EXHIBIT 2.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT, by and among Sanmina Corporation, a Delaware
corporation ("Sanmina"), SCI Systems, Inc., a Delaware corporation (the
"Corporation"), and Xxxxx X. Xxxxxx (the "Executive"), dated as of this ____ day
of _________ , 2001.
W I T N E S S E T H:
WHEREAS, the Corporation desires to recognize the Executive's
commitment to the Corporation and to confirm the right of the Executive to
certain employment, compensation and severance benefits; and
WHEREAS, to attain that end the Corporation and the Executive wish to
enter into this Employment Agreement; and
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Corporation and
the Executive do hereby agree as follows:
1. Term. The term of this Agreement shall commence upon the Change of
Control Date and shall expire on the earlier of (i) the six (6) month
anniversary of the Change of Control Date or (ii) the date Executive voluntarily
terminates his employment pursuant to Section 4(b).
2. Position and Duties During the Term.
(a) Position. During the Term, the Executive shall serve as the
Chief Financial Officer of the Corporation and shall have such duties, titles,
responsibilities and authorities (including reporting responsibilities and
authorities) as are consistent with such position.
(b) Business Time. During the Term, the Executive agrees to devote
his full business time during normal business hours to the business and affairs
of the Corporation and to use his best efforts to perform faithfully and
efficiently the responsibilities assigned to him hereunder, to the extent
necessary to discharge such responsibilities, except for
(i) time spent in managing his personal, financial and legal
affairs and serving on corporate, civic or charitable boards or committees, in
each case only if and to the extent not substantially interfering with the
performance of such responsibilities, and
(ii) periods of vacation to which he is entitled.
It is expressly understood and agreed that the Executive's continuing
to serve on any boards and committees on which he is serving or with which he is
otherwise associated immediately preceding the Term, or his service on any other
boards and committees of which the Corporation has knowledge and does not
object, in writing, within thirty (30) days after first becoming aware of such
service, shall not be deemed to interfere with the performance of the
Executive's services to the Corporation.
3. Compensation. During the Term, the Executive shall be entitled to
the following compensation for as long as the Executive remains an employee of
the Corporation;
(a) Base Salary. The Executive shall receive an annual base salary
(the "Base Salary") of at least $367,500. The Base Salary shall be paid in
accordance with the Corporation's standard payroll practices.
(b) Stay Bonus. If the Executive is employed by the Corporation on
the six (6) month anniversary of the Change of Control Date or any earlier date
mutually agreed upon by the Corporation and the Executive, the Executive shall
receive a $200,000 cash bonus. Such bonus shall be paid by wire transfer to a
bank account chosen by the Executive within five (5) business days of the six
(6) month anniversary of the Change of Control Date.
(c) Option Vesting. Notwithstanding the terms of any previous stock
option agreements between the Corporation and the Executive, regardless of his
employment status at that time, the Executive shall be fully vested, as of the
six (6) month anniversary of the Change of Control Date or any earlier date
mutually agreed upon by the Corporation and the Executive in all of his
outstanding restricted stock, stock options and other equity based awards
granted under the Corporation's stock incentive plans prior to July 13, 2001.
All vested stock options must be exercised by the Executive withineighteen (18)
months after the Date of Termination or such unexercised options will be
forfeited.
(d) Additional Benefits. During the Term, the Executive shall be
entitled to participate in all incentive and savings plans and programs,
including stock option plans and other equity-based compensation plans, and in
all employee retirement, executive retirement and executive death benefit plans
of the Corporation and any Affiliated Companies (or any successor plans as
reasonably determined by Sanmina) on a basis not materially less favorable than
the basis on which the Executive was participating in such programs during the
ninety (90) day period immediately preceding the commencement of the Term.
(e) Other Benefit Plans. During the Term, the Executive, his spouse
and their eligible dependents (as defined in, and to the extent permitted by,
the applicable plan), as the case may be, shall be entitled to participate in or
be covered under all medical, dental, disability, group life, severance,
accidental death and travel accident insurance plans and programs of the
Corporation and any Affiliated Companies (or any successor plans as reasonably
determined by Sanmina) on a basis not materially less favorable than the basis
on which the Executive, his spouse and their eligible dependents were
participating in such programs during the ninety (90) day period immediately
preceding the commencement of the Term.
