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Exhibit 10.9
EXECUTION COPY
SOLECTRON CORPORATION
MARC ONETTO CONSULTING AGREEMENT AND GENERAL
RELEASE
This Consulting Agreement and
General Release (this " Agreement ") is made by and between
Marc Onetto (" Consultant ") and Solectron Corporation, a
Delaware corporation (the " Company "). Consultant and the
Company are collectively referred to herein as the " Parties
."
RECITALS
WHEREAS, Consultant is employed by
the Company in the capacity of Executive Vice President of
Worldwide Operations;
WHEREAS, Consultant and the
Company entered into an employment agreement dated June 18,
2003 (the " Employment Agreement ");
WHEREAS, Consultant’s
employment relationship with the Company will terminate without
Cause (as defined in the Employment Agreement) on June 23,
2006 (the " Transition Date ");
WHEREAS, Consultant’s
relationship with the Company will transform into that of a
consultant beginning on the Transition Date;
WHEREAS, Consultant and the
Company wish to provide for Consultant’s orderly transition
from the position of Executive Vice President of Worldwide
Operations, and mutually desire that Consultant continue to provide
his services to the Company for an agreed-upon period as set forth
herein; and
WHEREAS, the Parties wish to
resolve any and all disputes, claims, complaints, grievances,
charges, actions, petitions and demands that the Consultant may
have against the Company, including, but not limited to, any and
all claims arising or in any way related to Consultant’s
employment with, or separation from, the Company;
NOW THEREFORE, in consideration of
the promises made herein after and conditioned upon
Consultant’s compliance with all conditions and covenants
contained in this Agreement, the Parties hereby agree as
follows:
COVENANTS
1. Scope of Consulting
Services .
(a)
Duties . In accordance with the terms of the Employment
Agreement, the Parties agree that for the six (6)-month period
following the Transition Date (the " Consulting Term "),
Consultant will serve as a consultant to the Company. In this
capacity, Consultant will render such business and professional
services in the
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performance of his duties as shall reasonably be assigned to him
by the Chief Executive Officer of the Company (the " CEO "),
not to exceed five (5) calendar days per month.
(b)
Independent Contractor Relationship . As of the Transition
Date, it is the express intention of the Parties that Consultant
will be an independent contractor of the Company. Nothing in this
Agreement shall in any way be construed to constitute Consultant as
an agent, employee or representative of the Company, but Consultant
shall perform the services hereunder as an independent contractor.
Consultant agrees to furnish (or reimburse the Company for) all
tools and materials necessary to accomplish the services in this
Agreement, and shall incur all expenses associated with
performance, except as expressly set forth herein. Consultant
acknowledges and agrees that Consultant is obligated to report as
income all compensation received by Consultant pursuant to this
Agreement, and Consultant agrees to and acknowledges the obligation
to pay all self-employment and other taxes thereon.
(c)
Obligations . Consultant certifies that Consultant has no
outstanding agreement or obligation that is in conflict with any of
the provisions of this Agreement, or that would preclude Consultant
from complying with the provisions hereof, and further certifies
that Consultant will not enter into any such conflicting agreement
during the term of this Agreement. During the Consulting Term and
thereafter, Consultant may engage in other employment or consulting
activities for any other entity or person, provided such activities
do not violate any provisions of this Agreement, the Employment
Agreement or the Exempt Proprietary Information Agreement between
Consultant and the Company (the "Proprietary Information
Agreement"), including, without limitation, Sections 6 and 7
hereof.
2. Compensation for
Consulting Services .
(a)
Consulting Fees . During the Consulting Term, the Company
will pay Consultant aggregate consulting fees equal to one-half
(1/2) of the sum of Consultant’s annual Base Salary and
Target Bonus (each as defined in the Employment Agreement), each at
the level in effect on the Transition Date. Consultant’s fees
shall be paid ratably during the Consulting Term in accordance with
the Company’s regular payroll schedule, subject to a delay in
payment as described in Section 4 hereof.
(b)
Equity . Consultant’s outstanding stock options and
other equity awards will continue to vest during the Consulting
Term in accordance with the applicable vesting schedule(s).
Consultant’s right to exercise any vested shares following
his termination of service hereunder will be governed by the terms
of the applicable stock option and other agreements and the
applicable plans under which such awards were granted.
(c)
Benefits . Pursuant to Section 8(a) of the Employment
Agreement, Consultant will receive Company-paid coverage for
Consultant and Consultant’s eligible dependents under the
Company’s Benefit Plans (as defined in the Employment
Agreement) during the Consulting Term. Consultant will not be
entitled to any other benefits which the Company may make available
to its employees, including, but not
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limited to, disability, life insurance or retirement benefits,
except that (i) the Company shall transfer title to the
computer and cell phone used by Consultant as of the Transition
Date to the Consultant, provided Consultant makes arrangements to
the satisfaction of the Company for the satisfaction of applicable
tax withholding related to such transfer, (ii) the Company
will reimburse Consultant’s costs of his use of such cell
phone during the Consulting Term as it relates to the provision of
services to the Company and only after Consultant has submitted
documentation to the Company substantiating any such costs to the
reasonable satisfaction of the Company, and (iii) in lieu of
all financial counseling Benefits Consultant would be entitled to
receive under the terms of the Employment Agreement, Consultant
shall be paid $6,000, less applicable tax withholding, on the
Effective Date.
