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Exhibit 10(b)
AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
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Applied Industrial Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
January 15, 1998
Dear ________:
Applied Industrial Technologies, Inc. (the "Company") considers it
essential to the best interest of the Company and its shareholders that its
management be encouraged to remain with the Company and to continue to devote
full attention to the Company's business. In this connection, the Company
recognizes that the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Company's
Board of Directors (the "Board") has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of key
members of the Company's management, including yourself, to their assigned
duties without distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in the employ of the Company
until the termination of your employment in conjunction with a "change in
control of the Company" (as defined in Section 2 hereof), this letter agreement
("Agreement") amends and restates the severance benefits which this Company
agrees will be provided to you in the event your employment with the Company is
terminated within the three year period immediately following any change in
control of the Company either by you for "Good Reason" or by the Company
"Without Cause" (both as defined in Section 3 hereof). In the event that a
change in control of the Company does not occur, your severance benefits, if
any, shall be determined without regard to this Agreement.
Nothing herein shall be construed so as to prevent either you or
the Company from terminating your employment at any time, for cause or
otherwise, subject only to the specific payment and other provisions hereinafter
provided for under certain circumstances in the event a change in control of the
Company shall have occurred prior to the date your termination becomes
effective. In addition, this agreement shall be deemed terminated, and of no
further force and effect, in the event that you cease to be a Board-elected
officer or an appointed officer of the Company prior to a change in control. You
hereby specifically acknowledge that your employment by the Company is
employment-at-will, subject to termination by you, or by the Company, at any
time with or without cause. You also acknowledge that such employment-at-will
status cannot be modified except in a specific writing which has been authorized
or ratified by the Board of Directors of the Company.
1. CONTINUED EMPLOYMENT. This confirms that you have advised the
Company that, in consideration of, among other things, the Company's entering
into this amended and restated Agreement with you, it is your present intention
to remain in the employ of the Company unless and until there occurs a change in
control of the Company.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless a change in control of the Company occurs and your employment with the
Company is terminated within three
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years thereafter either by you for Good Reason or by the Company Without Cause.
This Agreement is not intended to apply to termination of your employment by
reason of Death, Disability or Retirement (as defined in Section 3 hereof). For
purposes of this Agreement, a "change in control of the Company" shall mean:
(a) The Company is merged, consolidated or reorganized into or
with another entity and, immediately after such merger,
consolidation or reorganization, the holders of Company
voting stock immediately prior to the transaction hold, in
the aggregate, less than a majority of the combined voting
power of the then outstanding securities of the new entity;
(b) The Company sells substantially all of its assets to
another entity and, immediately after such sale, the
holders of Company voting stock immediately prior to the
sale hold, in the aggregate, less than a majority of the
combined voting power of the then outstanding securities of
the purchaser;
(c) A report is filed, or is required to be filed, on Schedule
13D or Schedule 14D-1 (or any successor form) disclosing
that any "person" has become a "beneficial owner" (as those
terms are defined by the Securities Exchange Act of 1934)
of Company securities representing 20% or more of the
combined voting power of then outstanding securities of the
Company;
(d) The Company files, or is required to file, a report or
proxy statement with the Securities and Exchange Commission
disclosing in response to Form 8-K or Schedule 14A (or any
successor form) that a change in control of the Company has
or may have occurred, or will or may occur in the future,
pursuant to a then-existing contract or transaction; or
(e) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least three-fourths 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 shareholders, was approved by a
vote of at least two-thirds of the directors comprising the
Incumbent Board shall be considered 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 by or on
behalf of a person other than the Board.
Notwithstanding events set forth in subparagraphs (c) and (d)
above, unless otherwise determined by a majority vote of the
Board, a change in control shall not be deemed to have occurred
solely because (i) the Company, (ii) an entity of which the
Company directly or indirectly beneficially owns 50% or more of
the entity's voting stock, or (iii) any employee stock ownership
plan or any other employee benefit plan sponsored by the Company,
either files or becomes obligated to file a report or proxy
statement in response to Schedules 13D, 14D-1 or 14A, or Form 8-K
(or any successor form), disclosing beneficial ownership by it of
voting stock, whether in excess of 20% or otherwise, or because
the Company reports that a change of control of the Company has or
may have occurred, or will or may occur in the future, by reason
of such beneficial ownership.
