Exhibit 10.15
SIGMATRON INTERNATIONAL, INC.
AMENDED AND RESTATED
CHANGE-IN-CONTROL SEVERANCE PAYMENT PLAN
ARTICLE I
PURPOSE OF THE PLAN
This Amended and Restated Change-in-Control Severance Payment Plan (the "Plan")
has been established by SigmaTron International, Inc., a Delaware corporation
(the "Corporation"), to provide for the payment of severance pay primarily to
selected management and highly compensated employees whose employment with the
Corporation terminates due to certain conditions created by a change in control
of the Corporation.
ARTICLE II
ELIGIBILITY
2.1. EMPLOYEES COVERED BY PLAN. Only those employees of the Corporation listed
on Exhibit A are participants in the Plan ("Participants"). No other
employees are covered by this Plan, unless designated for coverage by the
Board.
ARTICLE III
DEFINITIONS
3.1. "BOARD" means the Board of Directors of the Corporation.
3.2. "CAP" is defined in Section 5.6(a).
3.3. "CAUSE" in connection with the termination of a Participant's employment
with the Corporation means: (i) conviction of a felony; (ii) gross
negligence in the performance of the Participant's duties; (iii)
deliberate material injury to the Corporation; or (iv) refusal after at
least ten (10) days written notice from the Board to carry out directions
of the Board, provided that performance in accordance with such directions
does not constitute a change in the terms and conditions of the
Participant's employment as described in Section 4.1. If the Corporation
could have terminated a Participant's employment for Cause, but lacked
actual knowledge of any act or omission described above at the time of
termination, the termination will nevertheless be deemed for Cause upon
the later discovery of such act or omission. A determination that a
termination is for Cause, as defined above, will be effective only for the
purpose of this Plan and will not be determinative with respect to any
other contract or arrangement between the
Corporation and the Participant, unless the Board makes a specific
determination to the contrary.
3.4. "CHANGE-IN-CONTROL" means a Change-in-Control of the Corporation. A
Change-in-Control of the Corporation shall occur upon the happening of any
one of the following:
(a) THIRTY PERCENT VOTING SHARES. The acquisition by any entity, person,
or group of beneficial ownership, as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934, of the ownership of more than
30% in the aggregate of the outstanding capital stock of the Corporation
entitled to vote for the election of directors; acquisitions by Cyrus
Tang, a stockholder who is currently the beneficial owner of more than 30%
of the capital stock of the Corporation, or any affiliate of Cyrus Tang,
shall not constitute a Change-in-Control.
(b) CHANGE IN MAJORITY OF DIRECTORS. As a result of, or in connection
with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of
the foregoing transactions, the persons who are directors of the
Corporation before the transaction shall cease to constitute a majority of
the board or the board of directors of any successor to the Corporation;
(c) MERGER, CONSOLIDATION OR SHARE EXCHANGE. The Corporation becomes a
party to a merger, consolidation or share exchange in which either (i) the
Corporation will not be the surviving corporation or (ii) the Corporation
will be the surviving corporation and any outstanding shares of common
stock of the Corporation will be converted into shares of any other
company (other than a reincorporation or the establishment of a holding
company involving no change of ownership of the Corporation) or other
securities or cash or other property (excluding payments made solely for
fractional shares); or
(d) SALE OF ASSETS. All or substantially all of the assets and business of
the Corporation are sold, transferred or assigned to, or otherwise
acquired by, any other entity or entities.
In no event shall the distribution by the Corporation to its shareholders of
stock in a subsidiary be deemed a Change-in-Control.
3.5. "CODE" means the Internal Revenue Code of 1986, as amended.
3.6. "INVOLUNTARY TERMINATION OF EMPLOYMENT" means any termination of a
Participant's employment with the Corporation unless the termination of
employment is due to or is on account of:
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(a) death;
(b) resignation or retirement without the occurrence of one or more of the
payment conditions described in Subsections (b), (c), (d), (e), (f) or (g)
in Section 4.1 within sixty (60) days prior to the Participant's
resignation or retirement date;
(c) disability; or
(d) Cause.
3.7. "MINIMUM PAYMENT" is defined in Section 5.6(b).
