EXHIBIT 99.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into by and between Littelfuse,
Inc. (the "Company") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Executive") as of the 1st day of
May, 2006 (the "Effective Date"). All terms not otherwise defined elsewhere
herein shall have the meaning set forth in Section 13 hereof.
WHEREAS, the operations of the Company and its Affiliates are a complex
matter regarding direction and leadership in a variety of arenas, including
financial, strategic planning, manufacturing, sales, human resources,
regulatory, customer relations and others;
WHEREAS, the Executive is possessed of certain experience and expertise
that qualify the Executive to provide the direction and leadership required by
the Company and its Affiliates; and
WHEREAS, subject to the terms and conditions hereinafter set forth, the
Company therefore wishes to continue to employ the Executive as its Chairman,
Chief Executive Officer and President and the Executive wishes to continue such
employment:
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, terms, provisions and conditions set forth in this Agreement,
the parties hereby agree:
Section 1. Employment. Subject to the terms and conditions set forth in
this Agreement, the Company hereby offers and the Executive hereby accepts
continued employment.
Section 2. Term. The term of Executive's employment under this
Agreement shall commence on May 1, 2006 and shall end on the first date on which
the term is terminated pursuant to Section 5 hereof. The term of this Agreement
is hereafter referred to as "the term of this Agreement" or "the term hereof."
Section 3. Capacity and Performance. (a) During the term hereof, the
Executive shall serve the Company as its Chairman, Chief Executive Officer and
President. In addition, and without further compensation, the Executive shall
serve as an officer of one or more of the Company's Affiliates if so elected or
appointed from time to time. During the term hereof, if elected or appointed,
Executive shall serve as a member of the Board of Directors of the Company (the
"Board"). Upon cessation of employment with the Company, Executive shall offer
to resign as a member of the Board.
(b) During the term hereof, the Executive shall be employed by the
Company on a full-time basis and shall perform the duties and responsibilities
and have the authority of Executive's position and such other duties,
responsibilities and authority on behalf of the Company and its Affiliates,
reasonably consistent with Executive's position, as may be reasonably designated
from time to time by the Board or by its designees. Executive's duties,
responsibilities and authority shall be commensurate with the duties,
responsibilities and authority of similarly positioned executives of similar
businesses of similar size in the United States. During the term, Executive
shall report to the Board.
(c) During the term hereof, the Executive shall devote Executive's full
business time and best efforts, business judgment, skill and knowledge
exclusively to the advancement of the business and interests of the Company and
its Affiliates and to the discharge of Executive's duties and responsibilities
to them. The Executive shall not engage in any other business activity or serve
in any industry, trade, professional, governmental or academic position during
the term of this Agreement, except as may be expressly approved in writing in
advance by the Board. The foregoing restriction, however, shall not be
interpreted to prohibit the Executive from (i) involvement in any charitable or
community activities or organizations (including, without limitation,
participation in industry trade groups) or (ii) serving on the board of
directors of up to one (1) non-competing, for-profit business enterprise without
the prior approval in writing in advance by the Board, that does not give rise
to a conflict of interest and that does not materially interfere with
Executive's ability to perform Executive's duties and responsibilities under
this Agreement.
(d) Executive acknowledges and agrees that Executive owes a fiduciary
duty of loyalty, fidelity, and allegiance to act at all times in the best
interests of the Company and its Affiliates and to do no act which would,
directly or indirectly, injure the Company and/or its Affiliates' business,
interests or reputation. It is agreed that any direct or indirect interest in,
connection with, or benefit from any outside activities, particularly commercial
activities, which interest might in any way adversely affect the Company and/or
its Affiliates, involves a possible conflict of interest. In keeping with
Executive's fiduciary duties to the Company and its Affiliates, Executive agrees
that Executive shall not knowingly become involved in a conflict of interest
with the Company and/or its Affiliates, or upon discovery thereof, allow such a
conflict to continue. Moreover, Executive shall not engage in any activity that
is reasonably likely to involve a possible conflict of interest without first
obtaining written approval in accordance with the Company's conflict of interest
policy and procedures.
(e) The duties and responsibilities to be performed by the Executive
shall be performed primarily at the Company's Des Plaines, Illinois headquarters
offices, subject to reasonable travel requirements on behalf of the Company
consistent with the nature of Executive's duties and responsibilities.
Section 4. Compensation and Benefits. As compensation for all services
performed by the Executive under and during the term hereof and subject to
performance of the Executive's duties and of the obligations of the Executive to
the Company and its Affiliates, pursuant to this Agreement or otherwise:
(a) Base Salary. During the term hereof, the Company will pay
the Executive a base salary at the rate of Five Hundred Twenty-Five
Thousand Dollars ($525,000.00) per annum, payable in accordance with
the payroll practices of the Company for its executives and subject to
annual review and to increase, but not decrease, from time to time by
the Board in its discretion. Such base salary, as from time to time in
effect, is hereafter referred to as the "Base Salary."