The first date upon which a change in control as defined above
takes place shall be known as the "Effective Date." Anything in this Agreement
to the contrary notwithstanding, if a change in control occurs and if your
employment with the Company is terminated prior to the date on which the change
in control occurs, and if it is reasonably demonstrated by you that such
termination (i) was at
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the request of a third party who had taken steps reasonably calculated to effect
a change in control or (ii) was by the Company and arose with or in anticipation
of a change in control, then for all purposes of this Agreement your employment
shall be deemed to have been terminated by the Company Without Cause under
Section 3(f) of this Agreement and the "Effective Date" shall mean the date
immediately prior to the Date of Termination (as defined in Section 3 hereof).
3. TERMINATION OF EMPLOYMENT. Your employment with the Company
shall or may be terminated, as the case may be, for any of the following
reasons:
(a) DEATH. Termination of your employment with the Company
due to your death;
(b) RETIREMENT. Termination of your employment with the
Company at or after the attainment of age sixty-five (65);
(c) DISABILITY. Termination of your employment with the
Company either by you or the Company after you are physically or mentally
incapacitated for a period of one hundred eighty (180) consecutive days such
that you cannot substantially perform your duties of employment with the Company
on a full-time basis;
(d) CAUSE. Termination of your employment with the Company
at any time for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure by you to perform
substantially your duties with the Company or one
of its affiliates (other than for Disability or
Good Reason), after a written demand for
substantial performance is delivered to you by the
Board or the Chief Executive Officer of the Company
which specifically identifies the manner in which
the Board or Chief Executive Officer believes that
you have not substantially performed your duties,
or
(ii) the willful engagement by you in illegal conduct or
gross misconduct involving moral turpitude that is
materially and demonstrably injurious to the
Company.
For purposes of this Section 3(d), no act or failure to act shall
be considered "willful" unless it is done, or omitted to be done,
in bad faith or without your reasonable belief that such action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given you 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, in good
faith and in the best interests of the Company. Termination of
your employment with the Company shall not be deemed to be for
Cause unless and until there shall have been delivered to you 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 you and you are given an
opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, you are
guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail;
(e) GOOD REASON. You may terminate your employment with the
Company for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment of any duties inconsistent in any
respect with your position (including status,
offices, titles and reporting requirements),
authority, duties
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or responsibilities, 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,
insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by
you;
(ii) any failure by the Company to continue to provide
you with an annual base salary, employee benefits
and an opportunity to earn incentive and bonus
compensation equal or greater to that which was
provided to you by the Company immediately prior to
the Effective Date other than an isolated,
insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company
promptly after the receipt of notice thereof given
by you;
(iii) the Company's requiring you to be based at or
generally work from any location other than the
location that you were based at or generally worked
from prior to the Effective Date or the Company's
requiring you to travel on Company business to a
substantially greater extent than required
immediately prior to the Effective Date; or
(iv) any failure by the Company to comply with and
satisfy Section 12 of this Agreement.
For purposes of this Section 3(e), your good faith determination
of "Good Reason" shall be conclusive. Anything in this Agreement
to the contrary notwithstanding, a termination by you for any
reason during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(f) WITHOUT CAUSE. The Company may terminate your employment
with the Company Without Cause. For purposes of this Agreement the term "Without
Cause" shall mean termination of your employment for reasons other than for
Death, Retirement, Disability or Cause.
