Exhibit 10.33
KEY CONTRIBUTOR SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of January 24, 2002, by and between
BENCHMARK ELECTRONICS, INC. ("Benchmark"), and XXXXX X. XXXXX ("Employee").
A. The Executive Compensation Committee of the Board of Directors of Benchmark
has recommended, and the Board of Directors has approved, that Benchmark enter
into severance agreements with key employees who are from time to time
designated by the Executive Compensation Committee;
B. Should Benchmark become subject to any proposed or threatened Change of
Control (as hereinafter defined), the Board of Directors believes it imperative
that Benchmark and the Board of Directors be able to rely upon Employee to
continue in Employee's position, and that Benchmark be able to receive and rely
upon Employee's advice, if requested, as to the best interests of Benchmark and
its stockholders without concern that Employee might be distracted by the
personal uncertainties and risks created by such a proposal or threat;
C. Should Benchmark receive any such proposals, in addition to Employee's
regular duties, Employee may be called upon to assist in the assessment of such
proposals, advise management and the Board of Directors as to whether such
proposals would be in the best interests of Benchmark and its stockholders, and
to take such other actions as the Board of Directors of Directors might
determine to be appropriate;
Accordingly, Benchmark and Employee agree as follows:
1. SERVICES DURING CERTAIN EVENTS. In the event a third person begins a
tender or exchange offer, circulates a proxy to stockholders, or takes other
steps to effect a Change of Control, Employee agrees not to voluntarily leave
the employ of Benchmark or its subsidiaries, and to render the services
contemplated in the recitals to this Agreement, until the third person has
abandoned or terminated his efforts to effect a Change of Control until a Change
of Control has occurred.
2. TERMINATION FOLLOWING CHANGE OF CONTROL. Except as provided in Section
4 hereof, Benchmark will provide or cause to be provided to Employee the rights
and benefits described in Section 3 hereof in the event that Employee's
employment is terminated:
(a) at any time within two years following a Change of Control by
Benchmark or its subsidiaries for reasons other than for "cause" (as such term
is defined in Section 4 hereof) or other than as a consequence of Employee's
death, permanent disability or retirement at or after the normal retirement date
as provided under Benchmark's Retirement Plan as in effect immediately preceding
such date ("Normal Retirement Date"); or
(b) at any time within two years following a Change of Control by
Employee following the occurrence of any of the following events without
Employee's written consent:
(i) the reduction of Employee's annual salary (including any
deferred portions thereof), annual or long-term cash or stock bonus
opportunities, or level of benefits or supplemental compensation; or
(ii) the transfer of Employee to a location requiring a change
in Employee's residence or a material increase in the amount of
travel normally required of Employee in connection with Employee's
employment.
3. RIGHTS AND BENEFITS UPON TERMINATION. In the event of the termination
of Employee's employment under any of the circumstances set forth in Section 2
hereof ("Termination"), Benchmark agrees to provide or cause to be provided to
Employee the following rights and benefits:
(A) LUMP SUM PAYMENT AT TERMINATION. Employee shall be entitled to
receive within 30 days of Termination (i) a lump-sum payment in cash in
the amount equal to two times Employee's Earnings (as such term is defined
in this Section 3(a)), plus (ii) an additional amount sufficient to pay
all excise taxes incurred by Employee in connection with such lump sum
payment so that Employee will receive the same net after-tax amount he
would have received if no excise tax had been imposed; PROVIDED, HOWEVER,
that if there are fewer than 12 months remaining from the date of
Termination to Employee's Normal Retirement Date, the amount calculated
pursuant to this paragraph will be reduced by multiplying such amount by a
fraction, the numerator of which is the number of months (including any
fraction of a month) so remaining to Employee's Normal Retirement Date and
the denominator of which is 12.
For purposes of this Agreement, "Earnings" shall mean the sum of (1)
Employee's Annual Base Pay (as defined below), and (2) Employee's Recent
Cash Bonus (as defined below).
"Annual Base Pay" shall mean the greater of (1) the annualized
amount of Employee's rate of base pay (as shown in Benchmark's payroll
records) immediately before the Change of Control, and (2) the annualized
amount of Employee's rate of base pay (as shown in Benchmark's payroll
records) immediately before the date of Termination.
"Recent Cash Bonus" shall mean the highest bonus received by the
Employee in the year in which a Change of Control occurs or during either
of the proceeding two years, calculated as a percentage of Annual Base Pay
as of the time of such payment. To
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calculate this amount, Benchmark will divide (a) the sum of the bonuses
paid to Employee during the first calendar quarter of each of those three
years, by (b) the annualized amount of Employee's rate of base pay (as
shown in Benchmark's payroll records) at the time of such payment.
(B) OTHER BONUSES. Employee shall be entitled to any individual
bonuses or individual incentive compensation not yet paid but payable
under Benchmark's plans for years prior to the year of Employee's
termination of employment. Such amounts shall be paid to Employee in a
single lump sum cash payment along with the payment of the lump sum
severance payment described in 3(a).
