EXHIBIT 10.12
SOLECTRON CORPORATION
XXXX XXXXXX EMPLOYMENT AGREEMENT
This Agreement is entered into on June 18, 2003 (the "EFFECTIVE DATE")
by and between Solectron Corporation (the "COMPANY"), and Xxxx Xxxxxx
("EXECUTIVE").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date,
Executive will serve as the Executive Vice President of Worldwide Operations of
the Company. Executive's principal place of employment will be at the Company's
headquarters in Milpitas, California. Executive will render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, as will reasonably be assigned to him
by the Company's Chief Executive Officer. The Executive shall report to the
Company's President and Chief Executive Officer. The Company's worldwide
operations shall report to Executive, including Manufacturing, Materials,
Information Technology, Logistics (including transportation) and all company
wide quality programs. The period of Executive's employment under this Agreement
is referred to herein as the "EMPLOYMENT TERM."
(b) Obligations. During the Employment Term, Executive
will devote Executive's full business efforts and time to the Company. For the
duration of the Employment Term, Executive agrees not to actively engage in any
other employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the President and Chief Executive
Officer (which approval will not be unreasonably withheld); provided, however,
that Executive may, without the approval of the President and Chief Executive
Officer, serve in any capacity with any civic, educational or charitable
organization, provided such services do not interfere with Executive's
obligations to the Company. It is understood and agreed by the Company and
Executive that Executive's obligation to commence performing services hereunder
is subject to Executive's possible need of continuing to provide transitional
services to Executive's present employer for such period as such employer may
reasonably request, and that during such period of transitional services for
such employer, Executive will be treated by the Company as being on an unpaid
leave of absence from the Company.
2. At-Will Employment. Executive and the Company agree that
Executive's employment with the Company constitutes "at-will" employment.
Executive and the Company acknowledge that this employment relationship may be
terminated at any time, upon written notice to the other party, with or without
good cause or for any or no cause, at the option either of the Company or
Executive. However, as described in this Agreement, Executive may be entitled to
severance benefits depending upon the circumstances of Executive's termination
of employment. Upon the termination of Executive's employment with the Company
for any reason, the Executive will be entitled to payment of all accrued but
unpaid vacation, expense reimbursements and other benefits due to Executive
through his termination date under any Company-provided or paid plans, policies
and arrangements, and Executive will also be entitled to payment of the vested
portion, if any, of his Deferred Compensation (as adjusted for investment
returns thereon) in accordance with his payout election pursuant to Section
4(g).
3. Term of Agreement. This Agreement will have an initial term of
two (2) years commencing on the Effective Date. On the second annual anniversary
of the Effective Date and on each annual anniversary of the Effective Date
thereafter, this Agreement automatically will
renew for an additional term of one year unless at least thirty (30) days prior
to such anniversary, Executive or the Company gives the other party written
notice that the Agreement will not be renewed. If Executive incurs a termination
of employment that entitles Executive to receive the payments and benefits
described in Sections 8, 9, and 11 of this Agreement will not terminate until
all of Executive's and the Company's obligations under the Agreement have been
satisfied.
4. Compensation.
(a) Base Salary. The Company will initially pay Executive
an annual salary of $600,000 as compensation for his services (the "BASE
SALARY"). The Base Salary will be paid periodically in accordance with the
Company's normal payroll practices and be subject to the usual, required
withholding. Executive's salary will be subject to review and adjustments will
be made based upon the Company's standard practices.
(b) Signing Bonus. Executive will receive a bonus as the
result of executing this Agreement in the gross amount of $1,000,000 (the
"SIGNING BONUS") to be paid within thirty (30) days of the Effective Date. If,
before the third annual anniversary of the Effective Date, the Executive's
employment is terminated by the Company for Cause or by the Executive without
Good Reason, the Executive shall be required to repay the amount of such signing
bonus to the Company in full within 30 days following such termination date.