ARTICLE IV
PAYMENT CONDITIONS
4.1. CHANGE IN EMPLOYMENT TERMS AND CONDITIONS. Any Participant who, at any
time within twenty-four (24) months immediately following the effective
date of a Change-in-Control, sustains one or more of the following changes
in the terms and conditions of their employment shall receive the
Severance Payment described in Article V. The changes in the terms and
conditions of employment causing a Severance Payment are:
(a) Involuntary Termination of Employment;
(b) reduction in salary or material reduction in the Participant's fringe
benefits to which Participant is entitled, including a reduction in the
number of paid vacation days in any year, unless such reduction in
benefits is nondiscriminatory and the resulting level of benefits is
consistent with that available to employees with similar authority and
length of service, which as to a Participant shall include service with
the Corporation before a Change-in-Control;
(c) reduction in eligibility to participate in employee benefit plans or
reduction in eligibility to participate in other compensation plans,
including but not limited to, incentive bonus plans or stock option plans,
unless such reduction in eligibility is non-discriminatory and the
resulting level of eligibility is consistent with that available to
employees with similar authority and length of service, which as to
Participant shall include service with the Corporation before a
Change-in-Control;
(d) reduction in job responsibility and/or authority or the assignment of
duties of a non-executive nature or for which the Participant is not
reasonably equipped by his/her skills and experience;
(e) request to relocate the Participant's principal business office or
residence by
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more than fifty (50) miles or assignment of duties that would reasonably
require such relocation;
(f) assignment of duties to the Participant which would reasonably require
him/her to spend significantly more normal working days away from his/her
principal business office or residence during any consecutive twelve-month
period than such Participant was so required to spend on average during
the three (3) consecutive twelve-month periods immediately preceding the
date of a Change-in-Control; or
(g) failure to provide office facilities, secretarial services, and other
administrative services to the Participant which are substantially
equivalent to the facilities and services provided to the Participant on
the date of the Change-in-Control.
4.2. TERMINATION OF EMPLOYMENT. Notwithstanding Section 4.1, a Participant who
sustains one or more of the changes described in Section 4.1 (b), (c),
(d), (e), (f) and (g) above must terminate his/her employment by written
notice to the Corporation within seven (7) days after the change in
employment terms and conditions in order to receive a Severance Payment.
Each Change-in-Control will renew a Participant's right to terminate
employment and receive a Severance Payment. In no event shall a
Participant be entitled to more than one Severance Payment under this
Plan.
ARTICLE V
SEVERANCE PAYMENT
5.1. SEVERANCE PAY. A Participant who satisfies the payment conditions under
Article IV will receive a Severance Payment equal to that amount set forth
opposite such Participant's name on Exhibit A hereto, subject to
adjustments as otherwise provided in this Article V.
5.2. GOLDEN PARACHUTE RESTRICTION.
(a) REDUCTION FOR "PARACHUTE PAYMENT." Notwithstanding anything above in
this Article V, if the Participant is a "disqualified individual" (as
defined in Code Section 280G(c)), and the Severance Payment provided for
in this Article, together with any other payments which the Participant
has the right to receive from the Corporation (or its affiliates and
subsidiaries), would constitute a "parachute payment" (as defined in Code
Section 280G(b)(2)), the Severance Payment shall be reduced. The reduction
shall be in an amount so that the present value of the total amount
received by the Participant from the Corporation or its affiliates and
subsidiaries will be one dollar ($1.00) less than three (3) times the
Participant's base amount (as defined in Code Section 280G) and so that no
portion of the
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amounts received by the Participant shall be subject to the excise tax
imposed by Code Section 4999.
(b) REPAYMENT OF EXCESS AMOUNT. If through error or otherwise a
Participant should receive payments under this Plan, together with other
payments the Participant has the right to receive from the Corporation on
account of a change in control as defined in Code Section 280G, excluding
any qualified retirement plan payments, in excess of one dollar ($1.00)
less than three times his/her base amount, the Participant shall
immediately repay the excess to the Corporation upon notification that an
overpayment has been made.
5.3. UNFUNDED PLAN. Payments under this Plan shall be made from the general
funds of the Corporation. Nothing contained in this Plan shall give a
Participant any right, title or interest in any property of the
Corporation.
5.4. MODIFICATION OR WAIVER. A Participant's rights under the Plan may be
waived or modified by the written agreement of the affected Participant
and the Corporation. Nothing herein will prohibit a divergence between the
terms and conditions of a waiver or modification agreed to by any one
Participant and the terms and conditions agreed to by any other
Participant.