(b) Incentive Compensation. For fiscal year 2006 and each
fiscal year thereafter, the Executive will be eligible to receive an
annual incentive bonus with a
-2-
target bonus of fifty percent (50%) of the Base Salary, based on
performance against and payable in accordance with the Company's
management incentive plan for such fiscal year, and subject to a
maximum opportunity of 100% of Base Salary for superior performance;
provided that, either (i) the Executive must be employed by the Company
hereunder on the last day of the fiscal year and must not have given
nor received notice of termination under Section 5(c) or (f) hereunder
in order to be eligible to receive such bonus, or (ii) the Executive
must have been terminated pursuant to Section 5(a), (b), (d) or (e) in
order to be eligible to receive such bonus pro-rated for the partial
term of service for the fiscal year ending on the date of termination.
Except as otherwise provided in this Agreement, the amount of any
incentive bonus earned by the Executive hereunder shall be determined
by the Board (or such designated committee), based on its assessment,
in the exercise of its discretion, of performance against established
goals in accordance with such annual management incentive plan.
(c) Long Term Incentives. Executive shall be eligible to
receive such annual stock option, restricted share or other incentive
grants/awards ("Long Term Incentives") as may be determined by the
Board in its discretion.
(d) Vacations. During the term hereof, the Executive shall be
entitled to earn four (4) weeks of vacation per fiscal year, to be
taken at such times and intervals as shall be determined by the
Executive, subject to the reasonable business needs of the Company.
Vacation shall otherwise be governed by the policies of the Company, as
in effect from time to time.
(e) Employee Benefits. During the term hereof and subject to
any contribution therefor generally required of senior level executives
of the Company, the Executive shall be entitled to participate in any
and all employee benefit plans from time to time in effect for
employees of the Company generally, except to the extent such plans are
in a category of benefit otherwise provided to the Executive by this
Agreement. Such participation shall be subject to the terms of the
applicable plan documents and generally applicable Company policies.
The Company may alter, modify, add to or delete its employee benefit
plans at any time as it, in its sole judgment, determines to be
appropriate, without recourse by the Executive.
(f) Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable, customary and necessary business expenses
incurred or paid by the Executive in the performance of Executive's
duties and responsibilities hereunder during the term hereof, subject
to any maximum annual limit and other restrictions on such expenses set
by the Board and to such reasonable substantiation and documentation as
may be specified in advance by the Company from time to time.
(g) Perquisites. During the term hereof, the Company will
provide the Executive with the following perquisites:
(i) Automobile. The Company shall provide Executive
with an automobile in accordance with the Company's automobile
policy for executives.
-3-
(ii) Home Office. On behalf of the Executive, the
Company will provide and maintain a home office computer,
facsimile, telephone and required access line(s).
(iii) Financial Planning. The Company shall pay or
reimburse Executive for up to Fifteen Thousand Dollars
($15,000.00) per fiscal year for financial planning and tax
counseling services.
(iv) Legal Fees. The Company shall pay or reimburse
Executive for the reasonable legal fees incurred by Executive
attendant to the development of this Agreement, up to a
maximum of Five Thousand Dollars ($5,000.00).
Section 5. Termination of Employment and Severance Benefits. The term
of this Agreement shall end and the Executive's employment hereunder shall
terminate upon the first to occur of the following circumstances:
(a) Death. In the event of the Executive's death during the
term hereof, the Executive's employment hereunder shall immediately and
automatically terminate. In such event, the Company will pay or provide
to the Executive's designated beneficiary or, if no beneficiary has
been designated by the Executive, to Executive's estate:
(i) the Base Salary earned but not paid through the
date of termination.
(ii) any vacation time earned but not used through
the date of termination.
(iii) any business expenses incurred by the Executive
but un-reimbursed on the date of termination, provided that
such expenses and required substantiation and documentation
are submitted within sixty (60) days of termination and that
such expenses are reimbursable under Company policy,
(iv) if the date of termination occurs after the end
of a fiscal year and prior to the payment of the incentive
compensation award (as described in paragraph 4(b)) for such
prior fiscal year, payment of any earned incentive
compensation award will be made at the regularly scheduled
time,
(v) any vested benefits under the Company's employee
benefits plans, and
(vi) any benefit continuation and/or conversion
rights under the Company's employee benefits plans,
(all of the foregoing, "Accrued Benefits"). In addition to the
Accrued Benefits, the Company shall pay to the Executive's
estate the award under Section 4(b) for the performance period
in which the date of termination occurs, based on actual
-4-
performance for the entire period; provided, however, that
such award shall be subject to a pro-rata reduction to reflect
the portion of the performance period following the date of
termination, and with payment to be made at the regularly
scheduled time for payment of such amounts to executives of
the Company. Except as otherwise specifically set forth in
this Agreement, any Long Term Incentives, or as required by
law, the Company shall have no further obligation to the
Executive.
