policies of the Company in effect at any time during the 180-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the Executive's death
with respect to other key executives of the Company and their families.
(b) Disability. If during the Employment Period the Executive's
employment is terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other than those
obligations accrued or earned and vested (if applicable) by the Executive as of
the Date of Termination, including for this purpose, all Accrued Obligations.
All such Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits at least
equal to the most favorable of those provided by the Company to disabled
employees and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, in accordance with the
most favorable plans, programs, practices and policies of the Company in effect
at any time during the 180-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives and their
families.
(c) Cause; Other than for Good Reason. If during the Employment Period
the Executive's employment shall be terminated by the Company for Cause, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive the Base Salary through the Date of
Termination plus the amount of any compensation previously deferred by the
Executive (together with accrued interest thereon) and other than those
obligations accrued or earned and vested (if applicable) by the Executive
through the Date of Termination. If the Executive terminates his employment
other than for Good Reason during the Employment Period, this Agreement shall
terminate without further obligation to the Executive, other than those
obligations accrued or earned and vested (if applicable) by the Executive
through the Date of Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause, Disability or death, or if the Executive shall terminate his
employment for Good Reason, then the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts:
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1. to the extent not theretofore paid, the Executive's Base
Salary through the Date of Termination; and
2. the product of two (2) times the sum of (i) the Base
Salary and (ii) the maximum bonus payable to the Executive from the Company with
respect to the fiscal year in which the Effective Date occurs; and
3. in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any accrued interest
thereon) and not yet paid by the Company, and any accrued vacation pay not yet
paid by the Company; and
4. all other amounts accrued or earned by the Executive
through the Date of Termination and amounts otherwise owing under the then
existing plans and policies at the Company.
(e) Termination Before or After Employment Period. If the Executive's
employment with the Company terminates or is terminated either before or after
the Employment Period, then the provisions of paragraphs (a) through (d) of this
Agreement shall not apply, and the rights and obligations of the Executive and
the Company relating to such termination of employment shall be determined
without regard thereto.
(f) Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices provided by the
Company and for which the Executive may qualify, nor shall anything herein limit
or otherwise affect such rights as the Executive may have under any stock option
or other agreements with the Company. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program.
7. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company and which shall not be or become
public knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
8. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
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9. Miscellaneous
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Arizona, without reference to
principles of conflict of laws. 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 otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder 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 Executive:
_____________________________
c/o Suntron Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
If to the Company:
Suntron Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(f) This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.
(g) The Executive and the Company acknowledge that, except as set
forth in any written employment agreement between the Executive and the Company
and effective from and after the date hereof, the employment of the Executive by
the Company is "at will," and, prior to the Effective Date, may be terminated by
either the Executive or the Company at any time. Upon a termination of the
Executive's employment prior to the Effective Date, there shall be no further
rights of the Executive under this Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused this
agreement to be executed in its name on its behalf, all as of the day and year
first above written.
-----------------------------------------
[executive]
SUNTRON CORPORATION
By:
-------------------------------------
Xxxxxxxx Xxxxx
President and Chief Executive Officer
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The form of Change of Control Severance Agreement was executed by the following
persons on the dates indicated:
NAME TITLE DATE OF EXECUTION
---- ----- -----------------
Xxxxxx X. Xxxxx Chief Financial Officer February 14, 2006
Xxxxx X. Xxxxx Vice President, Chief Accounting May 16, 2006
Officer, Controller and Secretary
Xxxxx X. Xxxxx Vice President of Information May 16, 2006
Technology and Administration
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