Except in the case of Retirement or Death, termination of your
employment shall be effective only as of the earliest date (hereinafter referred
to as the "Date of Termination") specified by either you or the Company in a
written notice of termination ("Notice of Termination") to the other party
hereto. Notwithstanding any provision herein to the contrary, if at any time
prior to a change in control of the Company you receive notice from the Company
that you shall be placed in an income continuation status (i.e. where the
Company agrees to (i) continue to pay your then existing salary or a modified
level of salary continuation and/or all or some of your then existing employee
benefits and (ii) relieve you of your obligation to render services to the
Company), your employment, for the purpose of this Agreement only, shall be
deemed terminated as of the date of such notice and no benefits shall be payable
to you hereunder.
4. SEVERANCE PAY. If a change in control of the Company occurs and
within three years thereafter your employment with the Company is terminated
either by you for Good Reason or by the Company Without Cause, then in addition
to all other benefits which you have earned prior to such termination or to
which you are otherwise entitled, the Company shall pay to you as severance pay,
in a lump sum on or before the fifth day following the Date of Termination, the
following amounts:
(a) your full base salary earned through the Date of
Termination at the rate in effect ten days prior to the date Notice of
Termination is given, to the extent not theretofore paid;
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(b) an amount equal to the product of (1) the sum of (i) the
higher of your annual base salary in effect prior to the Effective Date, or your
annual base salary at the highest rate in effect at any time since any change in
control of the Company and (ii) the higher of your Additional Compensation (as
defined hereafter) for the most recently completed fiscal year of the Company,
or the arithmetic average of your Additional Compensation for the most recently
completed three fiscal years of the Company (the sum of such annual base salary
and Additional Compensation shall be referred to as your "Base Compensation")
and (2) the lesser of the number three or a fraction the numerator of which is
the number of months from and including the month in which the Date of
Termination occurs to and including the month in which you would attain the age
sixty-five and the denominator of which is twelve. The term "Additional
Compensation" shall mean your annual (measured by a calendar year) total
incentive compensation, commissions, bonuses, amounts deferred under any
non-qualified deferred compensation program of the Company, and any elective
contributions that are made by or on behalf of you under any plan maintained by
the Company that are not includible in gross income under Section 125 or
402(e)(3) of the Internal Revenue Code of 1986, as amended from time to time,
but excluding moving or educational reimbursement expenses, amounts realized
from the exercise of any stock options, and imputed income attributable to any
fringe benefit.
(c) in lieu of shares of Common Stock of the Company,
without par value ("Company Shares") issuable upon exercise of options
("Options"), if any, granted to you under any Company stock option plan (which
Options shall be deemed canceled upon the making of the payment herein referred
to), you shall receive an amount in cash equal to the aggregate spread between
the exercise prices of all such Options that are outstanding and held by you
(whether or not then fully vested or exercisable) and the higher of (i) the mean
of the high and low trading prices of Company Shares on the New York Stock
Exchange on the Date of Termination or (ii) the highest price per Company Share
actually paid in connection with any change in control of the Company; and
(d) an amount of cash equal to any unvested portion of your
interest in any of the Company's tax-qualified pension plans as of the Date of
Termination.
5. WELFARE BENEFIT PLANS. If a change in control of the Company
occurs and within three years thereafter your employment with the Company is
terminated either by you for Good Reason or by the Company Without Cause, then
the Company shall maintain in full force and effect, for the continued benefit
of you and your dependents for three years after the Date of Termination, all
life insurance, health and accident, disability and other employee benefit
plans, programs and arrangements (excluding, however, any tax-qualified and
nonqualified retirement plan or program of the Company), in which you were
entitled to participate immediately prior to the Date of Termination, provided
that your continued participation is possible under the general terms and
provisions of such welfare plans, programs and arrangements, and provided,
however, that in the event that your life insurance benefit is provided through
a split dollar program, the Company shall cause the policyowner of any life
insurance policy of your life under such program to transfer the ownership of
any such policy (with any cash value related thereto) to you. In the event that
your participation in any such welfare plan, program or arrangement is barred,
or any such plan, program or arrangement is discontinued or the benefits
thereunder materially reduced, the Company shall arrange to provide you with
benefits substantially similar to those which you were entitled to receive under
such plans, programs and arrangements immediately prior to the Date of
Termination. At the end of the period of coverage hereinabove provided for, you
shall have the option to have assigned to you at no cost and with no
apportionment of prepaid premiums, any assignable insurance owned by the Company
and relating specifically to you.