5.5. LONGEVITY. To the extent the Participant has been a Participant in the
Plan for less than thirty-six (36) months at the time of the
Change-in-Control, the Participant's Severance Payment shall be reduced by
multiplying the Severance Payment by a fraction, the numerator of which is
represented by the number of full months the Participant has been a
Participant in the Plan and the denominator is 36. For example, if a
Change-in-Control occurs during the 31st month after a Participant has
been selected as such by the Board and the Participant timely exercises
his right to receive the Severance Payment, the Participant's Severance
Payment shall be the amount resulting from multiplying the Severance
Payment by 30/36.
5.6. CAP.
(a) In the event the employment of one or more Participants is
terminated voluntarily or involuntarily within seven (7) days after
a Change-in-Control, the aggregate amount of Severance Payments paid
to all such Participants relating to that Change-in-Control shall
not exceed 15% of the market value of all of the Corporation's
capital stock on the date of the Change-in-Control (the "Cap"). The
market value shall, for publicly traded securities, be the mean
average price of the security for the ten-day period immediately
preceding the Change-in-Control determined for each of the said ten
days by the average of the highest and lowest trades on that day
times the total number of issued and outstanding shares.
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(b) The amount of each of the Severance Payments subject to the Cap
shall be calculated as follows:
(i) If the Cap equals or exceeds $100,000 times the number of
Participants sharing in the Severance Payments subject to the
Cap, each Participant shall receive a minimum payment of
$100,000 (the "Minimum Payment"). In addition, each
Participant shall receive his/her pro rata share of the amount
of the Cap exceeding the aggregate of the Minimum Payments,
determined by multiplying the excess amount by a fraction, the
numerator of which is the number of full months of employment
of that Participant and the denominator is the sum of the full
months of employment of all such Participants. If the
resulting sum with respect to any Participant is greater than
the Severance Payment for that Participant without regard to
the Cap, the Severance Payment of that Participant shall not
be increased above the amount provided by Exhibit A. The
amount in excess of the Severance Payment generated by the
formula of this Subsection for that Participant shall be
distributed among the Participants whose Severance Payment is
decreased by this Subsection pro rata by multiplying the
excess amount by a fraction, the numerator of which is the
number of full months of employment of each such Participant
and the denominator of which is the sum of the full months of
employment of all such Participants. This calculation shall be
repeated as often as necessary to allow a distribution of the
Cap prorated as described above so that no Participant
receives greater than the Severance Payment to which that
Participant is entitled under Exhibit A.
(ii) If the Cap is less than $100,000 times the number of
Participants sharing in the Severance Payments, the Severance
Payment to each such Participant shall be the Cap divided by
the number of such Participants.
(iii) An example of the allocations described in this Subsection is
set forth as Exhibit B, assuming hypothetically that the Cap
equals $2,100,000.
ARTICLE VI
PAYMENT TERMS
6.1. FORM. Severance Payments shall be made in a single lump sum within
fourteen (14) days after the date of the Participant's termination of
employment.
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6.2. LATE CHARGE AND INTEREST. In the event a Severance Payment or any portion
thereof is not paid within fourteen (14) days after the later of the date
provided for payment in Section 6.1 or the Participant's written request
for payment under this Plan, and the payment remains unmade for five (5)
days after written notice of such non-payment is given to the Corporation,
the Corporation shall pay the affected Participant an additional
twenty-five percent (25%) of the delinquent amount. In addition, the
Corporation shall pay the affected Participant interest at a rate of
twelve percent (12%) per annum in relation to the delinquent amount which
interest shall accrue from the date provided for payment in Section 6.1
until such delinquent amount is paid.
ARTICLE VII
AMENDMENT AND TERMINATION
7.1. BEFORE CHANGE-IN-CONTROL. This Plan may be amended from time to time or
terminated by action of the Board. This Plan will also automatically
terminate if the Company (1) is legally dissolved, (2) makes a general
assignment for the benefit of its creditors or (3) files for protection
under the United States Bankruptcy Code.
7.2. UPON OR AFTER CHANGE-IN-CONTROL. Notwithstanding the foregoing, the Plan
may not be amended or discontinued by the Corporation or the Board in
conjunction with or after the effective date of a Change-in-Control.