3. Consideration . In
consideration for the release of claims and other covenants
contained herein and conditioned upon Consultant’s compliance
with all conditions and covenants contained in this Agreement,
including, without limitation, the provisions regarding
confidentiality, non-disparagement, non-competition and
non-solicitation following the Transition Date, the Company will
provide Consultant, in addition to the compensation for
Consultant’s consulting services, the following severance
benefits in accordance with the terms of the Employment Agreement,
subject to the effectiveness of this Agreement and
Section 14:
(a)
Deferred Compensation . On the Effective Date, the Deferred
Compensation Payment (as defined in the Employment Agreement) (as
adjusted for investment returns thereon) will immediately vest and
be paid to Consultant in accordance with Consultant’s payout
election and the terms of the Company’s Executive Deferred
Compensation Plan (the " Deferred Compensation Plan ") and
subject to the terms of this Agreement. For avoidance of doubt, for
purposes of the Deferred Compensation Plan, Consultant shall be
deemed to have terminated service with the Company on the
Transition Date.
(b)
Equity Awards . As of the Effective Date, the Restricted
Stock (as defined in the Employment Agreement) will immediately
vest and be released from the Company’s repurchase right.
(c)
Signing Bonus . As of the earlier of (i) June 18,
2006, or (ii) the Effective Date, Consultant will have no
repayment obligation with respect to the Signing Bonus (as defined
in the Employment Agreement).
(d)
Severance Payment . Following the end of the Consulting
Term, Consultant will receive a lump sum payment equal to one
(1) times his annual Base Salary and Target Bonus (each as
defined in the Employment Agreement), each at the level in effect
on the Transition Date.
(e)
Benefits . Consultant will receive Company-paid coverage for
Consultant and Consultant’s eligible dependents under the
Company’s Benefit Plans (as defined in the Employment
Agreement) for twelve (12) months following the end of the
Consulting Term. Consultant’s rights to continuation of group
medical benefits pursuant
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to Part 6 of Title I of the Employee Retirement Income
Security Act of 1974 and analogous provisions of the Internal
Revenue Code (" COBRA ") shall commence at the end of such
12-month period.
4. Delayed Payment of
Certain Amounts . The Parties acknowledge that
Section 409A (" Section 409A ") of the Internal
Revenue Code of 1986, as amended (the " Code ") imposes
accelerated gross income inclusion, interest and additional income
taxes (" 409A Penalties ") on deferred compensation (as
defined under Section 409A) that does not meet certain
requirements set forth in Section 409A, and that as of the
date this Agreement is executed, final Treasury Regulations have
not been promulgated thereunder. Provisions of this Agreement that
are or may be deemed to be or to relate to a deferred compensation
plan (as defined in Section 409A and the proposed regulations
promulgated thereunder to date) have been agreed on between the
Parties in good faith reliance on the application of and the
guidance contained in IRS Notice 2005-1 and Sections 1.409A-1,
-2 and -3 of the proposed Treasury Regulations and the preamble
thereto, including the transitional rules thereof, to the facts and
circumstances of Consultant’s employment and the termination
thereof. Consultant and the Company intend that, from and after the
Transition Date, Consultant will not provide substantial services
for the Company, and that Consultant will have a "separation from
service" from the Company for purposes of Section 409A as of
the Transition Date. The Parties agree that it is not intended that
409A Penalties apply to any payment or the provision of any benefit
hereunder, and accordingly, the provisions of this Section 4
will apply to any payment or benefit to which 409A Penalties would
apply, regardless of whether such payment or benefit is explicitly
made subject to this Section 4. Accordingly, the Parties
hereby agree that no (i) consulting fees pursuant to
Section 2(a), (ii) any compensation that Consultant
deferred under the Deferred Compensation Plan or any other
non-qualified deferred compensation plan maintained by the Company
that was not grandfathered or otherwise exempt from the provisions
of Section 409A (it being understood between the Parties that
the Deferred Compensation Payment (as defined in the Employment
Agreement) and any earnings thereon are grandfathered or otherwise
exempt from the provisions of Section 409A), or
(iii) severance payments pursuant to Section 3(d), will
be paid prior to the date, with respect to any payment, that such
payment may be made without being a prohibited distribution under
Code Section 409A(a)(2)(B), as mutually determined by the
Company and the Consultant, acting in good faith. Upon the
expiration of the applicable Code Section 409A(a)(2)(B) deferral
period, all payments and benefits deferred pursuant to this
Section 4 (whether they would have otherwise been payable in a
single sum or in installments in the absence of such deferral)
shall be paid or reimbursed to Consultant in a lump sum payment,
and any remaining payments and benefits due under this Agreement
shall be paid or provided in accordance with the normal payment
dates specified for them herein. If delay or postponement of a
payment or the provision of a benefit would not avoid the
imposition of 409A Penalties, then the Parties agree to cooperate
diligently to revise the Agreement in order to preserve insofar as
possible the payment or benefit free from 409A Penalties.
Notwithstanding the foregoing, Consultant will be responsible for
all taxes under Section 409A or any other Section of the Code
and any other taxes that would ordinarily be the responsibility of
Consultant by law, statute, rule or regulation and the Company in
no way will be required to indemnify Consultant for the same.
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5. Payment of Salary and
other Compensation and Benefits . Except for amounts set forth
in Sections 2 or 3 that are payable after the Transition Date
or that are delayed pursuant to Section 4, on or prior to the
Transition Date, the Company shall pay Consultant the amount of any
and all accrued but unpaid salary, wages, bonuses, commissions,
profit-sharing, accrued but unusued vacation, and reimburseable
expenses owed to Consultant as of the Transition Date in connection
with his employment prior to the Transition Date.
6. Non-Competition .
Consultant, as a condition to the receipt of the consideration set
forth in this Agreement, agrees not to render services for any of
the Company’s Competitors (as defined below) during the
twenty-four (24) month pe
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