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EXHIBIT 10.9
AMENDMENT
TO
SENIOR EXECUTIVE SEVERANCE AGREEMENT
AMENDMENT TO SENIOR EXECUTIVE SEVERANCE AGREEMENT, made and entered into
as of the first day of January, 1997 by and between The DII Group, Inc., a
Delaware corporation (the "Corporation") and Xxxxxx X. Xxxxxx (the
"Executive").
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to that certain Senior
Executive Severance Agreement, dated May 21, 1993 (the "Severance Agreement")
and wish to amend the Severance Agreement as herein set forth: and
WHEREAS, the Board of Directors of the Corporation has approved the
following amendments to the Severance Agreement at a meeting of the Board of
Directors duly held on May 9, 1995 and has further ratified the following
amendments by Unanimous Written Consent of the Board of Directors dated
February 28, 1997.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 4(a) of the Severance Agreement is hereby amended so that said
Section 4(a) shall be and read as follows:
"a) Payment to the Executive as compensation for services rendered
to the Corporation a lump sum cash amount (subject to any applicable
payroll or other taxes required to be withheld) equal to twice (two
times) the sum of (i) the highest annual base salary received by the
Executive during the five-year period prior to the Change of Control (or
such shorter period that the Executive was employed by the Corporation or
a Subsidiary) or, if the amount would be greater, the highest annualized
base salary that the Executive would have received based on the highest
base annual salary rate in effect during such period and (ii) the highest
annual bonus received by the Executive during such five-year period, in
each case calculated without regard to amounts deferred under the
qualified and non-qualified plans of the Corporation. In the event that
there are fewer than 12 whole or partial months remaining from the date
of Termination to the Executive's normal retirement date, the amount to
be paid hereunder will be reduced by multiplying it by a fraction the
numerator of which is the number of whole or partial months so remaining
and the denominator of which is 12."
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2. Section 5 of the Severance Agreement is hereby amended by replacing the
word "options" appearing in the second line thereof with the word "option" and
inserting the words "stock incentive," immediately after the word "option" in
the second line thereof.
3. Section 6 of the Severance Agreement is hereby amended by adding the
words "and each anniversary thereafter" immediately after the word
"anniversary" in the third line thereof.
4. Section 9 of the Severance Agreement is hereby amended so that said
Section 9 shall be and read as follows:
9. Taxes.
"(a) Notwithstanding anything herein to the contrary, if
any of the payments provided for under Section 4 of this
Agreement, calculated without regard to any other payments or
benefits which the Executive has the right to receive from the
Corporation (including acceleration of vesting of options and
performance shares), would constitute a "parachute payment" (as
defined in Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code")), the payments pursuant to Section 4 of
this Agreement shall be reduced to the largest amount as would
result in no payments or portions thereof being nondeductible
by the Corporation under Section 280G of the Code, calculated
without regard to any other payments which the Executive has
the right to receive from the Corporation (including
acceleration of vesting of options and performance shares). In
the event that the Executive and the Corporation dispute
whether there should be any reduction in payments pursuant to
this Section 9, the determination of whether such reduction is
necessary shall be made by an independent accounting firm or
law firm mutually acceptable to the Executive and the
Corporation and such determination shall be conclusive and
binding on the Corporation and the Executive.
(b) In the event that any payment or benefit to the
Executive or for his benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment
with the Corporation or a change in ownership or effective
control of the Corporation or of a substantial portion of its
assets (each a "Payment" and collectively, the "Payments"),
would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the
Executive 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
Executive will be entitled to receive an additional payment (a
"Gross-Up Payment"), such that the net amount retained by the
Executive, after deduction and/or payment of any Excise Tax on
the Payments and the Gross-Up Payment and any federal, state
and local
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income tax on the Gross-Up Payment (including any interest or
penalties, other than interest and penalties imposed by reason
of the Executive's failure to file timely a tax return or pay
taxes shown due on his return, imposed with respect to such
taxes), shall be equal to the Payments. Notwithstanding the
foregoing, the amount of the Gross-Up Payment otherwise
required pursuant to Section 9(b) of this Agreement shall be
reduced by an amount equal to the Gross-Up Payment (if any)
that would have been required under the preceding portion of
Section 9(b) of this Agreement if no payments or benefits
arising from or relating to the acceleration, vesting or
lapsing of restrictions on incentive awards (including, without
limitation, stock options, performance shares and restricted
stock) had been made.
