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Draft: 4/29/97 EXHIBIT 10(b)
CONSULTING, NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
This CONSULTING, NONCOMPETITION AND CONFIDENTIALITY AGREEMENT (this
"Agreement") is entered into as of _________, 1997 by and among APPLIED
INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation (the "Company"), [J. XXXXXXX
XXXXX CONSULTING] (the "Consultant") and J. XXXXXXX XXXXX ("Xxxxx").
WITNESSETH:
WHEREAS, prior to the acquisition of INVETECH Company ("INVETECH") by
the Company, Xxxxx served as a senior executive officer of INVETECH and made
major contributions to the profitability, growth and financial strength of
INVETECH; and
WHEREAS, Xxxxx has formed a consulting company to provide business
consulting services through which Xxxxx will act as the primary advisor; and
WHEREAS, the Company desires to assure itself of both present and
future consulting services of Consultant and anticipates Consultant will make
significant contributions to the profitability, growth and financial strength of
the Company; and
WHEREAS, the Consultant and Xxxxx are willing to render services to the
Company on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company, Xxxxx and Consultant agree as follows:
1. DUTIES AND COMPENSATION.
(a) During the term of this Agreement, Consultant agrees to cause Xxxxx
to be available to the Company during normal business hours to provide
consulting services with respect to the business and affairs of the Company and
its affiliates for up to a maximum of ten business days per year and to use his
best efforts to promote the interests of the Company and its affiliates.
(b) During the term of this Agreement, the Company shall pay to
Consultant an annual consulting fee of $70,000 on the date hereof and thereafter
annually on the anniversary date hereof for the four succeeding years. In
addition, in consideration of Xxxxx'x covenants under Sections 2 and 3 of this
Agreement, the Company shall also pay to Xxxxx $2,550,000 in five equal annual
installments of $510,000, the first of which shall be payable on the date hereof
and the remainder of which shall be payable annually on the anniversary date
hereof during the four succeeding years.
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2. NONCOMPETITION COVENANT. During the longer of (i) the five year
period following the date hereof and (ii) the one year period following the date
of termination of any and all of Xxxxx'x relationships with the Company (other
than as a shareholder), including any and all relationships as a director,
officer, employee or consultant of the Company or its affiliates, Xxxxx
covenants and agrees that he will not, directly or indirectly, with or through
another individual or organization, whether as a shareholder (other than as the
holder of less than 1% of the outstanding shares of a publicly held company),
partner, member, director, officer, employee, agent, or consultant, or in any
other capacity, manufacture, provide, sell, design or distribute products or
services that are the same or similar to products or services now, heretofore or
hereafter provided, sold, designed or distributed by the Company or any of its
affiliates anywhere within the United States or Canada.
3. CONFIDENTIAL INFORMATION. In addition, during the five year period
following the date of termination of any and all of Consultant's and Xxxxx'x
relationships with the Company (other than as a shareholder), including any and
all relationships as a director, officer, employee or consultant of the Company
or its affiliates, Consultant and Xxxxx severally covenant and agree to keep
confidential and not to disclose to others information relating to the Company
or any of its affiliates, or their respective businesses, including, but not
limited to, information regarding (i) customers or potential customers; (ii)
vendors or suppliers; (iii) pricing structure and profit margins; (iv) employees
and payroll policies; (v) computer systems; (vi) facilities or properties; and
(vii) other proprietary, confidential or secretary information relating to the
Company or any of its affiliates, or their respective businesses, products,
activities or operating aspects (hereafter "Confidential Information").
Consultant and Xxxxx shall use all reasonable care to protect, and prevent
unauthorized disclosure of, any Confidential Information unless such information
(a) is now or becomes generally known or available to the public without any
violation of this Agreement; or (b) is required to be disclosed by applicable
law or by court or governmental order.
4. TERM; EFFECT OF TERMINATION. The term of this Agreement shall
continue for five years following the date hereof; provided, however, no such
termination shall affect or otherwise limit or reduce Consultant's or Xxxxx'x
obligations under Sections 2 and 3 of this Agreement or the Company's obligation
to make the payments called for under the last sentence of Section 1(b) of this
Agreement or to provide the benefits specified in Section 5.
5. SALARY CONTINUATION; HEALTH INSURANCE.
(a) Promptly following the date hereof, the Company and Xxxxx agree to
amend the salary continuation agreement between Xxxxx and INVETECH to (i)
provide that the benefits payable thereunder shall be payable to Xxxxx beginning
at an age not earlier than age 55 designated by Xxxxx and (ii) adjust the
aggregate benefits payable thereunder to reflect the payment of the amounts
accrued on INVETECH's Closing Balance Sheet (as defined in the Merger Agreement)
plus $500,000 during the benefits payment period specified therein, as amended
pursuant to clause (i) of this Section 5(a) and using a present value discount
rate of 7.7%.
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(b) During the term of Xxxxx'x and his spouse's lives, the Company
shall pay Consultant $700 per month for the cost of health insurance to be
obtained and maintained by Consultant for Xxxxx, his wife and his eligible
children. The obligation to obtain and maintain any such health insurance
benefits shall be solely the responsibility of Consultant and shall not be the
responsibility of the Company.
6. REMEDIES; IRREPARABLE HARM. Consultant and Xxxxx acknowledge that a
breach of its or his obligations under Section 2 or 3 of this Agreement would
result in irreparable injury to the Company for which monetary damages alone
would not be an adequate remedy. Therefore, Consultant and Xxxxx consent to the
issuance of injunctive relief in the event of a breach of its or his obligations
under Section 2 or 3, in addition to any other remedies to which the Company may
be entitled at law or in equity.
7. SEVERABILITY; NO SET-OFF. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, including without limitation, as to
time, geographic area, or scope of activity, such provision shall be severable
from the other provisions of this Agreement and the remainder of this Agreement
and the application of such provision to any other person or circumstances shall
not be affected, and the provision so held to be invalid, unenforceable or
otherwise illegal shall be reformed to the extent (and only to the extent)
necessary to make it enforceable, valid and legal. The Company shall have no
right of set-off under this Agreement for any breach (or alleged breach) of any
provision of the Plan and Agreement of Merger dated April 29, 1997 between the
Company and INVETECH or the related Escrow Agreement.
8. SUCCESSORS; ASSIGNMENT. This Agreement shall inure to the benefit of
and be enforceable by the Consultant's and Xxxxx'x successors, personal
representatives, executors, administrators, heirs, distributees and/or legatees.
This Agreement is personal in nature and no party hereto may, assign, transfer
or delegate this Agreement or any rights or obligations hereunder except the
Company may assign its rights but not its obligations hereunder to any of its
wholly owned affiliates.
9. NOTICE. For all purposes of this Agreement, all communications
including without limitation notices, consents,requests or approvals, provided
for herein shall be in writing and shall be deemed to have been duly given when
delivered or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Consultant or Xxxxx at Xxxxx'x
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
10. GOVERNING LAW. The validity, interpretation,construction and
performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By _________________________________
Its ________________________________
[J. XXXXXXX XXXXX CONSULTING]
____________________________________
By: J. Xxxxxxx Xxxxx, President
____________________________________
J. Xxxxxxx Xxxxx