(f) Other Perquisites. During the Term, the Executive shall also be
entitled to:
(i) prompt reimbursement for all reasonable business expenses
incurred by the Executive, provided that Executive supports appropriate
documentation with reimbursement requests; and
(ii) paid vacation and all employee benefits in accordance with
the Corporation's employee benefit plans.
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4. Termination. The provisions of this Section 4 apply to any
Termination of Employment occurring during the Term of this Agreement.
(a) Disability. The Corporation may terminate the Executive's
employment after having established the Executive's Disability, by giving to the
Executive written notice of its intention to terminate his employment, and his
employment with the Corporation shall terminate effective on the earlier of (i)
the six (6) month anniversary of the Change of Control Date or (ii) the 90th day
after receipt of such notice if the Executive shall fail to return to full-time
performance of his duties within ninety (90) days after such receipt. The
Executive agrees, in the event of any dispute under this Section 4(a) and if
requested by the Corporation, to submit to a physical examination by a licensed
physician selected by the Corporation, the cost of such examination to be paid
by the Corporation. This Section will be interpreted and applied so as to comply
with the provisions of the Americans with Disabilities Act and any applicable
state or local laws.
(b) Voluntary Termination by Executive. Notwithstanding anything in
this Agreement to the contrary, the Executive may, upon not less than thirty
(30) days' written notice to the Corporation, voluntarily terminate employment
for any reason (including retirement under the terms of the Corporation's
retirement plan as in effect from time to time), provided that any termination
by the Executive pursuant to Section 4(d) on account of Constructive Termination
shall not be treated as a voluntary termination under this Section 4(b).
(c) Termination by the Corporation. The Corporation at any time may
terminate the Executive's employment for Cause or without Cause.
(d) Constructive Termination. The Executive at any time may
terminate his employment for Constructive Termination.
(e) Notice of Termination. Any termination by the Corporation for
Cause or by the Executive for Constructive Termination shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
10(c). For purposes of this Agreement, a "Notice of Termination" means a written
notice given, in the case of a termination for Cause, within ten (10) business
days of the Corporation's having actual knowledge of the events giving rise to
such termination, and in the case of a termination for Constructive Termination,
within one hundred eighty (180) days of the Executive's having actual knowledge
of the events giving rise to such termination, and which (1) indicates the
specific termination provision in this Agreement relied upon, (2) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(3) if the termination date is other than the date of receipt of such notice,
specifies the termination date of this Agreement (which date shall be not more
than fifteen (15) days after the giving of such notice). The failure by the
Executive to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Constructive Termination shall not waive any
right of the Executive hereunder or preclude the Executive from asserting such
fact or circumstance in enforcing his rights hereunder.
(f) Date of Termination. For the purpose of this Agreement, the term
"Date of Termination" means (1) in the case of a termination for which a Notice
of Termination is required, the date of receipt of such Notice of Termination
or, if later, the date specified therein,
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as the case may be and (2) in all other cases, the actual date on which the
Executive's employment terminates.
5. Obligations of the Corporation Upon Termination. Upon termination of
the Executive's employment with the Corporation during the Term, the Corporation
shall have the following obligations (including the obligation to pay the cost
of all benefits provided by any applicable benefit plan to the Executive and the
Executive's family to the extent permissible under the terms of such plans and
applicable law except normal employee contributions required by the applicable
benefit plan of other participating executives with comparable
responsibilities).
(a) Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement other
than payment as described herein. Upon the Executive's death, the Corporation
shall pay or provide the following:
(i) Cash Payment. The Corporation shall pay to the Executive's
legal representatives in a lump sum in cash, within thirty (30) days after the
Date of Termination, an amount equal to the aggregate of the following amounts
(other than amounts payable from Qualified Plans, non-qualified retirement plans
and deferred compensation plans, which amounts shall be paid in accordance with
the terms of such plans):
(1) all Accrued Obligations;
(2) in the event the Stay Bonus under Section 3(b) has not
been paid, a cash amount equal to such Stay Bonus;
(ii) Benefit Continuation. The Executive's family shall be
entitled to receive benefits generally available to the surviving families of
executives with comparable responsibilities or positions.
