PAUL TUFANO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and
Restated Employment Agreement (the “Agreement”) is made
by and between Solectron Corporation (the “Company”),
and Paul Tufano (“Executive”) as of March 14, 2007
(the “Effective Date”).
1. Duties
and Scope of Employment .
Positions
and Duties . Executive
will serve as the Company’s Interim President and Chief
Executive Officer and as Executive Vice President and Chief
Financial Officer. While acting as Interim President and Chief
Executive Officer, Executive will report to the Board of Directors
of the Company (the “Board”). Following the
Company’s hiring of a President and Chief Executive Officer,
Executive shall remain Executive Vice President and Chief Financial
Officer and shall report to the President and Chief Executive
Officer of the Company (the “CEO”). Executive will
render such business and professional services in the performance
of Executive’s duties, consistent with Executive’s
position within the Company, as will reasonably be assigned to
Executive by the Board or the CEO, as the case may be. 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 Board of Directors of the Company (the
“Board”) (which approval will not be unreasonably
withheld); provided, however, that Executive may, without the
approval of the Board, serve in any capacity with any civic,
educational or charitable organization, provided such services do
not interfere with Executive’s obligations to
Company.
2.
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.
3.
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.
(a)
Base Salary . During the Employment Term, the Company will
pay Executive an annual salary of $625,001 as compensation for his
services (the “Base Salary”). The Base Salary will be
paid through payroll periods that are consistent with the
Company’s normal payroll practices, but in all events will
not be less frequent than once per month. Executive’s salary
will be subject to review and adjustments will be made based upon
the Company’s normal performance review practices.
(b)
Bonuses . Executive may participate in any bonus plan or
similar arrangement the Company may have in place that are
applicable to other senior executives of the Company, on such terms
and conditions as the Executive Compensation and Management
Resources Committee of the Board (the “Committee”) may
determine from time to time in its discretion.
(c) Stock
Options . Executive will be eligible to receive options to
purchase the Company’s common stock pursuant to any plans or
arrangements it may have in effect from time to time. The Committee
will determine in its discretion whether Executive will be granted
any such option or options and the terms of any such option or
options in accordance with the terms of any applicable plan or
arrangement that may be in effect from time to time.
Notwithstanding the foregoing, unless Executive’s employment
has been terminated for “Cause” (as defined in Section
7(b) hereof) Executive shall be granted (i) an option to
purchase 125,000 shares of the Company’s Common Stock on the
date hereof and (ii) an option to purchase 750,000 shares of
the Company’s Common Stock on September 3, 2007. The
options shall have an exercise price of $0.001, shall be deemed
exercised when issued and the underlying shares issuable upon
exercise shall be subject to forfeiture until October 15, 2008
unless prior to that date Executive’s employment is
terminated pursuant to the provisions of Sections 5(a) or 5(b)
hereof.
(c)
Deferred compensation . Unless Executive’s employment
has been terminated for “Cause” (as defined in Section
7(b) hereof) the Company shall contribute to the account of
Executive under the Company’s deferred compensation plan
$300,000 on each of the date on which a new CEO is hired and the
first anniversary of such date. This contribution shall fully vest
and shall be no longer subject to forfeiture on October 15,
2008 unless prior to that date Executive’s employment is
terminated pursuant to the provisions of Sections 5(a) or 5(b)
hereof.
(a)
Involuntary Termination other than for Cause, Death or
Disability or Resignation for Good Reason Prior to a Change of
Control or After Twelve Months Following a Change of Control .
If the Executive resigns from the Company for Good Reason or the
Company terminates Executive’s employment with the Company
without Executive’s consent and for a reason other than
Cause, Executive becoming Disabled or Executive’s death, any
of which occur prior to a Change of Control or after twelve
(12) months following a Change of Control and Executive signs
and delivers to the Company a separation agreement and release of
claims in a form satisfactory to the Company, then promptly
following such termination of employment, or, if later, the
effective date of the separation agreement and release of claims,
Executive will receive the following severance from the
Company:
(i)
Accrued Compensation . Executive will be entitled to receive
all accrued vacation, expense reimbursements and any other benefits
due to Executive through the date of termination of employment in
accordance with the Company’s then existing employee benefit
plans, policies and arrangements.
(ii)
Severance Payment . Executive will be paid continuing
payments of severance pay at a rate equal to Executive’s Base
Salary rate, as then in effect, and Executive’s target bonus
for the year of termination, for a period of twelve
(12) months plus one additional month for every full year
Executive has been employed with the Company as of the date of such
termination, not to exceed twenty-four (24) months (the
“Severance Payment Period”), from the date of such
termination, to be paid periodically in accordance with the
Company’s normal payroll policies; provided, however, that if
during the Severance Payment Period Executive engages in
Competition or breaches the covenants in Section 12 or in the
separation agreement, all payments pursuant to this subsection will
immediately cease; and provided further, however, that if the event
giving rise to the payment of severance hereunder is the result of
Executive’s voluntary termination of employment for Good
Reason as a result of the Company’s hiring of a new CEO, the
Severance Payment Period shall be limited to twelve
(12) months.
(iii)
Continued Employee Benefits . Executive will receive
Company-paid coverage during the Severance Payment Period for
Executive and Executive’s eligible dependents under the
Company’s Benefit Plans; provided, however, that if during
the Severance Payment Period Executive engages in Competition or
breaches the covenants in Section 12 or in the separation
agreement, all Company-paid coverage pursuant to
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this subsection
will immediately cease.
