Attached files
file | filename |
---|---|
8-K - FORM 8-K - APPLIED INDUSTRIAL TECHNOLOGIES INC | l42518e8vk.htm |
EX-99.1 - EX-99.1 - APPLIED INDUSTRIAL TECHNOLOGIES INC | l42518exv99w1.htm |
EXHIBIT
10.1
[APPLIED INDUSTRIAL TECHNOLOGIES LETTERHEAD]
April 27, 2011
Mr. David L. Pugh
2516 Interlachen Lane
Westlake, OH 44145
2516 Interlachen Lane
Westlake, OH 44145
Dear David:
We have received your letter dated April 23, 2011 formalizing your decision to retire and
tendering your resignation as the Chairman, Chief Executive Officer and member of the Board of
Directors (the Board) of Applied Industrial Technologies, Inc. (the Company),
with such retirement and resignation to become effective on October 25, 2011 or upon the earlier
hiring of a new Chief Executive Officer (the New CEO), but not earlier than June 30,
2011, (the Retirement Date). You will continue to receive your base salary at the
rate of $945,000 through your Retirement Date. Additionally, you will remain covered under the
Companys D&O insurance coverage through your Retirement Date. We recognize your extensive
contributions to the Company throughout your many years of service, and we very much appreciate
your willingness to further serve and assist the Company as the Board of Directors endeavors to
find a candidate to succeed you as Chief Executive Officer.
In consideration of your willingness to assist the Board in hiring the New CEO and in
completing an orderly transition to the New CEO, and in consideration of entering into this letter
agreement (this Agreement), the Board has determined to guarantee you an annual incentive
payment equal to 100% of your base salary for the Companys fiscal year ending June 30, 2012
(Fiscal 2012) to be prorated based on the number of calendar days elapsed in Fiscal 2012
from and including July 1, 2011 to the date of your retirement (the Guaranteed Bonus).
However, you will not be eligible to receive any equity award grants for service during
Fiscal 2012 other than the Guaranteed Bonus. The Guaranteed Bonus shall be paid in a lump sum on
the eighth day following your retirement, provided that you execute and not revoke a general
release in the form attached hereto as Exhibit A. Other than the foregoing, you will be
entitled to receive, on and after your Retirement Date, all of your earned and vested benefits in
accordance with the terms and conditions of the respective plans in which you participated and any
agreements with the Company governing such awards.
In addition you covenant and agree that at all times during your employment and for a period
of twelve (12) months following your retirement (the Restricted Period), you shall not
for any reason, except as expressly permitted by this Agreement, directly or indirectly, on your
own behalf or on behalf of any individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political subdivision
thereof) (each, a Person):
(a) contact, solicit, induce, recruit or do business with any Customer (as defined
below) or Supplier (as defined below) of the Company or, to your knowledge, any other
Customer or Supplier of the Business (as defined below), with respect to any product or
service which is competitive with any product or service which constitutes, is part of,
constituted, or was part of, the Business, as conducted or, to your knowledge, planned to
be conducted, as of your retirement date or at any time within the twelve (12) month period
immediately preceding your retirement date.
(b) own an interest in, operate, join, control, advise, work for, consult to, have a
financial interest which provides any control of, or otherwise participate in, any Person
producing, designing, providing, soliciting orders for, selling, distributing, consulting
to, or marketing or re-marketing products or services competitive with or in substantially
the same line of business as the Business, or any part thereof, as conducted or, to your
knowledge, planned to be conducted, as of your retirement date or at any time within the
twelve (12) month period immediately preceding your retirement date. This prohibition
applies anywhere within North America, including Canada, the United States of America and
Mexico. This covenant does not prohibit the mere ownership of less than one percent (1%)
of the outstanding stock of any publicly-traded corporation as long as you do not actually
control such corporation and are not otherwise in violation of this Agreement.
(c) divert or attempt to divert or take advantage of or attempt to take advantage of
any actual or potential business or opportunities of the Company, of which you became aware
as the result of your employment with the Company and which relate specifically to the
Business, or any part thereof, as conducted or, to your knowledge, planned to be conducted,
as of your retirement or at any time within the twelve (12) month period immediately
preceding your retirement.
(d) hire any individual who was employed by the Company or any Affiliate thereof at
any time on or after that date which is six (6) months prior to the Retirement Date, or
directly or indirectly, entice, solicit or seek to induce or influence any such individual
to leave his or her employment.
(e) For purposes of the foregoing, the following definitions shall apply
Affiliate means any Person directly or indirectly controlling or
controlled by the Company or under direct or indirect common control with the
Company, including, without limitation, any director, officer, or shareholder of the
Company.
Business means the business conducted or planned to be conducted by
the Company and its Affiliates and subsidiaries as of a specified date. As of the
date of this Agreement, the Business includes the (a) distribution of industrial
products, including but not limited to bearings, power transmission components,
fluid power components and systems, industrial rubber products, linear motion
2
components, tools, safety products, and general maintenance and mill supply
products, (b) customized fluid power, mechanical, and rubber shop services, (c)
storeroom management services and (d) maintenance training.