6. OUTPLACEMENT SERVICES. If a change in control of the Company
occurs and within three years thereafter your employment with the Company is
terminated either by you for Good Reason or by the Company Without Cause, then
the Company shall provide you reasonable
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outplacement services for a period of up to one year of a nature customarily
provided at your executive officer level.
7. NO MITIGATION REQUIRED. You shall not be required to mitigate
the amount of any payment or benefit provided for in Section 4 or 5 by seeking
other employment or otherwise. Notwithstanding the foregoing, benefits otherwise
receivable under Section 5 of this Agreement shall be reduced to the extent that
and for any period during which you receive substantially similar benefits from
another employer.
8. NONCOMPETITION. If a change in control of the Company occurs
and within three years thereafter your employment with the Company is terminated
either by you for Good Reason or by the Company Without Cause, and you are
receiving payments from the Company pursuant to this Agreement, then for a
period of one (1) year from the Date of Termination of your employment you agree
not to, without the written consent of the Company, either directly or
indirectly, engage in, make any investment in, advise, assist or render any
services to any person or entity in competition with the business of the Company
or its subsidiaries. Notwithstanding the foregoing, you may own less than one
(1) percent of the combined voting power of all issued and outstanding voting
securities of any publicly-held corporation whose stock is traded on a major
stock exchange or quoted on NASDAQ.
9. CONFIDENTIAL INFORMATION. You hereby agree that you shall not
at any time (whether employed by the Company or not), either directly or
indirectly, disclose or make known to any person or entity any confidential
information, trade secret, or proprietary information that you acquired during
the course of your employment with the Company which shall not have become
public knowledge (other than by your actions in violation of this Agreement).
You further agree that upon the termination of your employment with the Company
or at any time upon the request of the Company you shall deliver to the Company
any and all literature, documents, correspondence, and other materials and
records furnished to or acquired by you from the Company during the course of
your employment with the Company. In no event shall an asserted violation of the
provisions of this Section 9 constitute a basis for deferring or withholding any
amounts otherwise payable to you under this Agreement
10. ADDITIONAL PAYMENTS.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it is determined (as hereafter provided) that any
payment or distribution to or for your benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement or similar right (a "Payment"), would be subject to the excise
tax imposed by Section 4999 of the Code (or any successor provision thereto), or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereafter collectively
referred to as the "Excise Tax"), then you shall be entitled to receive an
additional payment or payments (a "Gross-Up Payment") in an amount such that,
after payment by you of all taxes (including federal, state, and local taxes and
any interest or penalties imposed with respect to such taxes and including any
Excise Tax) imposed upon the Gross-Up Payment, you retain (or have withheld and
credited on your behalf for tax purposes) an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 10(e) hereof, all
determinations required to be made under this Section 10, (including whether an
Excise Tax is payable by the Executive, the amount of such Excise Tax, whether a
Gross-Up Payment is required, and the amount of such Gross-Up Payment) shall be
made by a nationally-recognized legal or accounting firm (the "Firm") selected
by you in your sole discretion. You agree to direct the Firm to submit its
determination and detailed supporting calculations to both you and the Company
within 15 calendar days after the Date
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of Termination, if applicable, or such earlier time or times as may be requested
by you or the Company. If the Firm determines that any Excise Tax is payable by
you and that a Gross-Up Payment is required, the Company shall pay you the
required Gross-Up Payment within five business days after receipt of such
determination and calculations. If the Firm determines that no Excise Tax is
payable by you, it shall, at the same time as it makes such determination,
furnish you with an opinion that you have substantial authority not to report
any Excise Tax on your federal income tax return. Any determination by the Firm
as to the amount of the Gross-Up Payment shall be binding upon you and the
Company. As a result of the uncertainty in the application of Section 4999 of
the Code (or any successor provision thereto) at the time of the initial
determination by the Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (an
"Underpayment"). In the event that the Company exhausts its remedies pursuant to
Section 10(e) hereof and you thereafter are required to make a payment of any
Excise Tax, you may direct the Firm to determine the amount of the Underpayment
(if any) that has occurred and to submit its determination and detailed
supporting calculations to both you and the Company as promptly as possible. Any
such Underpayment shall be promptly paid by the Company to you, or for your
benefit, within five business days after receipt of such determination and
calculations.