(iii) Notwithstanding the terms of any previous stock option
agreements between the Corporation and the Executive, the Executive shall be
fully vested, as of the Date of Termination in all of his outstanding restricted
stock, stock option and other equity based awards granted under the
Corporation's stock incentive plans prior to July 13, 2001. All vested stock
options must be exercised by the Executive within eighteen (18) months after the
Date of Termination or such unexercised options will be forfeited.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability the Corporation shall pay or provide the
following:
(i) Cash Payment. The Corporation shall pay to the Executive or
the Executive's legal representatives in a lump sum in cash, within thirty (30)
days after the Date of Termination, an amount equal to the aggregate of the
following amounts (other than amounts payable from Qualified Plans,
non-qualified retirement plans and deferred compensation plans, which amounts
shall be paid in accordance with the terms of such plans):
(1) all Accrued Obligations;
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(2) in the event the Stay Bonus under Section 3(b) has not
been paid, a cash amount equal to such Stay Bonus;
(ii) Benefit Continuation. The Executive, the Executive's spouse
and their eligible dependents (as defined in, and to the extent permitted by,
the applicable plan) shall be entitled for a period commencing on the date of
the Disability and expiring on the six (6) month anniversary of the Change of
Control Date to continue to participate in or be covered under all medical,
dental, disability, group life, severance, accidental death and travel accident
insurance plans and programs of the Corporation and any Affiliated Companies or
to receive equivalent benefits by alternate means (provided, however that to the
extent the Disability qualifies for benefits under the disability plan of
Sanmina Corporation ("Sanmina"), the Executive shall be entitled to receive such
benefits for the duration of his Disability or, if shorter, as long as provided
for under such disability plan). Notwithstanding the foregoing, the benefits
provided to the Executive and his family shall not be materially less than the
benefits generally available to executives of the Corporation with comparable
responsibilities or positions immediately prior to the Change of Control Date.
(iii) Notwithstanding the terms of any previous stock option
agreements between the Corporation and the Executive, the Executive shall be
fully vested, as of the Date of Termination in all of his outstanding restricted
stock, stock option and other equity based awards granted under the
Corporation's stock incentive plans prior to July 13, 2001. All vested stock
options must be exercised by the Executive within eighteen (18) months after the
Date of Termination or such unexercised options will be forfeited.
(c) Termination by the Corporation for Cause and Voluntary
Termination by Executive. If the Executive's employment shall be terminated
during the Term for Cause or voluntarily terminated by the Executive (other than
on account of Constructive Termination), the Corporation shall pay the Executive
the Accrued Obligations. The Executive shall be paid all such Accrued
Obligations in a lump sum in cash within thirty (30) days of the Date of
Termination and the Corporation shall have no further obligations to the
Executive under this Agreement, unless otherwise required by a Qualified Plan or
specified pursuant to a valid election to defer the receipt of all or a portion
of such payments made in accordance with any plan of deferred compensation
sponsored by the Corporation.
(d) Other Termination of Employment. If the Corporation (i)
terminates the Executive's employment other than for Cause, Disability, or
Death, or the Executive terminates his employment for Constructive Termination
and (ii) the Date of Termination occurs during the Term, the Corporation shall
pay or provide the Executive the following:
(i) Cash Payment. The Corporation shall pay to the Executive in
a lump sum in cash, within thirty (30) days after the Date of Termination, equal
to the aggregate of the following amounts (other than amounts payable from
Qualified Plans, non-qualified retirement plans and deferred compensation plans,
which amounts shall be paid in accordance with the terms of such plans):
(1) all Accrued Obligations;
(2) in the event the Stay Bonus under Section 3(b) has not
been paid, a cash amount equal to such Stay Bonus;
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(ii) Notwithstanding the terms of any previous stock option
agreements between the Corporation and the Executive, the Executive shall be
fully vested, as of the Date of Termination in all of his outstanding restricted
stock, stock option and other equity based awards granted under the
Corporation's stock incentive plans prior to July 13, 2001. All vested stock
options must be exercised by the Executive withineighteen (18) months after the
Date of Termination or such unexercised options will be forfeited.
