EXHIBIT 10.9
AMENDED AND RESTATED
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st day of December,
2007, by and between LITTELFUSE, INC., a Delaware corporation (hereinafter
referred to as the "Company"), and XXXX XXXXXX XXXXXXX (hereinafter referred to
as the "Executive");
WITNESSETH:
WHEREAS, the Board of Directors of the Company (hereinafter referred to as
the "Board") has determined that it is in the best interests of the Company and
its stockholders to provide the Executive with certain protections against the
uncertainties usually created by a Change of Control (as such term is
hereinafter defined); and
WHEREAS, in order to better enable the Executive to devote his full time,
attention and energy to the business of the Company prior to and after a Change
of Control, thereby benefiting the Company and its stockholders, the Company and
the Executive have entered into a Change of Control Employment Agreement, dated
as of September 1, 2006 (the "Original Agreement"); and
WHEREAS, the Company and the Executive now wish to amend and restate the
Original Agreement in order to comply with the requirements of Section 409A of
the Internal Revenue Code (the "Code"), and the final regulations issued to
implement said requirements ("Section 409A");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the Company and the Executive hereby agree that the
Original Agreement is amended and restated on the terms and conditions set forth
below, which shall entirely supersede the terms and conditions of the Original
Agreement:
Section 1. Certain Definitions. (a) The "Effective Date" shall mean the
first date during the Change of Control Period (as defined in Section 1(b)
hereof) on which a Change of Control (as defined in Section 2 hereof) occurs.
Notwithstanding anything to the contrary contained in this Agreement, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the direct or indirect request of a third party who theretofore had taken
any steps intended to effect a Change of Control or (ii) otherwise arose in
connection with or in anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on the
date hereof and ending on January 1, 2009.
Section 2. Change of Control. For the purpose of this Agreement, a "Change
of Control" shall mean:
(a) The acquisition in one or more transactions by any individual,
entity or group (hereinafter referred to collectively as a "Person") within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (hereinafter referred to as the "Exchange Act"), of beneficial
ownership (within the meaning of, and calculated in accordance with, Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (hereinafter
referred to as the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (hereinafter
referred to as the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or
(iv) any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (c) of this Section
2; or
(b) Individuals who, as of the date hereof, constitute the Board
(hereinafter referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (hereinafter referred to as a "Business Combination") unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan
2
(or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination, or the combined
voting power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company within one year after a Business
Combination.
Section 3. Employment Period. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby agrees to remain as an employee
of the Company, subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
Section 4. Terms of Employment.
(a) Position and Duties. (i) During the Employment Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 20 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (hereinafter referred to as the
"Annual Base Salary"), which shall be paid at a monthly rate, equal to at least
twelve times the highest monthly base salary paid
3
or payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date and thereafter at least annually. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as used in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to the Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (hereinafter referred to as the "Annual Bonus") in cash at least
equal to the Executive's highest bonus under the Company's incentive bonus
program or any comparable bonus under any predecessor or successor plan, for the
last three full fiscal years prior to the Effective Date (annualized in the
event that the Executive was not employed by the Company for the whole of such
fiscal year) (hereinafter referred to as the "Recent Annual Bonus"). Each such
Annual Bonus shall be paid no later than the fifteenth day of the third month of
the fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus. Any such deferral election shall be made not later than the first day of
the fiscal year for which the Annual Bonus is paid, and shall be made in
accordance with policies adopted by the Company in compliance with Section 409A.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive,
4
those provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the Executive
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the Executive
by the Company and its affiliated companies at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
Section 5. Termination of Employment.