(b) Disability. i. The Company may terminate the Executive's
employment hereunder, upon notice to the Executive, in the event that
the Executive becomes disabled during Executive's employment hereunder
through any illness, injury, accident or condition of either a physical
or psychological nature and, as a result, is unable to substantially
perform Executive's duties and responsibilities hereunder, with or
without reasonable accommodation, for one hundred eighty (180) days
during any period of three hundred and sixty-five (365) consecutive
calendar days. In the event of such termination, except as otherwise
specifically set forth in this Agreement, any Long Term Incentives, or
as required by law, the Company shall have no further obligation to the
Executive, other than for payment of the Accrued Benefits. In addition
to the Accrued Benefits, the Company shall pay to the Executive or the
Executive's duly appointed guardian the award under Section 4(b) for
the performance period in which the date of termination occurs, based
on actual performance for the entire period; provided, however, that
such award shall be subject to a pro-rata reduction to reflect the
portion of the performance period following the date of termination,
and with payment to be made at the regularly scheduled time for payment
of such amounts to executives of the Company.
ii. The Board may designate another employee or a Board member
to act in the Executive's place during any period of the Executive's
disability. Notwithstanding any such designation, the Executive shall
continue to receive the Base Salary in accordance with Section 4(a),
perquisites in accordance with Section 4(g), and benefits in accordance
with Section 4(e), to the extent permitted by the then-current terms of
the applicable employee benefit plans, until the Executive becomes
eligible for disability income benefits under the Company's disability
income plan or until the termination of Executive's employment,
whichever shall first occur. While receiving disability income payments
under the Company's disability income plan, the Executive shall be
entitled to receive any Base Salary under Section 4(a) hereof, reduced
by the amount of any disability benefits paid for the same period of
time, and shall continue to participate in perquisites in accordance
with Section 4(g) and Company employee benefit plans in accordance with
Section 4(e) and the terms of such plans, until the termination of
Executive's employment.
iii. If any question shall arise as to whether during any
period the Executive is disabled through any illness, injury, accident
or condition of either a physical or psychological nature so as to be
unable to substantially perform Executive's duties and responsibilities
hereunder, with or without reasonable accommodation, the Executive may,
and at the request of the Company shall, submit to a medical
examination by a physician selected by the Company to whom the
Executive or Executive's duly appointed
-5-
guardian, if any, has no reasonable objection to determine whether the
Executive is so disabled and such determination shall for the purposes
of this Agreement be conclusive of the issue. If such question shall
arise and the Executive shall fail to submit to such medical
examination, the Company's determination of the issue shall be binding
on the Executive.
(c) By the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause at any time upon notice to
the Executive setting forth in reasonable detail the nature of such
Cause. The following, as determined by the Board in its reasonable
judgment, shall constitute "Cause" for termination: (i) the Executive's
willful failure to perform in accordance with the direction of the
Board (other than by reason of disability), or gross negligence in the
performance of, Executive's material duties and responsibilities to the
Company or any of its Affiliates; (ii) the Executive's breach of any of
Executive's obligations under Section 3(d), 7, 8 or 9 of this
Agreement; (iii) conviction of the Executive of, or the Executive's
plea of guilty or no contest to, a felony; (iv) conduct by the
Executive that constitutes fraud, gross negligence or gross misconduct
that results in material harm to the Company; (v) other conduct by the
Executive that is, or could reasonably be expected to be, materially
harmful to the Company or any of its Affiliates; or (vi) a material
breach of this Agreement by Executive not cured to the reasonable
satisfaction of the Board within thirty (30) days after written notice
to Executive of such material breach. Upon the giving of notice of
termination of the Executive's employment hereunder for Cause, the
Company shall have no further obligation to the Executive, other than
for the Accrued Benefits; provided, however, that the Executive shall
be reinstated if within ten (10) business days following termination
for Cause the Executive can demonstrate to the Board, and the Board in
its sole discretion agrees that there was no reasonable basis for
termination of the Executive for Cause.