(c) An initial determination as to whether a Gross-Up
Payment is required pursuant to this Agreement and the amount
of such Gross-Up Payment shall be made at the Corporation's
expense by an accounting firm selected by the Corporation and
reasonably acceptable to the Executive which is designated as
one of the five largest accounting firms in the United States
(the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed
supporting calculations and documentation to the Corporation
and the Executive within five days of the termination date if
applicable, or such other time as requested by the Executive
(provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax) and if the
Accounting Firm determines that no Excise Tax is payable by the
Executive as provided in Section 9(b) above, it shall furnish
the Executive with an opinion reasonably acceptable to the
Executive to such effect. Within ten days of the delivery of
the Determination to the Executive, the Executive shall have
the right to dispute the Determination (the "Dispute"). The
Gross-Up Payment, if any, as determined pursuant to this
Paragraph 9(c) shall be paid by the Corporation to the
Executive within five days of the receipt of the Accounting
Firm's determination. The existence of the Dispute shall not
in any way affect the Executive's right to receive the Gross-Up
Payment in accordance with the Determination. Upon the final
resolution of a Dispute, the Corporation shall promptly pay to
the Executive any additional amount required by such
resolution. If there is no Dispute, the Determination shall be
binding, final and conclusive upon the Corporation and the
Executive subject to the application of Section 9(d) below.
(d) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a
Gross-Up Payment (or a portion thereof) will be paid which
should not have been paid (an "Excess Payment") or a Gross-Up
Payment (or a portion thereof) which should have been paid will
not have been paid (an "Underpayment"). An Underpayment shall
be deemed to have occurred (i) upon notice (formal or informal)
to the Executive from any governmental taxing authority that
the
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Executive's tax liability (whether in respect of the
Executive's current taxable year or in respect of any prior
taxable year) may be increased by reason of the imposition of
the Excise Tax on a Payment or Payments with respect to which
the Corporation has failed to make a sufficient Gross-Up
Payment, (ii) upon a determination by a court, (iii) by reason
of a determination by the Corporation (which shall include the
position taken by the Corporation, together with its
consolidated group, on its federal income tax return) or (iv)
upon the resolution of the Dispute to the Executive's
satisfaction. If an Underpayment occurs, the Executive shall
promptly notify the Corporation and the Corporation shall
promptly, but in any event, at least five days prior to the
date on which the applicable government taxing authority has
requested payment, pay to the Executive an additional Gross-Up
Payment equal to the amount of the Underpayment plus an amount
that, net of federal, state and local income taxes, is equal to
any interest and penalties (other than interest and penalties
imposed by reason of the Executive's failure to file timely a
tax return or pay taxes shown due on the Executive's return)
imposed on the Underpayment. An Excess Payment shall be deemed
to have occurred upon a Final Determination (as hereinafter
defined) that the Excise Tax shall not be imposed upon a
Payment or Payments (or portion thereof) with respect to which
the Executive had previously received a Gross-Up Payment. A
"Final Determination" shall be deemed to have occurred when the
Executive has received from the applicable government taxing
authority a refund of taxes or other reduction in the
Executive's tax liability by reason of the Excess Payment and
upon either (x) the date a determination is made by, or an
agreement is entered into with, the applicable governmental
taxing authority which finally and conclusively binds the
Executive and such taxing authority, or in the event that a
claim is brought before a court of competent jurisdiction, the
date upon which a final determination has been made by such
court and either all appeals have been taken and finally
resolved or the time for all appeals has expired or (y) the
statute of limitations period with respect to the Executive's
applicable tax return has expired. If an Excess Payment is
determined to have been made, the amount of the Excess Payment
shall be treated as a loan by the Corporation to the Executive
and the Executive shall pay to the Corporation on demand (but
not less than 10 days after the determination of such Excess
Payment and written notice has been delivered to the Executive)
the amount of the Excess Payment plus interest at an annual
rate equal to the Applicable Federal Rate provided for in
Section 1274(d) of the Code from the date the Gross-Up Payment
(to which the Excess Payment relates) was paid to the Executive
until the date of repayment to the Corporation.
(e) Notwithstanding anything contained in this Agreement
to the contrary, in the event that, according to the
Determination, an Excise Tax will be imposed on any Payment or
Payments, the Corporation shall pay to the applicable
government taxing authorities as Excise Tax
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withholding, the amount of the Excise Tax that the Corporation
has actually withheld from the Payment or Payments."
5. Section 10(f) of the Severance Agreement is hereby amended to change the
addresses to which notices and other communications hereunder shall be sent as
follows:
If to the Executive:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
If to the Corporation:
The DII Group, Inc.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
6. Except as otherwise expressly provided herein, the Severance Agreement
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
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Xxxxxx X. Xxxxxx
THE DII GROUP, INC.
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Name:
Title:
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