(c) You and the Company shall each provide the Firm access
to and copies of any books, records and documents in the possession of the
Company or you, as the case may be, reasonably requested by the Firm, and
otherwise cooperate with the Firm in connection with the preparation and
issuance of the determination contemplated by Section 10(b) hereof.
(d) The fees and expenses of the Firm for its services in
connection with the determinations and calculations contemplated by Section
10(b) hereof shall be borne by the Company. If such fees and expenses are
initially paid by you, the Company shall reimburse you the full amount of such
fees and expenses within five business days after receipt from you of a
statement therefor and reasonable evidence of your payment thereof.
(e) You agree to notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as
promptly as practicable but no later than ten business days after you actually
receive notice of such claim. You agree to further apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid
(in each case, to the extent known by you). You agree not to pay such claim
prior to the earlier of (i) the expiration of the 30-calendar-day period
following the date on which you give such notice to the Company and (ii) the
date that any payment or amount with respect to such claim is due. If the
Company notifies you in writing at least five business days prior to the
expiration of such period that it desires to contest such claim, you agree to:
(i) provide the Company with any written records or
documents in your possession relating to such claim
reasonably requested by the Company,
(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 competent in
respect of the subject matter and 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,
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold you harmless, on an after-tax basis, for
and against any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of costs
and expenses. Without limiting the foregoing provisions of this Section 10(e),
the Company shall control all proceedings taken in connection with the contest
of any claim contemplated by this Section 10(e) and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim (provided,
however, that you may participate therein at your own cost and expense) and may,
at its option, either direct you to pay the tax claimed and ▇▇▇ for a refund or
contest the claim in any permissible manner, and you agree 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 you to pay the tax
claimed and ▇▇▇ for a refund, the Company shall advance the amount of such
payment to you on an interest-free basis and shall indemnify and hold you
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; and provided further, however, that any extension of the statute of
limitations relating to payment of taxes for your taxable year with respect to
which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and you 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.
(f) If, after the receipt by you of an amount advanced by
the Company pursuant to Section 10(e) hereof, you receive any refund with
respect to such claim, you agree (subject to the Company's complying with the
requirements of Section 10(e) hereof) to promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after your receipt of an amount advanced by the
Company pursuant to Section 10(e) hereof, a determination is made that you are
not entitled to any refund with respect to such claim and the Company does not
notify you in writing of its intent to contest such denial of refund prior to
the expiration of 30 calendar 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 pursuant to this Section 10.
11. SECURITY. To secure payment of the benefits herein provided
for the Company agrees to maintain an irrevocable escrow account (the "Escrow
Account") at Key Trust Company of Ohio, N.A. (the "Bank"), Cleveland, Ohio, and
to keep on deposit in the Escrow Account such amount, if any, as shall at all
times be at least equal to the required security hereinafter provided for. The
maximum amount of required security to be kept on deposit at any time shall be
(A) an amount equal to three (3) times your annualized Base Compensation, with
such amount to be recalculated each November to reflect changes in your
annualized Base Compensation, or (B) if there has been a determination with your
written consent or by a final arbitral award rendered in accordance with this
Agreement that a specific lesser amount fully secures the Company's obligations
under this Agreement, or that the Company has fully performed its obligations
under this Agreement, then such specific lesser amount or, in the case that the
Company has fully performed its obligations under this Agreement, nothing. The
full maximum amount of required security shall be kept on deposit at all times
after there shall have been a change in control of the Company. Unless and until
such a change in control of the Company shall have occurred, however, the
Company shall only be obliged to maintain on deposit in the Escrow Account an
amount at least equal to 50% of the maximum amount of required security. Amounts
deposited in the Escrow Account shall be paid out by the Bank only to you, in
such amounts as you shall certify to the Bank as amounts that the Company is in
default in paying to you under this Agreement, or to the Company, to the extent
that the amount on deposit exceeds the maximum amount of required security as
specified in joint written instructions from you and the Company to the Bank or
in a final settlement or judgment relating to this Agreement.