Customer means any Person or entity to which the Company or any
Affiliate has provided or actively solicited products or services in the twelve (12)
months prior to the cessation of your employment.
Supplier means any Person or entity that provided goods or services
to the Company or any Affiliate to be used in connection with the Business in the
twelve (12) months prior to the cessation of your employment.
You acknowledge that should you violate any of the foregoing covenants (collectively, the
Restrictive Covenants), it will be difficult to determine the resulting damages to the
Company and, in addition to any other remedies the Company may have, (i) the Company shall be
entitled to temporary injunctive relief without being required to post a bond and permanent
injunctive relief without the necessity of proving actual damage, and (ii) the Company shall have
the right to offset the Guaranteed Bonus under this Agreement to the extent of any money damages
incurred or suffered by the Company as a result of your breach. The Company may elect to seek one
or more of these remedies at its sole discretion on a case by case basis. Failure to seek any or
all remedies in one case shall not restrict the Company from seeking any remedies in another
situation. Such action by the Company shall not constitute a waiver of any of its rights.
It is the parties intent that each of the Restrictive Covenants be read and interpreted with
every reasonable inference given to its enforceability. However, it is also the parties intent
that if any term, provision or condition of the Restrictive Covenants is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions
thereof shall remain in full force and effect and shall in no way be affected, impaired or
invalidated. Finally, it is also the parties intent that if a court should determine any of the
Restrictive Covenants are unenforceable because of over-breadth, then the court shall modify said
covenant so as to make it reasonable and enforceable under the prevailing circumstances.
In the event of any breach by you of any Restrictive Covenant, the running of the period of
restriction shall be automatically tolled and suspended for the duration of such breach, and shall
automatically recommence when such breach is remedied in order that the Company shall receive the
full benefit of your compliance with each of the Restrictive Covenants.
You agree that the Restrictive Covenants shall be enforced independently of any other
obligations between the Company, on the one hand, and you, on the other (other than the Companys
obligation to make payments under this Agreement), and that the existence of any other claim or
defense shall not affect the enforceability of the Restrictive Covenants or the remedies provided
herein.
Except as specifically provided in this Agreement, this Agreement supersedes and replaces all
prior employment agreements, confidentiality agreements, arrangements or plans
3
specifically relating to you that were entered into prior to the date hereof between the
Company or any of its Affiliates and you.
This Agreement, including the other documents expressly referenced herein, contains the
complete agreement between the parties and no party has relied upon or will claim reliance upon any
oral or written statement which may be claimed in any way to relate to the subject matter of this
Agreement in connection with the execution of this Agreement.
The provisions of this Agreement are severable. If any provision is held to be invalid or
unenforceable, it shall not affect the validity or enforceability of any other provision.
This Agreement shall be governed by the internal laws (and not the conflicts of law
provisions) of the State of Ohio.
If you are in agreement with the foregoing, please acknowledge your agreement in the place
provided below and return an original of this Agreement to the Company, whereupon this Agreement
shall become a binding agreement between the Company and you.
Very truly yours, Applied Industrial Technologies, Inc., an Ohio corporation |
||||
By: | /s/ Fred D. Bauer | |||
Fred D. Bauer | ||||
Vice President - General Counsel & Secretary | ||||
Agreed to this 27th day of April, 2011.
By:
|
/s/ David L. Pugh | |
David L. Pugh |
4
Exhibit A
General Release of Claims
General Release of Claims
This General Release of Claims (Release) is entered into by you and Applied
Industrial Technologies, Inc. (the Company), and effective eight (8) days after the date
indicated below your signature below, unless you revoke your acceptance as provided below. The
parties are entering into this Release pursuant to that certain letter agreement dated April 27,
2011 (the Agreement), pursuant to which the Company has agreed to pay you, in certain
circumstances, certain benefits specified in such Agreement to which you may not otherwise be
entitled unless you execute the general release of claims set forth in this Release.
1. Your Release of Claims. You understand that by executing this Release, you are
agreeing not to sue, or to otherwise bring any kind of claim against, the Company or any of the
Releasees (as defined below) for any reason whatsoever based on anything that occurred through the
date you executed this Release. Specifically, in this regard, you agree as follows:
(a) On behalf of yourself and your heirs and assigns, you hereby
release the Company, its associates, owners, members, affiliates, divisions,
subsidiaries, related partnerships, predecessors, successors, heirs, assigns,
agents, directors, officers, partners, employees, insurers, representatives and
lawyers (the Releasees) from all claims arising out of, based upon, or
relating to your hire, employment, remuneration or separation from the Company.