(d) By the Company Other than for Cause. The Company may
terminate the Executive's employment hereunder other than for Cause at
any time upon sixty (60) days' notice to the Executive. During such
sixty (60) day notice period, the Company may require that the
Executive cease performing some or all of Executive's duties and
responsibilities and/or not be present at any or all time(s) at the
Company's headquarters offices and/or other facilities. In the event of
such termination, in addition to the Accrued Benefits, the Company
shall:
i. until the conclusion of a period of twelve (12)
months following the date of termination of the Executive's
employment hereunder, (A) continue to pay the Executive the
Base Salary at the rate in effect on the date of termination
and (B) pay the Executive an amount equal to the Section 4(b)
annual incentive bonus at target payable in equal installments
at the same time Base Salary hereunder is paid;
ii. if Executive elects to exercise his COBRA
continuation rights to continue his Company sponsored group
health and dental plan benefits, subject to any employee
contribution generally applicable to senior level executives
actively employed by the Company, continue to contribute to
the premium cost of the
-6-
Executive's participation, and that of Executive's eligible
dependents, in the Company's group health and dental plans,
provided that the Executive and such dependents are entitled
to continue such participation under applicable law and plan
terms, but not to exceed twelve (12) months;
iii. pay to the Executive the award under Section
4(b) for the performance period in which the date of
termination occurs, based on actual performance for the entire
period; provided, however, that such award shall be subject to
a pro-rata reduction to reflect the portion of the performance
period following the date of termination, and with payment to
be made at the regularly scheduled time for payment of such
amounts to executives of the Company;
iv. subject to any employee contribution generally
applicable to senior level executives actively employed by the
Company, continue to contribute to the premium cost of the
Executive's participation in the Company's group life
insurance plan, provided that the Executive is entitled to
continue such participation under applicable law and plan
terms, but not to exceed twelve (12) months; and
v. pay for costs and expenses of outplacement
services selected by the Executive and reasonably acceptable
to the Company, up to a maximum cost to the Company of
Twenty-Five Thousand Dollars ($25,000.00) with payment to be
made by the Company to the outplacement vendor upon the
submission to the Company of documentation reasonably
satisfactory to the Company evidencing the incurrence of such
costs and expenses within sixty (60) days following
Executive's date of termination.
Any obligation of the Company to the Executive hereunder is
conditioned, however, (i) upon the Executive signing a waiver and
release of claims agreement in a form utilized by the Company for
senior level executives of the Company (the "Employee Release") within
twenty-one days (or such greater period as the Company may specify)
following the later of the date on which the Executive (or, in the case
of termination by the Executive for Good Reason, the Company) receives
notice of termination of employment or the date the Executive receives
a copy of the Employee Release, (ii) upon the Executive not revoking
the Employee Release in a timely manner thereafter, and (iii) upon the
Executive meeting Executive's obligations under Section 6(c) hereof.
Base Salary to which the Executive is entitled hereunder shall be
payable in accordance with the normal payroll practices of the Company
and will begin at the Company's next regular payroll period which is at
least five (5) business days following the effective date of the
Employee Release, but shall be retroactive to next business day
following the date of termination. Notwithstanding the provisions of
this Section 5(d), however, in the event that, within a reasonable time
(which time shall not exceed ninety (90) days) following termination of
the Executive's employment by the Company hereunder, the Board
determines in good faith that circumstances existed which would have
constituted a basis for termination of the Executive's employment for
Cause, the Executive's employment will be deemed to have been
terminated for Cause in accordance with Section 5(c) hereof.
-7-
(e) By the Executive for Good Reason. The Executive may
terminate Executive's employment hereunder for Good Reason, upon notice
to the Board setting forth in reasonable detail the nature of such Good
Reason. The following shall constitute "Good Reason" for termination by
the Executive: (i) a material breach of the Agreement by the Company
not cured within thirty (30) days after written notice by the Executive
to the Company, or (ii) without Executive's written consent: (A) any
change in title or any material diminution of Executive's duties or
authority, (B) assignment of duties materially inconsistent with
Executive's duties in effect on the Effective Date, (C) any change in
the reporting structure, or (D) any requirement that Executive relocate
his principal residence as in effect on the Effective Date or office
other than at the Company's headquarters offices. In the event of
termination in accordance with this Section 5(e), the Executive will be
entitled to the same pay and benefits Executive would have been
entitled to receive had the Executive's employment been terminated by
the Company other than for Cause in accordance with Section 5(d) above;
provided, that the Executive satisfies all conditions to such
entitlement, including without limitation the signing of an effective
Employee Release and meeting Executive's obligations under Section 6(c)
hereof. It is agreed and understood that Good Reason shall cease to
exist for an event on the sixtieth (60th) day following the later of
its occurrence or Executive's reasonable knowledge thereof, unless the
Executive has given the Board written notice thereof prior to such
date.
(f) By the Executive Other than for Good Reason. The Executive
may terminate Executive's employment hereunder at any time upon six
(60) days' prior written notice to the Board. In the event of
termination by the Executive pursuant to this Section 5(f), the Board
may elect to waive the period of notice, or any portion thereof, and,
if the Board so elects, the Company will pay the Executive the Base
Salary for the notice period or for any remaining portion of the
period. The Company shall have no further obligation to the Executive,
other than for the Accrued Benefits due to Executive.
(g) Change of Control. The Executive shall be covered under
the Company's Change of Control Employment Agreement as in effect from
time to time during the term of this Agreement. Any amounts and/or
benefits payable, paid or provided to the Executive under such Change
of Control Employment Agreement shall be in lieu of and not in addition
to amounts and/or benefits payable or provided under this Agreement.
This Agreement is not intended to preclude amounts and/or benefits
payable under the Change of Control Employment Agreement should the
events described therein occur.
