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 .”
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:
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
1
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
2
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
3
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.
4
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 belo
|