(c) Annual Bonus. Executive's annual target bonus will be
100% of his Base Salary ("TARGET BONUS") with an annual maximum bonus of 200% of
his Base Salary. Executive's annual bonus will be payable upon achievement of
performance goals established by the Compensation Committee of the Board (the
"COMMITTEE"). Notwithstanding anything in the foregoing to the contrary, the
Executive's annual bonus for his first year of employment will be guaranteed to
equal at least $600,000, and shall be determined in accordance with the
following two sentences. For purposes of the Company's fiscal year ending August
31, 2003, the Executive shall receive a pro rata annual bonus equal to (x) the
greater of (i) $600,000 and (ii) the full year actual annual bonus, multiplied
by (y) a fraction, the numerator of which is the number of days between and
including the Effective Date and August 31, 2003 and the denominator of which is
365 (the "Fiscal 2003 Fraction"). For purposes of the Company's fiscal year
ending August 31, 2004, the Executive shall receive an annual bonus equal to the
greater of (x) (i) $600,000 multiplied by the difference between 1 and the
Fiscal 2003 Fraction (the "Fiscal 2004 Fraction") plus (ii) the actual full year
annual bonus (if any) multiplied by the difference between 1 and the Fiscal 2004
Fraction or (y) the actual full year annual bonus.
(d) Stock Option. As of the Effective Date, Executive
will be granted a nonstatutory stock option to purchase 1,600,000 shares of the
Company's Common Stock (the "COMMON STOCK") at an exercise price equal to the
fair market value per share on the date of grant (the "OPTION"). The Option will
vest as to 1/48th of the shares subject to the Option upon the Executive's
completion of each full month of Service (as defined in Section 13) over the
forty-eight (48)-month period measured from the date of grant. Notwithstanding
anything in the foregoing to the contrary, the Shares subject to the Option
shall become fully vested upon the occurrence of a Change in Control. The Option
may be granted from one of the Company's stock option plans or pursuant to a
stand-alone stock option agreement, or a combination of both. As a result, the
Option will be subject to the terms, definitions and provisions of the Company's
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stock option plan under which it is granted, if any, (the "OPTION PLAN") and the
stock option agreement by and between Executive and the Company (the "OPTION
AGREEMENT"), both of which documents are incorporated herein by reference;
provided, however, that the terms and provisions of the Option Agreement shall
be substantially the same as if the portion of the Option represented by such
Option Agreement had been granted under the Option Plan. The Company shall take
such actions as are necessary to register the shares relating to such Options
under the applicable securities laws on or before the date such Options become
exercisable.
(e) Restricted Stock. Immediately upon the commencement
of employment, the Company will issue Executive 400,000 shares of Common Stock
(the "RESTRICTED STOCK") at $0.001 per share. In the event Executive's Service
(as defined in Section 13) terminates for any reason, and subject to the
provisions of this Agreement, the Company will have the right to repurchase the
Restricted Stock at $0.001 per share (the "REPURCHASE RIGHT"). Subject to the
accelerated vesting provisions set forth herein, all of the Restricted Stock
will vest and be released from the Company's Repurchase Right upon the
Executive's continuation in Service through the fourth anniversary of the
commencement of employment. Notwithstanding anything in the foregoing to the
contrary, all of the Restricted Stock will vest and be released from the
Company's Repurchase Right upon the occurrence of a Change in Control.
The Restricted Stock will be subject to a restricted stock
agreement by and between Executive and the Company (the "RESTRICTED STOCK
AGREEMENT"), which such agreement is hereby incorporated by reference and will
provide that Executive may satisfy the minimum withholding tax obligation that
may arise upon the vesting of such Restricted Stock with shares of Restricted
Stock that so vest and are released from the Company's Repurchase Right on such
date and that are valued, for such purpose, at the closing price per share of
Common Stock on such date. The Company shall take such actions as are necessary
to register the Restricted Stock under the applicable securities laws on or
before the date such Restricted Stock ceases to be subject to the Company's
Repurchase Right.
(f) Future Equity Awards. The Executive acknowledges that
the next scheduled equity award date for all senior executives is September
2005, but the Committee is not precluded from making earlier awards if it
chooses to do so in its sole discretion.
(g) Deferred Compensation. On the Effective Date, the
Company will credit $800,000 under its Executive Deferred Compensation Plan, as
amended and restated effective January 1, 2003 (the "DEFERRED COMPENSATION
PLAN") for the benefit of Executive (the "DEFERRED COMPENSATION PAYMENT").
The Deferred Compensation Payment (as adjusted for investment
returns thereon) will vest upon the eighth annual anniversary of the
commencement of the Executive's employment. Notwithstanding anything in the
foregoing to the contrary, the Deferred Compensation Payment will vest upon the
occurrence of a Change in Control. The entire Deferred Compensation Payment will
be held in a so-called rabbi trust, and Executive will have the right to invest
and reinvest the Deferred Compensation Payment and earnings thereon throughout
the deferral period, subject to the terms of the Deferred Compensation Plan.