(h) Timing of Payments. In the event that at the time that
Executive's date of termination from Company employment occurs the
Company is publicly traded (as defined in Section 409A of the Internal
Revenue Code), any amounts payable under this Section 5 that would
otherwise be considered deferred compensation subject to the additional
twenty percent (20%) tax imposed by Section 409A if paid within six (6)
months following the date of termination of Company employment shall
accumulate and
-8-
be paid in a lump sum, without interest, at the later of the time
otherwise provided in Section 5 or the time that will prevent such
amounts from being considered deferred compensation.
Section 6. Effect of Termination. The provisions of this Section 6
shall apply to termination pursuant to Section 5 or otherwise.
(a) The Executive shall promptly give the Company notice of
all facts necessary for the Company to determine the amount and
duration of its obligations in connection with any termination pursuant
to Section 5(b)-(f) hereof.
(b) Except for group health and dental plan coverage and group
life insurance coverage continued pursuant to Section 5(d) or 5(e)
hereof, benefits shall terminate pursuant to the terms of the
applicable employee benefit plans based on the date of termination of
the Executive's employment without regard to any continuation of Base
Salary or other payment to the Executive following such date of
termination. Executive shall be afforded such benefit continuation
and/or conversion rights as required by law or the Company's benefits
plans.
(c) The Executive agrees that if, on the date Executive's
employment with the Company terminates, howsoever caused, the Executive
is a member of the Board or of the board of directors of any of the
Affiliates or holds any position or office with the Company or any of
the Affiliates, the termination shall constitute Executive's offer of
resignation from all such memberships, positions and offices, effective
as of the date of termination of Executive's employment and Executive
agrees to execute confirmation of any such resignations requested by
the Company.
(d) Provisions of this Agreement shall survive any termination
if so provided herein or if necessary or desirable to accomplish the
purposes of other, surviving provisions, including without limitation
the obligations of the Executive under Sections 7, 8 and 9 hereof. The
obligation of the Company to make payments to or on behalf of the
Executive under Section 5(d) or 5(e) hereof is expressly conditioned
upon the Executive's continued full performance of obligations under
Sections 7, 8 and 9 hereof.
Section 7. Confidential Information, Return of Documents and Property,
Continued Cooperation, and Nondisparagement. (a) The Executive acknowledges that
the Company and its Affiliates continually develop Confidential Information,
that the Executive may develop Confidential Information for the Company or its
Affiliates and that the Executive may learn of Confidential Information during
the course of employment. The Executive will comply with the policies and
procedures of the Company and its Affiliates for protecting Confidential
Information and shall not disclose to any Person or use, other than as required
by applicable law or for the proper performance of Executive's duties and
responsibilities to the Company and its Affiliates, any Confidential Information
obtained by the Executive incident to Executive's employment or other
association with the Company or any of its Affiliates. The Executive understands
that this
-9-
restriction shall continue to apply after Executive's employment terminates,
regardless of the reason for such termination.
(b) All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the Company or
its Affiliates and any copies, in whole or in part, thereof (the "Documents"),
whether or not prepared by the Executive, and any tangible property of the
Company furnished to the Executive, including, but not limited to, computers,
personal digital assistants, credit cards, and identification cards, shall be
the sole and exclusive property of the Company and its Affiliates. The Executive
shall safeguard all Documents and tangible property of the Company and shall
surrender to the Company at the time Executive's employment terminates, or at
such earlier time or times as the Board or its designee may specify, all
Documents and other tangible property of the Company then in the Executive's
possession or control.
(c) During the term hereof and for a reasonable period thereafter (but
not less than twelve (12) months following termination of Executive's
employment), the Executive agrees to cooperate with the Company with respect to
all matters arising during or related to Executive's employment, including
without limitation cooperation in connection with any litigation or governmental
investigation or regulatory or other proceeding which may have arisen or which
may arise following the execution of this Agreement. As part of the cooperation
agreed to herein, the Executive shall provide complete and truthful information
to the Company and its attorneys with respect to any matter arising during or
related to Executive's employment. Further, the Executive shall be available to
meet with Company personnel and the Company's attorneys and shall provide to the
Company and its attorneys any and all documentary or other physical evidence
pertinent to any such matter; and, at the Company's request upon reasonable
notice, the Executive shall travel to such places as the Company may specify
(for which the Company will reimburse Executive for reasonable travel and
lodging expenses) and provide such complete and truthful information and
evidence to parties whom the Company may specify. Further, upon the oral request
of the Company or its attorneys, the Executive shall testify, truthfully and
accurately, to any such matter in any civil case to which the Company is a party
or in connection with any investigation or regulatory or other proceeding
relating to the Company or its activities. To the extent legally permissible,
the Executive shall promptly notify the Board, within two business days, of
Executive's receipt from any third party or governmental entity of a request for
testimony and/or documents, whether by legal process or otherwise, relating to
any matter arising during or relating to Executive's employment. Except as
otherwise expressly provided herein, the Executive shall not charge the Company
for Executive's compliance with obligations under this Section 7(c), but shall
be reimbursed for all reasonable and documented out of pocket expenses incurred
at the request of the Company. The Executive's compliance with this Section 7(c)
shall be reasonably requested by the Company, so, where practicable, to minimize
interference with the Executive's then current employment. In the event the
Executive can demonstrate loss of base salary from the Executive's full-time
employer during any period of time the Executive is complying with this Section
7(c), the Company will compensate the Executive for Executive's reasonable time
at an amount to be then agreed upon between the Company and the Executive.