(a) Disability. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give written notice to the
Executive of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after delivery of such notice to the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such delivery, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
5
selected by the Company or its insurers and reasonably acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive
by the Board which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties and such failure is not cured within sixty (60) calendar days after
receipt of such written demand; or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, any act or failure to act on the part of
the Executive in violation or contravention of any order, resolution or
directive of the Board of Directors of the Company shall be considered "willful"
unless such order, resolution or directive is illegal or in violation of the
certificate of incorporation or by-laws of the Company; provided, however, that
no other act or failure to act on the part of the Executive, shall be considered
"willful," unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's action or omission was
in the best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company 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 Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire 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 before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the Executive is not elected to, or is removed from, any elected
office of the Company which the Executive held immediately prior to the
Effective Date;
(ii) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position, authority, duties or
responsibilities as contemplated by Section 4(a) hereof, or any other
action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated,
6
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
the Executive;
(iii) any failure by the Company to comply with any of the provisions
of this Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(iv) the Company's requiring the Executive to travel on Company
business to a substantially greater extent than required immediately prior
to the Effective Date; or
(v) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) hereof. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, 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 (iii) if the Date of Termination
(as defined below) is other than the date of delivery of such notice, specifies
the termination date (which date shall be not more than 30 days after the
delivery of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of delivery of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination, (iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be, and (iv) if the
Executive's employment is terminated by the Executive without Good Reason, the
last day of employment of the Executive with the Company.
(f) Definition of Termination of Employment. For all purposes of this
Agreement, the Executive's employment shall be considered to have been
terminated if, and only if, the Executive has incurred a separation from service
with the Company as defined in Section 409A. By way of illustration, and without
limiting the generality of the foregoing, the following principals shall apply:
7
(i) The Executive shall not be considered to have separated from
service so long as the Executive is on military leave, sick leave, or other
bona fide leave of absence if the period of such leave does not exceed six
months, or if longer, so long as the Executive retains a right to
reemployment with the Company under an applicable statute or by contract.
(ii) Regardless of whether his employment has been formally
terminated, the Executive will be considered to have separated from service
as of the date it is reasonably anticipated that no further services will
be performed by the Executive for the Company, or that the level of bona
fide services the Executive will perform after such date will permanently
decrease to no more than 20 percent of the average level of bona fide
services performed over the immediately preceding 36-month period (or the
full period of employment if the Executive has been employed for less than
36 months). For purposes of the preceding test, during any paid leave of
absence the Executive shall be considered to have been performing services
at the level commensurate with the amount of compensation received, and
unpaid leaves of absence shall be disregarded.
(iii) For purposes of determining whether the Executive has separated
from service, all services provided for the Company, or for any other
entity that is part of a controlled group that includes the Company as
defined in Section 414(b) or (c) of the Code, shall be taken into account,
whether provided as an employee or as a consultant or other independent
contractor; provided that the Executive shall not be considered to have not
separated from service solely by reason of service as a non-employee
director of the Company or any other such entity.
Section 6. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause or Disability or the Executive shall terminate his employment for
Good Reason, the following provisions shall apply:
(i) The Company shall pay to the Executive the amounts set forth in A.
and B. below.
A. The sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, plus (2) an
amount, which shall be in satisfaction of the Executive's right to an
Annual Bonus for the year that includes the Date of Termination, equal
to the product of (x) the higher of (I) the Recent Annual Bonus and
(II) the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months), for the
most recently completed fiscal year during the Employment Period, if
any (such higher amount being hereinafter referred to as the "Highest
Annual Bonus") multiplied by (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 plus (3)
8
any compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) are hereinafter referred
to as the "Accrued Obligations"). The Accrued Obligations shall be
paid in a lump sum within 30 days after the Date of Termination,
except that any deferred compensation referred to in clause (3), and
any other amounts that, had the Executive's employment not terminated,
would have been paid after the fifteenth day of the third month
following the end of the year that includes the Date of Termination,
shall be paid at the time and in the form such amounts would have been
paid had this Agreement not applied, but no such amount shall be paid
sooner than six months after the Date of Termination.
B. The amount equal to the product of (1) two multiplied by (2)
the sum of (x) the Executive's Annual Base Salary plus (y) the Highest
Annual Bonus, which shall be paid in a lump sum on the first day that
is at least six months after the Date of Termination; provided that if
the Executive dies during such six month period such amount shall be
paid to his estate or designated beneficiary within 30 days after the
date of his death.