(C) DUTY TO MITIGATE. Employee's entitlement to benefits hereunder
shall not be governed by any duty to mitigate damages by seeking further
employment nor offset by any compensation which Employee may receive from
future employment.
(D) PAYMENT OBLIGATIONS ABSOLUTE. Benchmark's obligation to pay or
cause to be paid to Employee the benefits and to make the arrangements
provided in this Section 3 shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
setoff, counterclaim, recoupment, defense or other right, which Benchmark
may have against Employee or anyone else. All amounts payable by or on
behalf of Benchmark hereunder shall be paid without notice or demand. Each
and every payment made hereunder by or on behalf of Benchmark shall be
final and Benchmark and its subsidiaries shall not, for any reason
whatsoever, seek to recover all or any part of such payment from Employee
or from whomever shall be entitled thereto.
4. CONDITIONS TO THE OBLIGATIONS OF BENCHMARK. Benchmark shall have no
obligation to provide or cause to be provided to Employee the rights and
benefits described in Section 3 hereof if either of the following events shall
occur:
(A) TERMINATION FOR CAUSE. Benchmark or its subsidiaries shall
terminate Employee's employment for "cause." For purposes of this
Agreement, the parties agree that the phrase "for cause" should be
interpreted in the context of an employment arrangement for an executive
with unique responsibilities to participate in the execution of the
business plan adopted by Benchmark's Board of Directors. Accordingly, the
term "for cause" includes (i) acts of dishonesty; (ii) knowing violations
of any written policy of Company or applicable to Benchmark's operations;
(iii) violations of applicable laws, rules or regulations that expose
Company to damages or liability; (iv) breach of fiduciary duty; and (v)
failure to fulfill assigned responsibilities to achieve the earnings,
revenue or profitability targets established by the Board of Directors.
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(B) RESIGNATION AS DIRECTOR. Employee shall, promptly after
Termination and upon receiving a written request to do so, resign as a
director and/or officer of each subsidiary and affiliate of Benchmark of
which Employee is then serving as a director and/or officer.
5. CONFIDENTIALITY; NON-SOLICITATION; COOPERATION.
(A) CONFIDENTIALITY. Employee agrees that at all times following
Termination, Employee will not, without the prior written consent of
Benchmark, disclose to any person, firm or corporation any confidential
information of Benchmark or its subsidiaries which is now known to
Employee or which hereafter may become known to Employee as a result of
Employee's employment or association with Benchmark and which could be
helpful to a competitor, unless such disclosure is required under the
terms of a valid and effective subpoena or order issued by a court or
governmental body; PROVIDED, HOWEVER, that the foregoing shall not apply
to confidential information which becomes publicly disseminated by means
other than a breach of this Agreement.
(B) NON-SOLICITATION. Employee agrees that for a period of three
years following the date of Termination (or until Employee's Normal
Retirement Date, whichever is sooner) Employee will not induce, either
directly or indirectly, any employee of senior to manager level of
Benchmark or any of its subsidiaries to terminate his or her employment.
(C) COOPERATION. Employee agrees that, at all times following
Termination, Employee will furnish such information and render such
assistance and cooperation as may reasonably be requested in connection
with any litigation or legal proceedings concerning Benchmark or any of
its subsidiaries (other than any legal proceedings concerning Employee's
employment). In connection with such cooperation, Benchmark will pay or
reimburse Employee for reasonable expenses.
(D) REMEDIES FOR BREACH. It is recognized that damages in the event
of breach of this Section 5 by Employee would be difficult, if not
impossible, to ascertain, and it is therefore agreed that Benchmark, in
addition to and without limiting any other remedy or right it may have,
shall have the right to an injunction or other equitable relief in any
court of competent jurisdiction, enjoining any such breach, and Employee
hereby waives any and all defenses Employee may have on the ground of lack
of jurisdiction or competence of the court to grant such an injunction or
other equitable relief. The existence of this right shall not preclude
Benchmark from pursuing any other rights and remedies at law or in equity
which Benchmark may have.
6. TERM OF AGREEMENT. This Agreement shall terminate on December 31, 2002;
PROVIDED, HOWEVER, that this Agreement shall automatically renew for successive
one-year terms
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unless Benchmark notifies Employee in writing at least 30 days prior to an
expiration date that it does not desire to renew the Agreement for an additional
term. This Agreement shall also terminate if and when the management of
Benchmark determines that Employee is no longer a key employee for purposes of
being a party to a severance agreement with Benchmark and so notifies Employee
in writing. The preceding provisions of this Section 6 to the contrary
notwithstanding, this Agreement shall not terminate (i) within three years after
a Change of Control or (ii) during any period of time when Benchmark has reason
to believe that any third person has begun a tender or exchange offer,
circulated a proxy to stockholders, or taken other steps or formulated plans to
effect a Change of Control, such period of time to end when, in the opinion of
the Executive Compensation Committee, the third person has abandoned or
terminated his efforts or plans to effect a Change of Control.