-10-
(d) During the term hereof and thereafter, the Executive agrees that
the Executive shall not take any actions or make any statements to the public,
current, former or future Company employees, prospective future employers, the
media, or any other third party whatsoever that disparages or reflects
negatively upon the Company and its Affiliates, and its and their directors,
officers, or employees. The Company agrees following the end of the term the
Company shall instruct its senior officers and members of the Board not to take
any actions or make any statements to the public, media, or any other third
party whatsoever that disparages or reflects negatively upon the Executive.
Notwithstanding the foregoing provisions of this Section 7(d), nothing herein
shall prevent the Company and its Affiliates, and its and their directors,
officers and employees or the Executive from responding truthfully to any
information requests or questions posed in any formal or informal legal,
regulatory, administrative or other proceedings involving any court, tribunal or
governmental body or agency or as otherwise required by law.
Section 8. Assignment of Rights to Intellectual Property. (a) The
Executive shall promptly and fully disclose all Intellectual Property to the
Company. The Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive agrees to execute
any and all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation the
execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to the Company and
to permit the Company to enforce any patents. copyrights or other proprietary
rights to the Intellectual Property. The Executive will not charge the Company
for time spent in complying with these obligations, but shall be reimbursed for
all reasonable and documented out of pocket expenses incurred at the request of
the Company. All copyrightable works that the Executive creates shall be
considered "work made for hire".
(b) As used in this Agreement, "Intellectual Property" means any
invention, formula, process, discovery, development, design, innovation or
improvement (whether or not patentable or registrable under copyright statutes)
made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during Executive's employment by the Company, provided,
however, notice is hereby provided that, in accordance with Illinois law (765
Ill. Comp. Stat. 1060/2), the term "Intellectual Property" shall not apply to
any invention that the Executive develops entirely on Executive's own time and
without using the equipment, supplies, facilities or trade secret information of
the Company, unless (i) such invention relates to the business of the Company or
to the actual or demonstrably anticipated research or development of the Company
or (ii) the invention results from any work performed by the Executive for the
Company.
Section 9. Restricted Activities. The Executive agrees that some
restrictions on Executive's activities during and after Executive's employment
are necessary to protect the goodwill, Confidential Information and other
legitimate interests of the Company and its Affiliates:
(a) While the Executive is employed by the Company and for the
period of twelve (12) months immediately following Executive's
employment by the Company (in the aggregate, with the period of
Executive's employment, the "Non-Competition
-11-
Period"), the Executive shall, not, directly or indirectly, whether as
owner, partner, investor, consultant, agent, executive or managerial
employee, co-venturer or otherwise, compete with the Company or any of
its Affiliates within the United States, Europe or Asia or undertake
any planning for any business competitive with the Company or any of
its Affiliates. Specifically, but without limiting the foregoing, the
Executive agrees not to engage in any manner in any activity that is
directly or indirectly competitive with the business of the Company or
any of its Affiliates as conducted or under consideration at any time
during the Executive's employment. Restricted activity includes without
limitation. providing services, directly or indirectly, with or without
compensation, whether as an executive or managerial employee,
independent contractor, officer, director or otherwise, to any Person
who does, or has plans to become. a competitor of the business of the
Company or any of its Affiliates. For the purposes of this Section 9,
the business of the Company and its Affiliates shall include all
Products and the Executive's undertaking shall encompass all items.
products and services that may be used in substitution for Products.
The foregoing restrictions shall not preclude the Executive from
retaining or making passive investment interests of less than two
percent (2%) in corporations whose stock is registered under the
Securities Exchange Act of 1934, as amended.
(b) The Executive agrees that, during Executive's employment
with the Company, Executive will not undertake any outside activity,
whether or not competitive with the business of the Company or its
Affiliates, that could reasonably give rise to a conflict of interest
or otherwise interfere with Executive's duties and obligations to the
Company or any of its Affiliates. Further, the Executive agrees that,
during Executive's employment and thereafter, Executive will comply
with the policies of the Company and directives of the Board with
respect to conflicts of interest, code of conduct, publicity and
disparagement of the Company, its business and its management, as in
effect from time to time.
(c) The Executive acknowledges the interest of the Company and
its Affiliates in maintaining a stable work force and agrees that,
during the Non-Competition Period, Executive will not (i) hire or
attempt to hire any employee of the Company or any of its Affiliates,
assist in such hiring by any Person or encourage any such employee to
terminate his or her relationship with the Company or any of its
Affiliates or (ii) solicit or encourage any independent contractor
providing services to the Company or any of its Affiliates to terminate
or diminish those services or its relationship with the Company or any
of its Affiliates.