Executive will elect the schedule for the deferred payout of the Deferred
Compensation Payment
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within thirty (30) days after the Effective Date and such election will be
consistent with the deferred payment provisions of Articles 5 and 6 of the
Deferred Compensation Plan.
5. Employee Benefits. During the Employment Term, Executive will
be eligible to participate in accordance with the terms of all Company employee
benefit plans, policies and arrangements that are applicable to other senior
executives of the Company, as such plans, policies and arrangements and terms
may exist from time to time; provided that the Company shall waive any waiting
periods or pre-existing condition clauses under its welfare benefit plans so
that welfare benefit plan coverage for the Executive and his eligible dependents
shall being on the Effective Date.
6. Relocation. Executive will receive the Company's standard
executive relocation package to move from his current residence to the
metropolitan area containing the Company's headquarters. A copy of the Company's
executive relocation policy has been provided to Executive and is incorporated
herein by reference.
7. Expenses. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
8. Regular Severance.
(a) Termination Without Cause; Resignation for Good
Reason. In the event that the Company terminates Executive's employment for
reasons other than "Cause" (as defined in Section 13) or "Disability" (as
defined in Section 13), or in the event Executive resigns as a result of "Good
Reason" (as defined in Section 13), either of which occur prior to a "Change of
Control" (as defined in Section 13) or after twelve (12) months following a
Change of Control, then Executive will be entitled to (A) the immediate vesting
of the Deferred Compensation Payment (as adjusted for investment returns
thereon) and payment in accordance with his payout election pursuant to Section
4(g) and (B) the immediate vesting and release from the Company's Repurchase
Right of the Restricted Stock, and (C) Executive shall have no repayment
obligation with respect to the Signing Bonus described in Section 4(b). In
addition, Executive will receive a six (6)-month consulting contract
(substantially in the form attached hereto as Exhibit A) with the aggregate
consulting fees (which shall be paid ratably during the consulting period in
accordance with the Company's regular payroll schedule) equal to one-half (1/2)
of the sum of his annual Base Salary and Target Bonus, each at the level then in
effect. During the consulting term (which shall commence immediately upon
termination of Executive's employment with the Company), the Executive shall
receive Company-paid coverage for Executive and Executive's eligible dependents
under the Company's "Benefit Plans" (as defined in Section 13). Following the
end of the consulting period, Executive will receive: (i) a lump-sum payment
equal to one (1) times his annual Base Salary and Target Bonus, plus one (1)
month (base salary and pro rated target bonus) per full year of service in
excess of six (6) years service, not to exceed a maximum of twenty-four (24)
months base and target bonus, each at the level then in effect, and (ii)
Company-paid coverage for Executive and Executive's eligible dependents under
the Company's Benefit Plans for the twelve (12) months following the end of the
consulting period.
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(b) Voluntary Termination without Good Reason;
Termination for Cause. If Executive's employment with the Company terminates
voluntarily by Executive without Good Reason or for Cause by the Company, then
(i) all further vesting of the Executive's outstanding options to purchase
Common Stock will terminate immediately, (ii) all payments of compensation by
the Company to Executive hereunder will terminate immediately (except as to
amounts already earned), (iii) the Executive's vested rights to his Restricted
Stock will be determined in accordance with Section 4(e), (iv) the Executive
will be paid all accrued but unpaid vacation, expense reimbursements and other
benefits due to Executive through his termination date under any
Company-provided or paid plans, policies and arrangements, (v) Executive will be
entitled to payment of the vested portion, if any, of his Deferred Compensation
Payment (as adjusted for investment returns thereon) in accordance with his
payout election pursuant to Section 4(g), and (vi) Executive will only be
eligible for severance benefits in accordance with the Company's established
policies as then in effect.
(c) Termination due to Death or Disability. If
Executive's employment with the Company terminates due to the Executive's death
or Disability (as defined in Section 13), then Executive (or his estate) will be
entitled to (A) the immediate vesting of the Deferred Compensation Payment (as
adjusted for investment returns thereon) and payment in accordance with his
payout election pursuant to Section 4(g) and (B) the immediate vesting and
release from the Company's Repurchase Right of the Restricted Stock, and (C)
Executive (or his estate) shall have no repayment obligation with respect to the
Signing Bonus described in Section 4(b). Upon such termination, (i) all further
vesting of the Executive's outstanding options to purchase Common Stock will
terminate immediately, provided that any vested options shall remain exercisable
until the earlier of the one year anniversary of Executive's death or
termination due to Disability or the end of the original option term, (ii) all
payments of compensation by the Company to Executive hereunder will terminate
immediately (except as to amounts already earned), and (iii) the Executive (or
his estate) will be paid all accrued but unpaid vacation, expense reimbursements
and other benefits due to Executive through his termination date under any
Company-provided or paid plans, policies and arrangements.