(ii) During the two years following the Date of Termination, the
Company shall continue to provide medical insurance benefits to the
Executive and/or the Executive's family at least equal to those which would
have been provided to them in accordance with the medical insurance
benefits described in Section 4(b)(iv) hereof if the Executive's employment
had not been terminated at the premium rates applicable to active
employees, which coverage shall constitute the Executive's continuation
coverage under Section 4980B of the Code ("COBRA"), and shall be
administered in the same manner as COBRA coverage (except for the premium
payable and the duration of such coverage, but specifically including
provisions relating to termination of coverage if the Executive becomes
eligible for other employer-provided coverage; provided, however, that
after the expiration of the period during which the Executive would be
eligible for COBRA coverage the Executive will be required to pay the full
premium that would be required for a former employee on COBRA coverage, and
the Company shall pay to the Executive, on the first day of each month
during such coverage, additional severance pay in an amount such that the
net amount of such severance pay, after all applicable tax withholding,
equals the difference between the full COBRA premium and the premium
charged to active employees, which amount shall be applied to the payment
of the premium for coverage during such month.
(iii) For a period of up to two (2) years after the Date of
Termination, the Company shall provide outplacement services to the
Executive for the purpose of assisting the Executive seek new employment at
a cost to the Company not to exceed fifteen percent (15%) of the
Executive's Annual Base Salary, payable directly to an outplacement service
provider; provided, however, that the Company shall have no further
obligations to pay for any such outplacement services once the Executive
has accepted employment with any third party.
9
(iv) Notwithstanding anything to the contrary set forth in any stock
option plans pursuant to which the Executive has been granted any stock
options or other rights to acquire securities of the Company or its
Affiliates, as defined in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act (the "Plans"), any option or right granted to the
Executive under any of the Plans shall be exercisable by the Executive
until the earlier of (x) the date on which the option or right terminates
in accordance with the terms of its grant, or (y) the expiration of twelve
(12) months after the Date of Termination.
(v) To the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts
and benefits shall hereinafter be referred to collectively as the "Other
Benefits"); provided, however, that the total amount of Other Benefits that
constitute taxable income to the Executive shall not exceed the limit in
effect under Section 402(g)(1)(B) of the Code for the year that includes
the Date of Termination, except for (x) any payments pursuant to a plan or
policy providing retirement benefits, vacation leave, sick leave,
compensatory time, disability pay, or death benefits, (y) payments to
indemnify or insure the Executive against claims incurred during his
service to the Company, and (z) payments to reimburse the Executive for
amounts that, if paid by him and not reimbursed, would be deductible as
business expenses, or reasonable moving expenses, which reimbursable
expenses are incurred not later than the end of the second year following
the year that includes the Date of Termination, and are reimbursed not
later than the end of the third year following the year that includes the
Date of Termination.
(vi) Notwithstanding anything to the contrary contained in any
employment agreement, benefit plan or other document, in the event the
Executive's employment shall be terminated during the Employment Period by
the Executive for Good Reason or by the Company other than for Cause or
Disability, on and after the Date of Termination the Executive shall not be
bound or prejudiced by any non-competition agreement benefiting the Company
or its subsidiaries.
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations by the Company to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term "Other Benefits" as
utilized in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date.
10
(c) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations by the Company to the Executive under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive at the time and in the form provided in Section 6(a)(i)(A). With
respect to the provision of Other Benefits, the term "Other Benefits" as
utilized in this Section 6(c) shall include, and the Executive shall be entitled
after the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer executives
and their families at any time during the 120-day period immediately preceding
the Effective Date.
(d) Cause; Other than for Good Reason. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive (which shall be paid at the time and in the form it would otherwise
have been paid had this Agreement not applied), and (z) Other Benefits, in each
case to the extent theretofore unpaid. If the Executive voluntarily terminates
his employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations of the
Company to the Executive under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive at the time and in the
form provided in Section 6(a)(i)(A) and the Company shall timely pay or provide
the Other Benefits to the Executive. In no event shall the Executive be liable
to the Company for any damages caused by such voluntary termination by the
Executive nor shall the Executive be in any way restricted from being employed
by any other party after such voluntary termination.
(e) Compliance with Section 409A. The provisions of this Section 6 are
intended to comply with the requirements of Section 409A and shall be so
interpreted and administered. To the maximum extent possible, the provisions of
this Section 6 shall be construed in such a manner that no amounts payable to
the Executive are subject to the additional tax and interest provided in Section
409A(a)(1)(B) of the Code.
Section 7. Nonexclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section 12(f)
hereof, shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement, except as explicitly modified by this Agreement.
11
Section 8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the fullest extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest by the Company, the Executive or others in which the Executive is
the prevailing party and which involves or relates to the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment from the due date thereof until paid
at the prime rate from time to time reported in The Wall Street Journal during
said period.