(d) its Affiliates have a near permanent relationship with
their customers, the Executive agrees that, during the Non-Competition
Period, Executive will not directly or indirectly solicit or encourage
any customer of the Company or any of its Affiliates to terminate or
diminish its relationship with them, or to conduct with any Person any
business or activity which such customer conducts or could conduct with
the Company or any of its Affiliates.
-12-
Section 10. Notification Requirement. Until sixty (60) days after the
conclusion of the Non-Competition Period, the Executive shall give notice to the
Company of each new business activity Executive plans to undertake, at least
twenty-one (21) days prior to beginning any such activity. Such notice shall
state the name and address of the Person for whom such activity is undertaken
and the nature of the Executive's business relationship(s) and position(s) with
such Person. The Executive shall provide the Company with such other pertinent
information concerning such business activity as the Company may reasonably
request in order to determine the Executive's continued compliance with
Executive's obligations under Sections 7, 8 and 9 hereof.
Section 11. Enforcement of Covenants. The Executive acknowledges that
Executive has carefully read and considered all the terms and conditions of this
Agreement, including the restraints imposed upon Executive pursuant to Sections
7, 8 and 9 hereof. The Executive agrees that those restraints are necessary for
the reasonable and proper protection of the Company and its Affiliates and that
each and every one of the restraints is reasonable in respect to subject matter,
length of time and geographic area. The Executive further acknowledges that,
were Executive to breach any of the covenants contained in Sections 7, 8 or 9
hereof, the damage to the Company and its Affiliates would be irreparable. The
Executive therefore agrees that the Company and its Affiliates, in addition to
any other remedies available to them, shall be entitled to preliminary and
permanent injunctive relief against any breach or threatened breach by the
Executive of any of said covenants, without having to post bond. The parties
further agree that, in the event that any provision of Section 7, 8 or 9 hereof
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its being extended over too great a time, too large a geographic
area or too great a range of activities, such provision shall be deemed to be
modified to permit its enforcement to the maximum extent permitted by law.
Section 12. Conflicting Agreements. The Executive hereby represents and
warrants that the execution of this Agreement and the performance of Executive's
obligations hereunder will not breach or be in conflict with any other agreement
to which the Executive is a party or is bound and that the Executive is not now
subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of Executive's
obligations hereunder. The Executive will not disclose to or use on behalf of
the Company any proprietary information of a third party without such party's
consent.
Section 13. Definitions. Words or phrases which are initially
capitalized or are within quotation marks shall have the meanings provided in
this Section and as provided elsewhere herein. For purposes of this Agreement,
the following definitions apply:
(a) "Affiliates" means all persons and entities directly or
indirectly controlling, controlled by or under common control with the
Company, where control may be by either management authority, contract
or equity interest.
(b) "Confidential information" means any and all information
of the Company and its Affiliates that is not generally known by others
with whom they compete or do business, or with whom any of them plans
to compete or do business and any and all information, which, if
disclosed by the Company or its Affiliates would assist
-13-
in competition against them. Confidential Information includes without
limitation such information relating to (i) the development, research,
testing, manufacturing, marketing and financial activities of the
Company and its Affiliates, (ii) the Products, (iii) the costs, sources
of supply, financial performance and strategic plans of the Company and
its Affiliates, (iv) the identity and special needs of the customers of
the Company and its Affiliates and (v) the people and organizations
with whom the Company and its Affiliates have business relationships
and those relationships. Confidential Information also includes any
information that the Company or any of its Affiliates have received, or
may receive hereafter, belonging to customers or others with any
understanding, express or implied, that the information would not be
disclosed. Confidential Information does not include any information
that (i) at the time of disclosure or thereafter is generally available
to and known by the public (other than as a result of its disclosure
directly or indirectly by the Executive) or (ii) was available to the
Executive on a non-confidential basis from a source other than the
Company or its advisors, provided that such source is not and was not
bound by a confidentiality agreement regarding such material, the
Company, its affiliates or its business. In addition, in the event that
the Executive become legally compelled (by deposition, subpoena, civil
investigative demand or similar process) to disclose any of the
Confidential Information, such Confidential Information, to the extent
the Executive and the Company cannot, after using all commercially
reasonable efforts, obtain a protective order or other appropriate
remedy, shall not be deemed to be Confidential Information solely to
the extent and for the limited purpose the Executive is advised by
counsel that the Executive is legally required to disclose such
Confidential Information and the Executive shall use Executive's best
efforts to obtain assurance that confidential treatment will be
accorded such Confidential Information.
(c) "Person" means an individual, a corporation, a limited
liability company, an association; a partnership, an estate, a trust
and any other entity or organization, other than the Company or any of
its Affiliates.
(d) "Products" mean all products actively planned. researched.
developed, tested, manufactured, sold, licensed, leased or otherwise
distributed or put into use by the Company or any of its Affiliates,
together with all services provided or planned by the Company or any of
its Affiliates, during the Executive's employment.