9. Change of Control Severance.
(a) Termination Without Cause; Resignation for Good
Reason. If within twelve (12) months following a Change of Control the Company
(or acquiring entity) terminates Executive's employment for reasons other than
"Cause" (as defined in Section 13) or "Disability" (as defined in Section 13),
or Executive resigns for "Good Reason" (as defined in Section 13), then
Executive will receive: (i) a lump sum payment equal to two (2) times his annual
Base Salary and Target Bonus, both at the level in effect immediately prior to
his termination date or (if greater) at the level in effect immediately prior to
the Change in Control, (ii) Company-paid coverage for Executive and Executive's
eligible dependents under the Company's "Benefit Plans" (as defined in Section
13) for thirty-six (36) months following such termination, and (iii) any Options
(as described in Section 4(d)) shall remain exercisable until the earlier of the
two year anniversary of such termination or resignation or the end of the
original option term. In addition, Executive shall have no repayment obligation
with respect to the Signing Bonus described in Section 4(b). For the avoidance
of doubt, Executive's rights to his Deferred Compensation Payment (described in
Section 4(g)), his Restricted Stock (described in
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Section 4(e)) and his Options (described in Section 4(d)) shall have become
fully vested upon the occurrence of a Change in Control.
(b) Voluntary Termination without Good Reason;
Termination for Cause. If within twelve (12) months following a Change in
Control, Executive's employment with the Company terminates voluntarily by
Executive without Good Reason or for Cause by the Company, then (i) all further
vesting of the Executive's outstanding options to purchase Common Stock will
terminate immediately, (ii) all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as to amounts already
earned), (iii) the Executive will be paid all accrued but unpaid vacation,
expense reimbursements and other benefits due to Executive through his
termination date under any Company-provided or paid plans, policies and
arrangements, (iv) Executive will be entitled to payment of his Deferred
Compensation (described in Section 4(g)) (which shall become fully vested upon a
Change in Control) (as adjusted for investment returns thereon) in accordance
with his payout election pursuant to Section 4(g), (v) Executive will be
entitled to his Restricted Shares (described in Section 4(e)) (which shall have
become fully vested upon a Change in Control), (vi) Executive will be entitled
to his Options (described in Section 4(d)) and (vii) Executive will only be
eligible for severance benefits in accordance with the Company's established
policies as then in effect.
(c) Termination due to Death or Disability. In the event
the Executive's employment terminates by reason of death or "Disability" (as
defined in Section 13) within twelve (12) months following a Change of Control,
then (i) all further vesting of the Executive's outstanding options to purchase
Common Stock will terminate immediately, provided that any vested options shall
remain exercisable until the earlier of the one year anniversary of Executive's
death or termination due to Disability or the end of the original option term,
(ii) all payments of compensation by the Company to Executive hereunder will
terminate immediately (except as to amounts already earned), and (iii) the
Executive (or his estate) will be paid all accrued but unpaid vacation, expense
reimbursements and other benefits due to Executive through his termination date
under any Company-provided or paid plans, policies and arrangements. In
addition, Executive (or his estate) shall have no repayment obligation with
respect to the Signing Bonus described in Section 4(b). For the avoidance of
doubt, Executive's rights to his Deferred Compensation Payment (described in
Section 4(g)), his Restricted Stock (described in Section 4(e)) and his Options
(described in Section 4(d)) shall have become fully vested upon the occurrence
of a Change in Control.
10. Conditions to Receipt of Severance; No Duty to Mitigate.
(a) Separation Agreement and Release of Claims. The
receipt of any severance pursuant to Sections 8 and 9 will be subject to
executive signing and not revoking a separation agreement and release of claims
in a form reasonably acceptable to the Company. Such agreement will provide
(among other things) that Executive will not disparage the Company and the
Company (acting through its directors and officers) or its directors and
officers will not disparage the Executive during the twenty-four (24)-month
period following a termination that would otherwise trigger the payment of
severance under Sections 8 and 9. No severance pursuant to such Sections will be
paid or provided until the separation agreement and release agreement becomes
effective.