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12. SUCCESSORS, BINDING AGREEMENT. The Company shall 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, by agreement in form and substances satisfactory to you, to expressly
assume 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. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same amount and on the
same terms as you would be entitled hereunder if the Company had terminated your
employment after a change in control of the Company occurring at the time of
succession, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
paragraph 8 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. This Agreement shall inure to the benefit of
and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devises, legates, or
other designee or, if there be no such designee, to your estate.
13. CONTINUED STATUS AS ELECTED OFFICER OR APPOINTED OFFICER.
Notwithstanding anything to the contrary elsewhere contained in this Agreement,
if you cease to be a Board-elected officer or an appointed officer of the
Company prior to a change in control, this Agreement shall be deemed terminated
and of no further force and effect.
14. NOTICE. Notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and such officer as may be specifically
designated by the Board, provided, that the Company shall have the right to
terminate its obligations to you under this Agreement by written notice given to
you at any time prior to a change in control of the Company, so long as such
termination is not done in anticipation of or in connection with a change in
control of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement constitutes the entire agreement
between the Company and you with respect to the subject matter hereof and,
except to the extent a specific compensation program provides for benefits upon
a change in control relative to that program, which provisions shall remain in
effect, no agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. Without limiting the generality
of the foregoing, this Agreement supersedes and replaces in its entirety any
prior agreement relating to the subject matter hereof. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio.
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16. VALIDITY. The invalidity or unenforceability of any one or
more provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. JURISDICTION. In the event of any dispute or controversy
arising under or in connection with this Agreement you and the Company hereby
irrevocably consent to the jurisdiction of the Common Pleas Court of the State
of Ohio (Cuyahoga County) or the United States District Court for the Northern
District of Ohio.
19. LEGAL FEES AND EXPENSES. It is the intent of the Company that
you shall not be required to incur the expenses associated with the enforcement
of your rights under this Agreement by arbitration, litigation, other legal
action or negotiation to resolve any disputes because the cost and expenses
thereof would substantially detract from the benefits intended to be extended to
you hereunder. Accordingly, if it should appear to you that the Company has
failed to comply with any of its obligations under this Agreement or in the
event the Company or any other person takes any action to declare this Agreement
void or unenforceable, or institutes any arbitration or litigation designed to
deny, or to recover from, you the benefits intended to be provided to you
hereunder, the Company irrevocably authorizes you from time to time to retain
counsel of your choice, at the expense of the Company, to represent you in
connection with the initiation or defense of any arbitration, litigation, other
legal action or negotiation to resolve any disputes whether by or against the
Company or any director, officer, shareholder or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to your entering into an attorney-client relationship with
such counsel, and in that connection the Company and you agree that a
confidential relationship shall exist between you and such counsel. The Company
shall also pay or cause to be paid and shall be solely responsible for any and
all attorneys' and related fees and expenses incurred by you as a result of the
Company's failure to perform this Agreement or any provision hereof (including
this Section 19) or as a result of the Company or any person contesting the
validly or enforceability of this Agreement or any provision hereof.
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If this letter correctly sets forth our agreement on the
subject matter hereof, kindly sign and return to the Company the enclosed copy
of the letter which will then constitute our agreement on this subject.
Sincerely,
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By:
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ACCEPTED AND AGREED TO AS OF JANUARY 15, 1998
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Name of Officer
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