Section 14. Withholding. All payments made by the Company under this
Agreement shall be reduced by any tax or other amounts required to be withheld
by the Company under applicable law.
Section 15. Assignment. Neither the Company nor the Executive may make
any assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Executive is
transferred to a position with any of the Affiliates (provided such assignment
shall not relieve the Company from its duties and obligations hereunder) or in
the event that the Company shall hereafter effect a reorganization, consolidate
with, or merge into, any Person or transfer all or substantially all of its
properties or assets to any Person. This Agreement shall
-14-
inure to the benefit of and be binding upon the Company and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
Section 16. Severability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
Section 17. Waiver. No waiver of any provision hereof shall be
effective unless made in writing and assigned by the waiving party. The failure
of either party to require the performance of any term or obligation of this
Agreement, or the waiver by either party of any breach of this Agreement, shall
not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
Section 18. Notices. Any and all notices, requests. demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person, consigned to a reputable national overnight
courier or deposited in the United States mail, postage prepaid, registered or
certified, and addressed to the Executive at Executive's last known home address
on the books of the Company or, in the case of the Company, at its principal
place of business, attention of the Vice President Human Resources, or to such
other address as either party may specify by notice to the other actually
received.
Section 19. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior communications,
agreements and understandings, written or oral, with respect to the terms and
conditions of the Executive's employment, except as otherwise provided in
Section 5(f) with respect to Change of Control Employment Agreements, and
provided that this Agreement shall not supersede the Agreement for Deferred
Compensation, dated December 20, 2005, between the Executive and the Company,
pursuant to which the Company agreed to compensate the Executive for the
increase in the exercise price of certain of the Executive's stock options.
Section 20. Amendment. This Agreement may be amended or modified only
by a written instrument signed by the Executive and by an expressly authorized
representative of the Company.
Section 21. Headings. The headings and captions in this Agreement are
for convenience only and in no way define or describe the scope or content of
any provision of this Agreement.
Section 22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
-15-
Section 23. Governing Law. This is an Illinois contract and shall be
construed and enforced under and be governed in all respects by the laws of the
State of Illinois, without regard to the conflict of laws principles thereof.
Section 24. Survivorship. The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein shall survive the
termination or expiration of this Agreement.
Section 25. Construction. The parties acknowledge that this Agreement
is the result of arm's-length negotiations between sophisticated parties each
afforded representation by legal counsel. Each and every provision of this
Agreement shall be construed as though both parties participated equally in the
drafting of the same, and any rule of construction that a document shall be
construed against the drafting party shall not be applicable to this Agreement.
Section 26. Set Off; No Mitigation. The Company's obligation to pay
Executive the amounts provided and to make the arrangements provided hereunder
shall be subject to set-off, counterclaim or recoupment of monies owed by
Executive to the Company or its Affiliates. Executive shall not be required to
mitigate the amount of any payment provided for pursuant to this Agreement by
seeking other employment.
Section 27. Indemnification; Insurance. The Company agrees that it
shall indemnify Executive for any and all liabilities of Executive that arise by
reason of the fact that Executive is or was a director, officer or employee of
the Company and its Affiliates to the fullest extent permitted by the laws of
the State of Illinois, and that it will provide director and officer liability
insurance coverage on the same basis as provided to the other directors and
officers of the Company during the term of this Agreement and for a period of
ten (10) years thereafter. This provision shall survive any expiration or
termination of this Agreement.
Section 28. Dispute Resolution. Subject to the rights of the Company
pursuant to Section 11 above, any controversy, claim or dispute arising out of
or relating to this Agreement, the breach thereof, or the Executive's employment
by the Company shall be settled by arbitration with one arbitrator. The
arbitrator shall be currently licensed to practice law in a state within the
United States. The arbitration will be administered by the American Arbitration
Association in accordance with its National Rules for Resolution of Employment
Disputes. The arbitration proceeding shall be confidential, and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction. Any such arbitration shall take place in the Chicago, Illinois
area, or in any other mutually agreeable location. In the event any judicial
action is necessary to enforce the arbitration provisions of this Agreement,
sole jurisdiction shall be in the federal and state courts, as applicable,
located in Illinois. Any request for interim injunctive relief or other
provisional remedies or opposition thereto shall not be deemed to be a waiver or
the right or obligation to arbitrate hereunder. To the extent a party prevails
in any dispute arising out of this Agreement or any of its terms and provisions,
all reasonable costs, fees and expenses relating to such dispute, including the
parties' reasonable legal fees, shall be borne by the party not prevailing in
the resolution of such dispute, but only to the extent that the arbitrator or
court, as the case may be, deems reasonable and appropriate given the merits of
the claims and defenses asserted.
-16-
[ReMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-17-
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Executive, effective as of the date first above written.
EXECUTIVE: LITTELFUSE, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- ----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President, Human Resources
--------------------------------------
-18-