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(b) Non-Competition. In the event of a termination of
Executive's employment that would otherwise entitle Executive to the receipt of
severance pursuant to Sections 8 and 9, Executive agrees not to engage in
"Competition" (as defined in Section 13) during the twenty-four (24)-month
period following such termination. In the event Executive engages in Competition
within such period, all continuing payments and benefits to which Executive may
otherwise be entitled pursuant to Sections 8 and 9 will immediately cease
(including Executive's ability to exercise any outstanding stock options) and
the Company will be entitled to monetary damages (not to exceed the value of the
applicable severance benefits actually paid pursuant to Sections 8 and 9) or
equitable relief in the event of a breach of such covenant.
(c) Nonsolicitation. The receipt of any severance
benefits pursuant to Sections 8 and 9 will be subject to Executive not violating
the provisions of Section 17. In the event Executive breaches the provisions of
Section 17, all continuing payments and benefits to which Executive may
otherwise be entitled pursuant to Sections 8 and 9 will immediately cease
(including Executive's ability to exercise any outstanding stock options).
(d) No Duty to Mitigate. Executive will not be required
to mitigate the amount of any payment contemplated by this Agreement, nor will
any earnings that Executive may receive from any other source reduce any such
payment.
11. Golden Parachute Excise Tax.
(a) In the event it will be determined that any payment
or distribution by the Company or other amount with respect to the Company to or
for the benefit of Executive, 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 Section
12 (a "PAYMENT"), is (or will 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 (or will be) incurred by Executive with respect to the
excise tax imposed by Section 4999 of the Code with respect to the Company (the
excise tax, together with any interest and penalties, are hereinafter
collectively referred to as the "EXCISE TAX"), Executive will be entitled to
receive an additional cash payment (a "GROSS-UP PAYMENT") from the Company in an
amount equal to the sum of the Excise Tax and an amount sufficient to pay the
cumulative Excise Tax and all cumulative income taxes (including any interest
and penalties imposed with respect to such taxes) relating to the Gross-Up
Payment so that the net amount retained by Executive is equal to all payments to
which Employee is entitled pursuant to the terms of this Agreement (excluding
the Gross-Up Payment) or otherwise less income taxes (but not reduced by the
Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 11(c), all
determinations required to be made under this Section 11, 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 the determination, will be made by
a nationally recognized certified public accounting firm selected by the Company
with the consent of Executive, which should not unreasonably be withheld (the
"ACCOUNTING FIRM") which will provide detailed supporting calculations both to
the Company and Executive within thirty (30) days after the receipt of notice
from Executive that
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there has been a Payment, or such earlier time as is requested by the Company.
All fees and expenses of the Accounting Firm will be borne solely by the
Company. The Company, as determined in accordance with this Section 11, will pay
any Gross-Up Payment to Executive within five (5) days after the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it will so indicate to Executive in writing.
Any determination by the Accounting Firm will be binding upon the Company and
Executive; provided, however, that as a result of uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm, it is possible that Gross-Up Payments that the Company should
have made will not have been made (an "UNDERPAYMENT"), consistent with the
calculations required to be made hereunder. In the event the Company exhausts
its remedies in accordance with Section 11(c), or elects not to exercise such
remedies, and Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm will determine the amount of underpayment that has
occurred and the Underpayment will be promptly paid by the Company to or for the
benefit of Executive.
(c) Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require a
Gross-Up Payment (that has not already been paid by the Company). The
notification will be given as soon as practicable but no later than ten (10)
business days after Executive is informed in writing of the claim and will
apprise the Company of the nature of the claim and the date on which the claim
is requested to be paid. Executive will not pay the claim prior to the
expiration of the 30-day period following the date on which Executive gives
notice to the Company or any shorter period ending on the date that any payment
of taxes with respect to the claim is due. If the Company notifies Executive in
writing prior to the expiration of the 30-day or shorter period that it desires
to contest the claim, Executive will:
(i) give the Company any information reasonably
requested by the Company relating to the claim;
(ii) take any action in connection with
contesting the claim as the Company will reasonably request in writing
from time to time, including, without limitation, accepting legal
representation with respect to the claim by an attorney reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest the claim; and
(iv) permit the Company to participate in any
proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with the contest and will indemnify and hold Executive 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 the representation and payment of costs
and expenses. Without limitation of the forgoing provisions of this Section 11,
the Company will control all proceedings taken in connection with the contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences
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with the taxing authority in respect of the claim and may, at its sole option,
either direct Executive to pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute the
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company will
determine. If the Company directs Executive to pay the claim and xxx for a
refund, the Company will advance the amount of the payment to Executive, on an
interest-free basis, and will indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to the advance or with
respect to any imputed income with respect to the advance; and any extension of
the statute of limitations relating to payment of taxes for the taxable year of
Executive with respect to which the contested amount is claimed to be due will
be limited solely to the contested amount. The Company's control of the contest
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Executive will 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. If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 11(d), Executive becomes entitled to receive any
refund with respect to the claim, Executive will, subject to the Company's
compliance with the requirements of Section 11(d), promptly pay to the Company
the amount of the refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to this Section 11(d), a determination is made
that Executive will not be entitled to any refund with respect to the claim and
the Company does not notify Executive in writing of its intent to contest the
denial of refund prior to the expiration of thirty (30) days after the
determination, then the advance will be forgiven and will not be required to be
repaid and the amount of the advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
(e) Should the Company elect not to contest the Internal
Revenue Service claim in accordance with the foregoing provisions of Section
11(c) or otherwise not provide Executive with written notice of its intention to
contest such claim within the applicable thirty (30) day or shorter notice
period provided in Section 11(c), then the Company will promptly thereafter pay
Executive the applicable Gross-Up Payment attributable to such claim.