(iv) Equity
Awards . All option grants to Executive shall automatically
vest and become exercisable as to 100% of the shares of Common
Stock subject to such options. Additionally, shares of the
Company’s Common Stock (the “Restricted Stock”)
then held by Executive subject to a Company repurchase or
reacquisition right (the “Company Repurchase Right”)
(whether issued on, before or after the date of this Agreement)
will immediately vest and the Company Repurchase Right shall
lapse,
(v) Deferred compensation . All amounts contributed by
the Company for the account of Executive in the Company’s
deferred compensation plan shall vest and shall no longer be
subject to forfeiture.
(vi) Payments or Benefits Required by Law . Executive
will receive such other compensation or benefits from the Company
as may be required by law (for example, “COBRA”
coverage under Section 4980B of the Internal Revenue Code of
1986, as amended (the “Code”)).
(b)
Involuntary Termination other than for Cause, Death or
Disability or Resignation for Good Reason within Twelve Months of a
Change of Control . If within twelve (12) months following
a Change of Control (i) Executive resigns from his or her
employment with the Company (or any parent or subsidiary of the
Company) for Good Reason or (ii) the Company (or any parent or
subsidiary of the Company) terminates Executive’s employment
for other than Cause Executive becoming Disabled or
Executive’s death, and Executive signs and delivers to the
Company a separation agreement and release of claims in a form
satisfactory to the Company, then promptly following such
termination of employment, or, if later, the effective date of the
separation agreement and release of claims, Executive will receive
the following severance from the Company:
(i)
Severance Payment . For a period of twenty-four
(24) months following Executive’s termination of
employment (the “Change of Control Severance Payment
Period”), Executive will be paid continuing payments of
severance pay equal to Executive’s average Base Salary rate
for the two years prior to such termination, and Executive’s
average annual target bonus for the two years prior to such
termination, to be paid in equal installments periodically in
accordance with the Company’s normal payroll practices;
provided, however, that if Executive has been employed for less
than two years prior to such termination, for a period of
twenty-four (24) months following such termination, Executive
will be paid continuing payments of severance pay equal to
Executive’s average Base Salary rate for the period Executive
was actually employed with the Company, and Executive’s
average annual target bonus for the period Executive was actually
employed with the Company, to be paid in equal installments
periodically in accordance with the Company’s normal payroll
practices; provided, further, that in the event Executive engages
in Competition or breaches the covenants in Section 12 or in
the separation agreement during the Change of Control Severance
Payment Period, all payments pursuant to this subsection will
immediately cease.
(ii)
Equity Awards . All option grants to Executive then
outstanding (whether granted on, before or after the date of this
Agreement (discounted or otherwise)) will immediately vest and
become exercisable as to 100% of the shares subject to such
options. Additionally, shares of Restricted Stock will immediately
vest and Company Repurchase Right will lapse. Additionally,
Executive will have a period of three (3) months following
such termination of employment to exercise any unexercised options,
but in no event beyond the original maximum term of the any such
option. In all other respects any options and Restricted Stock will
continue to be bound by and subject to the terms of their
respective agreements.
(iii)
Continued Employee Benefits . Executive will receive
Company-paid coverage for a period of thirty-six (36) months
for Executive and Executive’s eligible dependents under the
Company’s Benefit Plans; provided, however, that in the event
Executive engages in Competition or breaches the covenants in
Section 12 or in the separation agreement during the
thirty-six month period following such termination, all
Company-paid coverage pursuant to this subsection will immediately
cease.
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(iv) Deferred compensation . All amounts contributed by
the Company for the account of Executive in the Company’s
deferred compensation plan shall vest and shall no longer be
subject to forfeiture.
(v)
Payments or Benefits Required by Law . Executive will
receive such other compensation or benefits from the Company as may
be required by law (for example, “COBRA” coverage under
Section 4980B of the Code).
(c)
Other Terminations . If Executive voluntarily terminates
Executive’s employment with the Company (other than for Good
Reason) or if the Company terminates Executive employment with the
Company for Cause, then Executive will (i) receive the Base
Salary through the date of termination of employment,
(ii) receive all accrued vacation, expense reimbursements and
any other benefits due to Executive through the date of termination
of employment in accordance with established Company plans,
policies and arrangements, and (iii) not be entitled to any
other compensation or benefits (including, without limitation,
accelerated vesting of stock options) from the Company except to
the extent provided under the applicable stock option agreement(s)
or as may be required by law (for example, “COBRA”
coverage under Section 4980B of the Code).
(d)
Termination due to Death or Disability . If
Executive’s employment with the Company is terminated due to
Executive’s death or Executive’s becoming Disabled,
then Executive or Executive’s estate (as the case may be)
will (i) receive the Base Salary through the date of
termination of employment, (ii) receive all accrued vacation,
expense reimbursements and any other benefits due to Executive
through the date of termination of employment in accordance with
Company-provided or paid plans, policies and arrangements, and
(iii) not be entitled to any other compensation or benefits
from the Company except to the extent required by law (for example,
“COBRA” coverage under Section 4980B of the
Code).
(e)
Section 409A . Any cash severance to be paid pursuant
to Sections 5(a)(ii) and 6(b)(i) will not be paid during the
six-month period following Executive’s termination of
employment, unless the Company reasonably determines that paying
such amounts immediately following Executive’s termination of
employment would not result the imposition of additional tax under
Section 409A of the Code (“Section 409A”), in
which case such amounts shall be paid in accordance with normal
payroll practices. If no cash severance is paid to Executive as a
result of the previous sentence, on the first day following such
six-month period, the Company will pay Executive a lump-sum amount
equal to the cumulative amounts that would have otherwise been paid
to Executive pursuant to Sections 5(a)(ii) and 6(b)(i).
Thereafter, Executive will receive his cash severance payments
pursuant to Sections 5(a)(ii) and 6(b)(i) in accordance with
the Company’s normal payroll practices.
6. 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 Section 5(b) of this
Agreement, but determined without regard to any additional payments
required under this Section 6 (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 rec
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