ARTICLE VIII
ARBITRATION
8.1. Except as otherwise provided herein, any controversy or claim arising out
of or relating to this Agreement or the breach hereof shall be settled by
arbitration in accordance with such rules as may be agreed upon by the
Corporation and Participant, or, failing agreement, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA") as such rules may be modified herein.
8.2. An award rendered in connection with an arbitration pursuant to this
Section shall be final and binding, and judgment upon such an award may be
entered and enforced in any court of competent jurisdiction.
8.3. The Forum for arbitration under this Section shall be Chicago, Illinois
and the governing law for such arbitration shall be the laws of the State
of Illinois.
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8.4. Arbitration under this Section shall be conducted by a single arbitrator
selected jointly by the Corporation and Participant. If within thirty (30)
days after a demand for arbitration is made, the Corporation and
Participant are unable to agree on a single arbitrator, three arbitrators
shall be appointed. The Corporation and Participant shall each select one
arbitrator and those two arbitrators shall then select within thirty (30)
days a third neutral arbitrator. In connection with the selection of a
single arbitrator or the third arbitrator, consideration shall be given to
familiarity with the electronics manufacturing services industry and
related products and experience in dispute resolution between parties, as
a judge or otherwise. If the arbitrators selected by the Corporation and
Participant cannot agree on a third arbitrator, they shall discuss the
qualifications of such third arbitrator with the AAA prior to selection of
such arbitrator, which selection shall be in accordance with the
Commercial Arbitration Rules of AAA.
8.5. If an arbitrator cannot continue to serve, a successor to an arbitrator
selected by the Corporation and Participant shall be also selected by the
same party, and a successor to a neutral arbitrator shall be selected as
specified in subsection 8.4 of this Section. A full rehearing will be held
only if the neutral arbitrator is unable to continue to serve or if the
remaining arbitrators unanimously agree that such a rehearing is
appropriate.
8.6. The arbitrator or arbitrators shall be guided, but not bound, by the
Federal Rules of Evidence and by the procedural rules, including discovery
provisions, of the Federal Rules of Civil Procedure. Any discovery shall
be limited to information directly relevant to the controversy or claim in
arbitration.
8.7. The parties shall each be responsible for their own costs and expenses,
except for the fees and expenses of the arbitrators, which shall be shared
equally by the Corporation and Participant. Notwithstanding the above, the
Corporation shall pay the arbitration expenses, including reasonable
attorneys' fees, incurred by any Participant in arbitration hereunder in
which such Participant successfully seeks to enforce his/her rights under
the Plan.
ARTICLE IX
MISCELLANEOUS
9.1. NO GUARANTEES. Nothing in this Plan will give Participants a separate
right to continued employment, compensation level or position with the
Corporation.
9.2. APPLICABLE LAW. To the extent not preempted by federal law, this Plan will
be construed in accordance with the laws (other than the conflict of laws
provisions) of the State of Illinois.
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9.3. PARTICIPANT ASSIGNMENT. No interest of any Participant under this Plan, or
any right to receive any payment or distribution hereunder, shall be
subject in any manner to sale, transfer, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind, nor may such
interest or right to receive a payment or distribution be taken,
voluntarily or involuntarily, for the satisfaction of the obligations or
debts of, or other claims against, the Participant including claims for
alimony, support, separate maintenance, and claims in bankruptcy
proceedings.
9.4. SEVERABILITY. In the event any provision of this Plan is held illegal or
invalid, the remaining provisions of this Plan shall not be affected
thereby.
9.5. SUCCESSORS. The Plan shall be binding upon and inure to the benefit of the
Corporation, the Participants and their respective heirs, representatives
and successors.
9.6. NOTICE. Notices under this Plan shall be in writing and sent by registered
mail, return receipt requested, to the following addresses or to such
other address as the party being notified may have previously furnished to
the other party by written notice:
If to the Corporation:
SigmaTron International, Inc.
2201 Landmeier Road
Elk Grove Village, IL 60007
Attention: President
If to a Participant:
The address last indicated on the records of the Corporation.
IN WITNESS WHEREOF, the Corporation has adopted this Amended and Restated
Change-in-Control Severance Payment Plan as of this 30th day of May, 2002.
SigmaTron International, Inc.
Attest: By: /s/ Gary R. Fairhead
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Its: President
By: /s/ Linda K. Blake
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Secretary
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