12. Attorneys' Fees. The Company will reimburse Executive's
reasonable attorneys' fees and other professional fees (up to $35,000) in
connection with the negotiation, preparation and execution of this Agreement
with the Company.
13. Definitions.
(a) Benefit Plans. For purposes of this Agreement,
"BENEFIT PLANS" means plans, policies or arrangements that the Company sponsors
(or participates in) and that immediately prior to Executive's termination of
employment provide Executive and/or Executive's eligible dependents with
medical, dental, vision and/or financial counseling benefits. Benefit Plans do
not include any other type of benefit (including, but not by way of limitation,
disability, life insurance or retirement benefits). A requirement that the
Company provide Executive and Executive's eligible dependents with coverage
under the Benefit Plans will not be satisfied unless the coverage is no less
favorable than that provided to Executive and Executive's eligible dependents
immediately prior to Executive's termination of employment.
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Notwithstanding any contrary provision of Sections 8 and 9, but subject to the
immediately preceding sentence, the Company may, at its option, satisfy any
requirement that the Company provide coverage under any Benefit Plan by instead
providing coverage under a separate plan or plans providing coverage that is no
less favorable or by paying Executive a lump-sum payment which is, on an
after-tax basis, sufficient to provide Executive and Executive's eligible
dependents with equivalent coverage under a third party plan that is reasonably
available to Executive and Executive's eligible dependents.
(b) Cause. For purposes of this Agreement, "CAUSE" will
mean (i) a willful failure by Executive to substantially perform Executive's
material duties under this Agreement other than a failure resulting from the
Executive's complete or partial incapacity due to physical or mental illness or
impairment, (ii) a willful act by Executive that constitutes gross misconduct
and is injurious to the Company, (iii) a willful breach by Executive of a
material provision of this Agreement, (iv) a material and willful violation by
Executive of a federal or state law or regulation applicable to the business of
the Company which is injurious to the Company, or (v) Executive's conviction or
plea of guilty or no contest to a felony. The Company will not terminate
Executive's employment for Cause without first providing Executive with written
notice specifically identifying the acts or omissions constituting the grounds
for a Cause termination and, with respect to clauses (i) through (iv), a
reasonable cure period of not less than thirty (30) days following such notice.
No act or failure to act by Executive will be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Company's best interest.
(c) Change of Control. For purposes of this Agreement,
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease, conveyance or other
disposition of all or substantially all of the Company's assets to any
"person" (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended), entity or group of persons acting in
concert;
(ii) any person or group of persons becoming the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly
or indirectly, of securities of the Company representing 30% or more of
the total voting power represented by the Company's then outstanding
voting securities;
(iii) a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or its controlling entity) at least 50% of the total
voting power represented by the voting securities of the Company or
such surviving entity (or its controlling entity) outstanding
immediately after such merger or consolidation; or
(iv) a contest for the election or removal of
members of the Board that results in the removal from the Board of at
least 33% of the incumbent members of the Board.
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(d) Competition. The Company will create a written list
of up to six companies that compete with the Company (each a "COMPETITOR"). The
Company may revise such list (by adding new companies to the list and reducing a
like number of companies from the list at the same time) in writing until the
last thirty (30) days of Executive's employment with the Company. For purposes
of this Agreement, Executive will be deemed to have engaged in "COMPETITION" if
he renders services for any of the six or fewer Competitors on the list
described in the previous two sentences.