(iii) Discharge of Corporation's Obligations. Subject to the
performance of its obligations under Sections 5, 6 and 7, the Corporation shall
have no further obligations to the Executive under this Agreement in respect of
any termination by the Executive for Constructive Termination or by the
Corporation other than for Cause or Disability.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Corporation or any of
its Affiliated Companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise prejudice such rights as the Executive may
have under any other agreements with the Corporation or any Affiliated
Companies, including, but not limited to stock option or restricted stock
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Corporation or
any Affiliated Companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan or program.
7. Full Settlement. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Corporation may have against the Executive or others whether by reason of
the subsequent employment of the Executive or otherwise. In no event shall the
Executive be obligated to seek other employment by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.
8. Legal Fees and Expenses. In the event that a claim for payment or
benefits under this Agreement is disputed and Executive prevails in whole or in
substantial part in such claim the Corporation shall pay all reasonable attorney
fees and expenses incurred by the Executive in pursuing such claim.
9. Successors.
(a) This Agreement is personal to the Executive and, without the
prior written consent of the Corporation, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Corporation, Sanmina, and their respective successors. The Corporation and
Sanmina shall require any successor to all or substantially all of the business
and/or assets of the Corporation and/or Sanmina, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Corporation and/or Sanmina would be required to perform if no such
succession
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had taken place. Sanmina shall guarantee the obligations of the Corporation on
and after the Change in Control Date.
10. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, applied without
reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand-delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Corporation prior to the Change of Control Date:
SCI Systems, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(with a copy to the attention of the General Counsel or to such other
address as either party shall have furnished to the other in writing in
accordance herewith). Notice and communications shall be effective when actually
received by the addressee.
If to Sanmina and to the Corporation on or after the Change of
Control Date:
Sanmina Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: Jure Sola, Chief Executive Officer
Xxxxx Xxxx, President and Chief Operating Officer
(with a copy to the attention of the General Counsel or to such other
address as either party shall have furnished to the other in writing in
accordance herewith). Notice and communications shall be effective when actually
received by the addressee.
(d) Tax Withholding. The Corporation may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
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(f) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(g) Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties regarding the terms and conditions
governing the Executive's employment with the Corporation, and all prior
agreements governing the Executive's employment with the Corporation shall have
no further effect; provided, however, that except as specifically provided
herein, the terms of this Agreement do not supersede the terms of any grant or
award to the Executive under the Corporation's stock incentive plans, management
incentive plans, long-term incentive plans and any other similar or successor
plans or programs.
11. Arbitration. In the event of any dispute or claim relating to or
arising out of this Agreement, such dispute shall be fully, finally and
exclusively resolved by a panel of three neutral arbitrators to be mutually
agreed upon by the parties. Such arbitration will be decided under the
employment dispute resolution rules of the American Arbitration Association and
will be held in Huntsville, Alabama. If the parties cannot agree upon such
arbitrators within twenty (20) days after submission of a party's request for
arbitration in writing, the arbitrators will be selected in accordance with the
procedures of the American Arbitration Association. The parties agree that the
existence, content and result of any arbitration proceeding shall be
confidential, except to the extent that the Corporation determines it is
required to disclose such matters in accordance with applicable laws.
12. Definitions.
(a) "Accrued Obligations" shall mean (i) the Executive's Base Salary
through the Date of Termination, (ii) any compensation previously deferred by
the Executive (together with any accrued earnings thereon) and not yet paid by
the Corporation and any accrued vacation pay for the current year not yet paid
by the Corporation, (iii) any amounts or benefits owing to the Executive or to
the Executive's beneficiaries under the then applicable employee benefit plans
or policies of the Corporation and (iv) any amounts owing to the Executive for
reimbursement of expenses properly incurred by the Executive prior to the Date
of Termination and which are reimbursable in accordance with the reimbursement
policy of the Corporation described in Section 3(g)(i).
(b) "Affiliated Company" shall mean any company controlling,
controlled by or under common control with the Corporation or Sanmina.
(c) "Annual Bonus" shall have the meaning set forth in Section 3(b).