(b) General Release of All Claims. You release the Releasees of and
from any and all manner of action or actions, cause or causes of action, in law or
in equity, suits, debts, liens, contracts, agreements, promises, liability, claims,
demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown,
fixed or contingent (collectively, the Claims), which you now or may
hereafter have against the Releasees, or any of them, by reason of any matter,
cause, or thing whatsoever from the beginning of time to the date hereof.
(c) Claims Specifically Released. The Claims released hereunder
specifically include, without limiting the generality of the foregoing, any Claims
arising out of, based upon, or relating to your hire, employment or remuneration by,
or your separation from, the Company or any of its affiliates including any Claims
arising under the following statutory and/or common laws as any or all of them may
have been amended from time to time:
(1) Title VII of the Civil Rights Act of 1964;
(2) the Age Discrimination in Employment Act;
(3) the Family Medical Leave Act;
(4) the Americans With Disabilities Act;
(5) the Fair Labor Standards Act;
(6) the Equal Pay Act;
(7) the Employee Retirement Income Security Act;
(8) the National Labor Relations Act; and/or
(9) any other local, state or federal statutory or common law
governing whitstleblowing, wrongful termination, breach of contract, breach
of public policy, discrimination in employment and/or the payment of wages
or benefits.
(d) Older Workers Benefit Protection Act. In accordance with the
Older Workers Benefit Protection Act of 1990, you are aware of the following:
(1) you have been and are advised to consult with an attorney
before signing this Agreement;
(2) you have twenty-one (21) days from the Retirement Date to
consider this Agreement; and
(3) you have seven (7) days after signing this Agreement to
revoke this Agreement, and this Agreement will not become effective until
that revocation period has expired.
(e) Claims Excluded from Release. This Release shall not extend to
any claim for benefits accrued and earned under the specific terms of any health,
disability, incentive, compensation or retirement plan in which you were or are a
participant, and any claim that may not, as a matter of law or public policy, be
released by you.
2. No Admission of Liability. Neither the execution of this Release, nor the
performance of any terms hereof, shall constitute, be construed as or be deemed an admission of any
liability, wrongdoing or culpability whatsoever by the Company.
3. Mutual Non-Disparagement. Because the purpose of this Release is to settle
amicably any and all disputes or claims among the parties, you will not, directly or indirectly,
make or cause to be made any statements to third parties defaming, slandering, criticizing or
disparaging any of the Releasees or otherwise negatively commenting on the character or reputation
of any of the Releasees. Likewise, the Company will not, directly or indirectly, make or cause to
be made any statements to third parties defaming, slandering, criticizing or disparaging you or
otherwise negatively commenting on your character or reputation.
4. Arbitration. You and the Company hereby agree to submit any claim or dispute
arising out of or relating to the terms of this Release to private and confidential arbitration by
a single neutral arbitrator. Subject to the terms of this paragraph, the arbitration proceedings
shall be governed by the Employment Arbitration Rules and Procedures of the Judicial Arbitration
and Mediation Service (JAMS) or the relevant rules of such other entity to which the you
and the Company may agree. The arbitrator shall be appointed by agreement of the parties hereto or, if no agreement can be reached, by JAMS (or other agreed-upon entity)
pursuant to its rules. The decision of the arbitrator shall be final and binding on all parties,
and judgment thereon may be entered in any court having jurisdiction. All costs of the arbitration
proceeding, including attorneys fees and witness expenses, shall be paid by the party against whom
the arbitrator rules.
5. Construction of Agreement. This Release shall be construed as a whole in
accordance with its fair meaning and in accordance with the laws of the State of Ohio. The
language of this Release shall not be construed for or against either you or the Company. Each and
every covenant, term, provision and agreements herein contained shall be binding upon and inure to
the benefit of the successors and assigns of you and the Company. The headings used herein are for
reference only and shall not affect the construction of this Release.
6. Severability. The provisions of this Release are severable. If any provision is
held to be invalid or unenforceable, it shall not affect the validity or enforceability of any
other provision.
7. Your Representation. You represent and warrant that:
(a) You have returned to the Company all Company property in your possession;
(b) You are not owed wages, commissions, bonuses or other compensation, other
than the amounts and benefits to be received by you in accordance with the
Agreement;
(c) During the course of your employment you did not sustain any injuries for
which you might be entitled to compensation pursuant to workers compensation law;
(d) You have not made any false and disparaging comments about the Company, nor
will you do so in the future;
(e) You have not initiated any adversarial proceedings of any kind against the
Company or against any other person or entity released herein, nor will you do so in
the future, except as specifically allowed by this Release; and
(f) You have thoroughly read and considered all aspects of this Release, that
you understand all its provisions and that you are voluntarily entering into said
agreement.
* * * *
WITNESS WHEREOF the parties have executed this Release on the dates written below.
David L. Pugh | ||
Date:
|
||
Applied Industrial Technologies, Inc., an Ohio corporation |
||||
By: |
||||
[NAME] | ||||
[TITLE] | ||||
Date: |
||||