(e) Disability. For purposes of this Agreement,
"DISABILITY" will mean that Executive has been unable to perform the principal
functions of Executive's duties due to a physical or mental impairment, but only
if such inability has lasted or is reasonably expected to last for at least six
(6) months. Whether Executive has a Disability will be determined by the Board
based on evidence provided by one or more physicians selected by the Board and
reasonably acceptable to Executive.
(f) Good Reason. For purposes of this Agreement, "GOOD
REASON" will mean (without Executive's written consent): (i) any reduction in
Executive's title, (ii) any employee other than the Chief Executive Officer is
inserted above Executive in the Company's organizational structure, (iii) the
Executive reports to anyone other than the Chief Executive Officer or the Board,
(iv) the operations described in Section 1(a) above are taken away from the
Executive, (v) a material reduction in Executive's authority, status or
responsibilities, (vi) a reduction in the aggregate level of Executive's
compensation (including Base Salary, Target Bonus and benefits) of more than
10%, other than a percentage reduction which is the same for all officers of the
Company, (vii) a material breach by the Company of its obligations to Executive
under this Agreement, (viii) any relocation of Executive's principal place of
employment by more than twenty-five (25) miles, or (ix) the issuance by the
Company of a notice of nonrenewal under Section 3. With respect to clause (vii),
Executive will not resign for Good Reason without first providing the Company
with written notice specifically identifying the acts or omissions constituting
the grounds for a Good Reason termination and a reasonable cure period of not
less than thirty (30) days following such notice.
(g) Service. For purposes of this Agreement, "SERVICE"
means the performance of services by Executive as an officer, employee,
consultant or board member of the Company or any parent or subsidiary
corporation (as such terms are defined in Sections 424(e) and (f) of the
Internal Revenue Code).
14. Confidential Information. Executive agrees to enter into the
Company's standard Confidential Information and Invention Assignment Agreement
(the "CONFIDENTIAL INFORMATION AGREEMENT") upon commencing employment hereunder.
15. Assignment. This Agreement will be binding upon and inure to
the benefit of (a) the heirs, executors and legal representatives of Executive
upon Executive's death and (b) any successor of the Company. Any such successor
of the Company will be deemed substituted for the Company under the terms of
this Agreement for all purposes. For this purpose, "SUCCESSOR" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. Except as otherwise
permitted by the terms of the
11
Option Plan and the Option Agreement, none of the rights of Executive to receive
any form of compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution. Any other
attempted assignment, transfer, conveyance or other disposition of Executive's
right to compensation or other benefits will be null and void.
16. Notices. All notices, requests, demands and other
communications called for hereunder will be in writing and will be deemed given
(i) on the date of delivery if delivered personally, (ii) one (1) day after
being sent by a well established commercial overnight service, or (iii) four (4)
days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:
If to the Company:
Solectron Corporation
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Chairman, Compensation Committee of the Board of
Directors
If to Executive:
at the last residential address known by the Company.
17. Non-Solicitation. For a period beginning on the Effective Date
and ending twenty-four (24) months after the Executive ceases to be employed by
the Company, Executive, directly or indirectly, whether as employee, owner, sole
proprietor, partner, director, member, consultant, agent, founder, co-venturer
or otherwise, will: (i) not solicit, induce or influence any person to leave
employment with the Company; or (ii) not directly or indirectly solicit business
from any of the Company's substantial customers and users on behalf of any
Competitor (as defined in Section 13(d)).
18. Severability. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement will continue in full force and effect without said
provision.
19. Arbitration.
(a) General. In consideration of Executive's service to
the Company, its promise to arbitrate all employment related disputes and
Executive's receipt of the compensation, pay raises and other benefits paid to
Executive by the Company, at present and in the future, Executive agrees that
any and all controversies, claims, or disputes with anyone (including the
Company and any employee, officer, director, shareholder or benefit plan of the
Company in their capacity as such or otherwise) arising out of, relating to, or
resulting from Executive's service to the Company under this Agreement or
otherwise or the termination of Executive's service with the Company, including
any breach of this Agreement, will be subject to binding arbitration under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280
through 1294.2, including Section 1283.05 (the "RULES") and pursuant to
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California law. Disputes which Executive agrees to arbitrate, and thereby agrees
to waive any right to a trial by jury, include any statutory claims under state
or federal law, including, but not limited to, claims under Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, the California Labor Code,
claims of harassment, discrimination or wrongful termination and any statutory
claims. Executive further understands that this Agreement to arbitrate also
applies to any disputes that the Company may have with Executive.