(d) "Base Salary" shall have the meaning set forth in Section 3(a).
(e) "Board" shall mean the Board of Directors of Sanmina.
(f) "Cause" shall mean (i) an act or acts of dishonesty or gross
misconduct on the Executive's part which result or are intended to result in
material damage to the Corporation's business, (ii) repeated material violations
by the Executive of his obligations under Section 2 of this Agreement which
violations are demonstrably willful and deliberate on the Executive's part and
which result in material damage to the Corporation's business and as to which
material violations the Board has notified the Executive in writing; (iii) the
willful engaging by the
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Executive in illegal conduct, gross misconduct or an act of fraud, dishonesty or
breach of trust which is materially and demonstrably injurious to the
Corporation; (iv) Executive's conviction for a felony, or (v) a final,
nonappealable judgment is entered against the Executive for breach of the
Executive's duty of loyalty to the Corporation.
For purposes of this provision, no act or failure to act, on the part
of Executive shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Corporation. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Corporation
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Corporation. The
cessation of employment of the Executive shall not be deemed to be for Cause
unless prior to such termination there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard at such meeting), finding, that, in the good faith opinion of such
committee, the Executive is guilty of the conduct described above, and
specifying the particulars thereof in detail.
(g) "Change of Control" means the consummation of the merger
transaction pursuant to the Agreement and Plan of Reorganization by and among
Sanmina Corporation, Sun Acquisition Subsidiary, Inc. and SCI Systems, Inc.
dated July 13, 2001, as amended to date.
(h) "Change of Control Date" shall mean the date on which a Change
of Control shall be deemed to have occurred.
(i) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(j) "Constructive Termination" shall mean any of the following:
(i) Unless with the express written consent of the
Executive, reduction in Base Salary.
(ii) Unless with the express written consent of the
Executive, reduction in minimum annual target bonus opportunity.
(iii) Unless with the express written consent of the
Executive, a change of more than twenty-five (25) miles in the office or
location where the Executive is based.
(iv) Unless with the express written consent of the
Executive, (A) the assignment to the Executive of any duties inconsistent in any
substantial respect with the Executive's position, authority or responsibilities
as contemplated by Section 2(a) of this Agreement, or (B) any other substantial
change in such position, including titles, authority or responsibilities from
those previously held by the Executive prior to the Change of Control Date, as
applicable. The Executive's position, authority and responsibilities shall not
be regarded as not commensurate with previous position, authority and
responsibilities merely by virtue of the fact that a successor shall have
acquired all or substantially all of the business and/or assets of the
Corporation.
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(v) Any failure by the Corporation to comply with any of the
provisions of Section 3 of this Agreement, other than an insubstantial or
inadvertent failure remedied by the Corporation promptly after receipt of notice
thereof given by the Executive.
(vi) Any failure of the Corporation or Sanmina to obtain
the assumption and agreement to perform this Agreement by a successor as
contemplated by Section 10(b).
(k) "Date of Termination" shall have the meaning set forth in
Section 4(f).
(l) "Disability" shall mean disability which would entitle the
Executive to receive full long-term disability benefits under the Corporation's
long-term disability plans. At any time that the Company does not maintain such
a long-term disability plan, "Disability" shall mean the inability of the
Employee, as determined by a majority of the Board, to substantially perform the
essential functions of his regular duties and responsibilities with or without
reasonable accommodation due to a medically determinable physical or mental
illness which has lasted (or can reasonably be expected to last) for a period of
six consecutive months.
(m) "Notice of Termination" shall have the meaning as set forth in
Section 4(f).
(n) "Qualified Plan" shall mean an employee benefit plan qualified
(or which is intended to be qualified) under Section 401(a) of the Code.
(o) "Subsidiary" shall mean any majority owned subsidiary of the
Corporation.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its Secretary, all
effective as of the day and year first above written.
SCI SYSTEMS, INC.
By:
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Title:
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ATTEST:
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Title:
-----------------------------
(CORPORATE SEAL)
SANMINA CORPORATION
By:
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Title:
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ATTEST:
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Title:
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(CORPORATE SEAL)
XXXXX X. XXXXXX
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Address:
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