Section 9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9, except as provided in the last sentence of this Section 9(a)) (hereinafter
referred to collectively as a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Regardless of whether the
Executive is subject to an Excise Tax, in the event that the Company fails to
make any payment at the time or in the form required by Section 6, and as a
result it is subsequently determined that Executive is subject to the additional
tax and interest provided in Section 409A(a)(1)(B) of the Code with respect to
any portion of such payment (such additional tax, together with any interest and
penalties thereon, are hereinafter collectively referred to as the "Section 409A
Penalty") then Executive shall also be entitled to receive an additional payment
(a "Section 409A Gross-Up") calculated in the same manner as a Gross-Up Payment
by substituting "Section 000X Xxxxxxx" for "Excise Tax" for all purposes of this
Section 9. The Section 409A Gross-Up shall be considered a Payment for purposes
of calculation of any Gross-Up Penalty.
(b) Subject to the provisions of Section 9(c) hereof, all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Ernst & Young
LLP or such other independent certified public accounting firm as may be
designated by the Executive (hereinafter referred to as the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company
12
and the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (hereinafter referred to as
the "Underpayment") consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
13
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and xxx for a
refund or to contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance. The Company's control of any such contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 9(c) hereof) promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9(c) hereof,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Anything else contained herein to the contrary notwithstanding, in no
event shall any Gross-Up Payment be paid to the Executive later than the last
day of the year following the year in which the Executive pays to the applicable
taxing authority the Excise Tax with respect to which the Gross-Up Payment is
due. The preceding sentence is included solely in order to satisfy the
requirements of Section 409A, and is not to be construed to permit a delay in
the time at which a Gross-Up Payment would otherwise be paid.
Section 10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable
14
to the Executive under this Agreement. The provisions of this Section 10 shall
survive any termination of this Agreement or any termination of the employment
of the Executive with the Company.
Section 11. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company 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
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, the term "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
Section 12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, without
reference to principles of conflict of laws. 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.
(b) Each notice, request, demand, approval or other communication which may
be or is required to be given under this Agreement shall be in writing and shall
be deemed to have been properly given when delivered personally at the address
set forth below for the intended party during normal business hours at such
address, when sent by facsimile or other electronic transmission to the
respective facsimile transmission numbers of the parties set forth below with
telephone confirmation of receipt, or when sent by recognized overnight courier
or by the United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Company:
Littelfuse, Inc.
000 X. Xxxxxxxxx Xxxxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attention: President (unless the Executive is the President, in which case
the communication should be to the attention of all of the Directors of the
Company other than the Executive)
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
15
If to the Executive:
Xxxx Xxxxxx Xxxxxxx
Facsimile: _____________
Confirm: _______________
Notices shall be given to such other addressee or address, or both, or by
way of such other facsimile transmission number, as a particular party may from
time to time designate by written notice to the other party hereto. Each notice,
request, demand, approval or other communication which is sent in accordance
with this Section shall be deemed given and received for all purposes of this
Agreement as of two business days after the date of deposit thereof for mailing
in a duly constituted United States post office or branch thereof, one business
day after deposit with a recognized overnight courier service or upon
confirmation of receipt of any facsimile transmission. Notice given to a party
hereto by any other method shall only be deemed to be given and received when
actually received in writing by such party.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to promptly
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i)-(v) hereof, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may otherwise
be provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company is "at will" and,
subject to Section 1(a) hereof and/or any other written agreement between the
Executive and the Company, prior to the Effective Date the Executive's
employment and/or this Agreement may be terminated by either the Executive or
the Company at any time prior to the Effective Date upon written notice to the
other party, in which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date, this Agreement shall supersede any
other agreement between the parties with respect to the subject matter hereof.
(g) This Agreement may be executed in two or more counterparts, all of
which taken together shall constitute one and the same agreement.
16
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Change of Control Employment Agreement as of the day and year first
above written.
EXECUTIVE: LITTELFUSE, INC.
/s/ Xxxx Xxxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------------------------- ------------------------------------
Xxxx Xxxxxx Xxxxxxx Name: Xxxx X. Xxxxxxxx
Title: Vice President, Human Resources
and General Counsel
17