(b) Procedure. Executive agrees that any arbitration will
be administered by the American Arbitration Association ("AAA") and that a
neutral arbitrator will be selected in a manner consistent with its National
Rules for the Resolution of Employment Disputes. The arbitration proceedings
will be held in Santa Xxxxx County, CA and will allow for discovery according to
the rules set forth in the National Rules for the Resolution of Employment
Disputes or California Code of Civil Procedure. Executive agrees that the
arbitrator will have the power to decide any motions brought by any party to the
arbitration, including motions for summary judgment and/or adjudication and
motions to dismiss and demurrers, prior to any arbitration hearing. Executive
agrees that the arbitrator will issue a written decision on the merits.
Executive also agrees that the arbitrator will have the power to award any
remedies, including attorneys' fees and costs, available under applicable law.
Executive understands the Company will pay for any administrative or hearing
fees charged by the arbitrator or AAA except that Executive will pay the first
$200.00 of any filing fees associated with any arbitration Executive initiates.
Executive agrees that the arbitrator will administer and conduct any arbitration
in a manner consistent with the Rules and that to the extent that the AAA's
National Rules for the Resolution of Employment Disputes conflict with the
Rules, the Rules will take precedence.
(c) Remedy. Except as provided by the Rules, arbitration
will be the sole, exclusive and final remedy for any dispute between Executive
and the Company. Accordingly, except as provided for by the Rules, neither
Executive nor the Company will be permitted to pursue court action regarding
claims that are subject to arbitration. Notwithstanding, the arbitrator will not
have the authority to disregard or refuse to enforce any lawful Company policy,
and the arbitrator will not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.
(d) Availability of Injunctive Relief. In addition to the
right under the Rules to petition the court for provisional relief, Executive
agrees that any party may also petition the court for injunctive relief where
either party alleges or claims a violation of this Agreement or the
Confidentiality Agreement or any other agreement regarding trade secrets,
confidential information, nonsolicitation or Labor Code Section 2870. In the
event either party seeks injunctive relief, the prevailing party will be
entitled to recover reasonable costs and attorneys' fees.
(e) Administrative Relief. Executive understands that
this Agreement does not prohibit Executive from pursuing an administrative claim
with a local, state or federal administrative body such as the Department of
Fair Employment and Housing, the Equal Employment Opportunity Commission or the
workers' compensation board. This Agreement does, however, preclude Executive
from pursuing court action regarding any such claim.
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(f) Voluntary Nature of Agreement. Executive acknowledges
and agrees that Executive is executing this Agreement voluntarily and without
any duress or undue influence by the Company or anyone else. Executive further
acknowledges and agrees that Executive has carefully read this Agreement and
that Executive has asked any questions needed for Executive to understand the
terms, consequences and binding effect of this Agreement and fully understand
it, including that Executive is waiving Executive's right to a jury trial.
Finally, Executive agrees that Executive has been provided an opportunity to
seek the advice of an attorney of Executive's choice before signing this
Agreement.
20. Attorneys' Fees in the Event of Litigation. In the event of
any litigation between the Company and Executive under this Agreement (including
arbitration as provided in Section 20), the Executive will be entitled to
reasonable attorneys' fees incurred in connection therewith if the Executive
prevails on a material issue.
21. Integration. This Agreement, together with the Option Plan,
Option Agreement, Restricted Stock Agreement, the Deferred Compensation Plan and
the Confidential Information Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in writing that specifically references this Section 22 and
signed by duly authorized representatives of the parties hereto.
22. Waiver of Breach. The waiver of a breach of any term or
provision of this Agreement, which must be in writing, will not operate as or be
construed to be a waiver of any other previous or subsequent breach of this
Agreement.
23. Headings. All captions and section headings used in this
Agreement are for convenient reference only and do not form a part of this
Agreement.
24. Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
25. Governing Law. This Agreement will be governed by the laws of
the State of California (with the exception of its conflict of laws provisions).
26. Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
27. Counterparts. This Agreement may be executed in counterparts,
and each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by their duly authorized officers, as of the day and
year first above written.
COMPANY:
SOLECTRON CORPORATION
/s/ Xxxxx X'Xxxxxx
--------------------------------------------
By: Xxxxx X'Xxxxxx
Title: Senior Vice President, Human Resources
Date: 18 June 2003
EXECUTIVE:
/s/ Xxxx Xxxxxx
--------------------------------------------
Xxxx Xxxxxx
Date: 18 June 2003
15