7. ARBITRATION. It is the mutual intention of the parties to have any
dispute concerning this Agreement resolved out of court. Accordingly, the
parties agree that any claim or controversy of whatever nature arising from or
relating in any way to this Agreement or the employment of the Employee by the
Company, and any continuing obligations under this Agreement, including disputes
arising under the common law or federal or state statutes, laws or regulations
and disputes with respect to the arbitrability of any claim or controversy,
shall be resolved exclusively by final and binding arbitration before a single
experienced employment arbitrator selected in accordance with the Employment
Dispute Resolution ("EDR") Rules of the American Arbitration Association
("AAA"). The arbitration will be conducted pursuant to the EDR Rules of the AAA,
and the arbitrator shall have full authority to award or grant all remedies
provided by law. The judgment upon the award may be enforced by any court having
jurisdiction thereof. Benchmark shall pay for the fees of the arbitrator and the
administrative and filing fees charged by the AAA.
8. EXPENSES. Benchmark shall pay or reimburse Employee for all costs and
expenses, including, without limitation, attorneys' fees, incurred by Employee
as a result of any arbitration proceeding (including an arbitration claim or
proceeding by Employee against Benchmark) arising out of, or challenging the
validity or enforceability of, this Agreement or any provision hereof.
9. MISCELLANEOUS.
(A) ASSIGNMENT. No right, benefit or interest hereunder shall be
subject to assignment, anticipation, alienation, sale, encumbrance,
charge, pledge, hypothecation or set-off in respect of any claim, debt or
obligation, or to execution, attachment, levy or similar process;
PROVIDED, HOWEVER, that Employee may assign any right, benefit or interest
hereunder if such assignment is permitted under the terms of any plan or
policy of insurance or annuity contract governing such right, benefit or
interest.
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(B) CONSTRUCTION OF AGREEMENT. Nothing in this Agreement shall be
construed to amend any provision of any plan or policy of Benchmark and
its subsidiaries. This Agreement is not, and nothing herein shall be
deemed to create, a commitment of continued employment of Employee by
Benchmark or any of its subsidiaries.
(C) AMENDMENT. This Agreement may not be amended, modified or
canceled except by written agreement of the parties.
(D) WAIVER. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby.
Employee may at any time or from time to time waive any or all
of the rights and benefits provided for herein which have not been
received by Employee at the time of such waiver. In addition, prior to the
last day of the calendar year in which Employee's Termination occurs,
Employee may waive any or all rights and benefits provided for herein
which have been received by Employee; provided that prior to the end of
such year Employee repays to Benchmark (or, if the benefit was received
from an employee benefit plan trust, to such trust) the amount of the
benefit received together with interest thereon at the minimum rate
required to avoid imputed income. Any waiver of benefits pursuant to this
paragraph shall be irrevocable. If Employee waives a right or benefit
provided for herein and such waiver is determined by the Internal Revenue
Service not to be effective, Benchmark shall indemnify Employee for any
federal income and excise taxes Employee incurs as a result of that
determination, so as to put Employee in the position Employee would have
been in had the waiver been given effect.
(E) SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(F) SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of Employee and Employee's personal representative and heirs,
and Benchmark and any successor organization or organizations which shall
succeed to substantially all of the business and property of Benchmark,
whether by means of merger, consolidation, acquisition of substantially
all of the assets of Benchmark or otherwise, including by operation of
law.
(G) TAXES. Any payment or delivery required under this Agreement
shall be subject to all requirements of the law with regard to withholding
of taxes, filing, making of reports and the like, and Benchmark shall use
its best efforts to satisfy promptly all such requirements.
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(H) DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement,
"Change of Control" shall mean:
1. The acquisition by any individual, entity or group of 20%
or more of either (i) the then outstanding shares of common stock of
Benchmark (the "Outstanding Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of Benchmark entitled to
vote generally in the election of directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of this subsection A,
the following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from Benchmark, (ii) any acquisition by
Benchmark, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Benchmark or any corporation controlled
by Benchmark or (iv) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection
(h)(3); or
2. Individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by Benchmark's
shareholders, was approved by a vote of at least majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors; or
3. Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of
Benchmark (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Common Stock and Outstanding Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding voting shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns Benchmark or all or substantially all of Benchmark's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination, or the Outstanding Common Stock and
Outstanding Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of Benchmark or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from
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such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board of Directors, providing for such Business
Combination.
4. Sections (h)(1-3) shall be interpreted in accordance with the
provisions of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and in accordance with the
meaning of Rule 13(d)-3 promulgated under the Exchange Act.
(I) GOVERNING LAW. Except to the extent that federal law controls,
this Agreement shall be governed and construed in accordance with the laws
of the State of Texas.
(J) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby, and incorporates into one document any previous severance
agreement executed by the parties and all amendments thereto as of the
date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of January
24, 2002.
BENCHMARK ELECTRONICS, INC
By: /s/ XXXX X. XX
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Xxxx X. Xx
President and Chief Operating Officer
/s/ XXXXX X. XXXXX
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Signature of Employee
XXXXX X. XXXXX
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Chief Financial Officer
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